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How much debt do I need for a DMP?

Posted 15 February 2016

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Your financial situation does have an impact on whether or not a DMP is right for you, but it’s not just about how much debt you’ve got. Read on to find out more.

One of the questions we are asked most often by people on the phone is how much debt they need to qualify for a Debt Management Plan (DMP). So, we thought we’d put together a guide so you know how DMPs work and whether it could be the best course of action for you. 

Before we go any further, it’s important to note that the solutions we’ll be talking about in today’s blog are available in England, Wales and Northern Ireland. If you live in Scotland there may be a similar situation for your needs, have a look at our Scottish page to learn more. 

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What is a DMP?

First of all, a DMP is a plan that you put together, either directly with your lenders or through a DMP provider.  It allows you to reduce the payments you make towards your unsecured debts each month, so that they are affordable and sustainable. On a DMP, you pay back everything you owe on the debts you’ve included, just at lower rate than originally agreed to, so it will take you longer overall. 

Another benefit is that the lenders may agree to stop adding interest and charges onto the debt and stop any legal action against you too. This is because they can see that you are making an effort to pay the debt back at what is a realistic rate for you. 

Is there a limit to the amount of debt I can have on a DMP?

The short answer to this question is that there really isn’t a minimum (or maximum) amount of debt that you have to have to qualify for a Debt Management Plan. Whether or not a Debt Management Plan is right for you depends more on your ability to repay your debts, rather than the amount of debt that you have. The general rule that we work to is as follows:

If you’re able to pay off your debts in 6 months with your current disposable income, you may not need to start a DMP as you could clear your debts directly with your creditors instead. 

To start a DMP some sort of regular income is important, as you will need to pay something towards your debts every month. When you first speak to an advisor about your debts they will take you through your income and expenditure in detail, making sure not to leave anything out, so they get a very accurate picture of your finances month to month. They will be looking to see whether you have any disposable income (DI) left after you’ve paid your main living costs (rent, council tax, utilities, food and so on) that you can put towards your debts and this will affect whether or not this solution is right for you. 

Disposable income is the money left over when all your essential bills have been paid – the free money that you can afford to put towards repaying your debts. Once this has been worked out, the advisor will look at the types of debts you have, how many debts you have, and whether you would be able to make a reasonable contribution to them each month. 

So, you might have high levels of debt, but still have a regular income and enough money to make a payment each month – in which case a Debt Management Plan might be right for you. On the other hand, you could have a relatively low amount of debt but have no disposable income to put towards them, in which case a DMP would not be the right way forward. 

There’s also a chance that after the advisor has looked into your finances, they see that you do have some disposable income. However, even if you paid this towards your debts every month, you still wouldn’t be able to pay everything back in a reasonable amount of time. This again could mean that a DMP isn’t right for you.

Alternatives to a DMP

If you’ve been told that a DMP isn’t right for you, it’s important not to worry. There’s likely to be another debt solution out there that’s right for you and your personal situation. Here are some other debt solutions that may suit your needs better. 


If you had some money to put towards your debts each month, but not enough to pay everything off in a reasonable amount of time, an Individual Voluntary Arrangement (IVA) is an alternative that may be suggested. This is because on an IVA you pay what you can afford each month, but the IVA is only designed to last for five-six years and, when it ends, the rest of the debts included on the plan would be written off. 

An IVA, however, isn’t as flexible as a DMP and there are more rules and restrictions involved in this solution. It’s also a legally binding agreement, so if you started one, it would be recorded on the insolvency register. For more information on this solution, have look at our detailed page

Debt Relief Orders

If you have debts under £20,000, but very little or no disposable income spare to put towards them, a Debt Relief Order (DRO) might be a viable option. If you qualified, you wouldn’t need to pay anything at all towards your debts. And, if your situation hadn’t improved after a year, the rest of the debts on the plan would be written off. 

s this solution is designed for those struggling with debts and a low level of assets and disposable income, the qualifying criteria is quite strict. So, as well as the limit on debt, you can'thave more than £50 in DI, have assets worth more than £1,000, or a car worth more than £1,000. You’ll be able to learn more about how DROs work here


If none of the other options above are open to you, bankruptcy is another possible route out of debt. With bankruptcy you sometimes have to pay something towards your debts for up to three years, but whether you do or not is the Trustee’s decision (the official receiver or insolvency practitioner that oversees your bankruptcy). If you were on a benefit only income then you wouldn’t have to pay anything into the bankruptcy. 

Like a DRO, bankruptcy would last for one year and, after that time, the rest of the debts included would be written off. Whilst it can help with your debts, bankruptcy will also have negative effects, like damaging your credit rating and affecting the type of job you may be able to do in the future. It’s important that you understand all the pros and cons, so have a look at our dedicated page to learn more. 

So there we have it, there isn’t a certain amount of debt that you have to have in order to qualify for a DMP. However, how much disposable income you have and how long it will take you to pay off your debts will have a bearing on whether you can have one. The best way to find out which debt solution is right for you is to get professional debt advice. Our advisors are available if you’d like to speak to someone today, just use the options on the left. 


by Christine Walsh

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