Debt Management Plan Eligibility Criteria

Debt Management Plans (DMPs) can be a great option if you’re struggling to keep up with paying off your debt. They work by consolidating all your debt and then setting up an informal agreement with your creditors and DMP provider to pay your debt in monthly instalments. This amount is calculated by taking your income and outgoings into account so your monthly payments are more manageable and realistic.

Before applying for a DMP, it’s important to research whether it is the right option for you and if you fit the relevant criteria. 

When should I consider a DMP?

If you are struggling with debt, there are debt solutions designed to help you. It may be a good idea to speak to a regulated debt advice company for insights into getting a Debt Management Plan if you are:

• Worried about your debt
• Finding it difficult to pay your household bills
• Reliant on your overdraft or credit card
• Regularly missing repayments or getting into arrears.

At MoneyPlus, we are committed to offering you expert advice and guidance. If you have any questions or concerns about debt management, please don’t hesitate to get in touch with us today.

What is the Debt Management Plan eligibility criteria?

As with any debt solution, there is a set of DMP criteria you’ll need to meet in order to be eligible. One of the most important things to consider is that a Debt Management Plan will only cover non-priority debts. Also known as unsecured debt, this is debt such as credit cards, store cards, overdrafts and water bills when paid directly to the water company rather than via a landlord. 

This is different to priority debt which covers things like rent, court fines or National Insurance – debts where there can be serious consequences if you don’t pay. Therefore, you need to be sure your priority debts are in order before you take out a DMP.

To meet the Debt Management Plan criteria, you’ll need to:

• Be a UK resident
• Have at least £100 in disposable income each month
• Have at least two unsecured debts to different creditors
• Have at least £2,000 in unsecured debt
• Not have enough disposable income to completely repay your debts within six months
• Not take on additional credit for the duration of your DMP.

What happens if my circumstances change?

Debt Management Plans last as long as it takes for you to pay off all your outstanding debts, which typically takes years. During this time, it’s very possible that your circumstances might change. For example, you might:

• Get a pay rise
• Be made redundant
• Move house
• Start a family
• Retire
• Receive an insurance payout
• Start or finish study.

As financial situations can change, you will need to review your DMP at least once a year to see if your monthly instalment is still reflective of your income and expenses. If there is a significant change to your finances, you should contact your DMP provider who can offer you advice on how this might affect your DMP.

If you are finding it difficult to keep up with your DMP payments, don’t panic. Get in touch with your DMP provider who can talk through your options with you. This might be to adjust your payments or if a DMP is not right for you, they can offer advice on other debt solutions. 

Alternatively, if your income has increased, it may be that you are in a position to pay a little more each month and pay off your debt quicker. Your DMP provider will take everything into account however – e.g. you may have got a new job with a larger income but you have to pay more in travel expenses. You will never have to pay what you can’t afford.