Living on a debt solution

If you’re on a debt management plan and your income rises – what happens?

Posted 29 September 2015

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So your income has gone up and you’re not sure what you should do about it – read our guide to find out.

When your finances have become unmanageable and you’re no longer in control of your debts, being on a debt management plan (DMP) could be an appropriate way to take back control. As well as clearing your debts in manageable monthly payments, you’ll have enough money to start enjoying life again and you’ll have an estimated date for when you’ll be out of debt.  


And, while you’re on a Debt Management Plan there’s nothing stopping you from applying for jobs that can earn you more money, getting a pay rise or taking on overtime at work, all of which are going to increase your income. If this happens, you might be thinking about what it means for your Debt Management Plan.


An increase in income may mean that you are able to pay off what you owe more quickly, which is beneficial for both you, and the people you owe money to as well. It may also mean that the debt solution you are currently on is not the one that’s the most suited to your new situation. A quick chat with your debt advisor, and a reassessment of your finances, should make it clear whether your Debt Management Plan is still the right solution for you.  


Get advice! 

Once you’ve realised that there will be some extra cash coming in, you should tell your DMP provider. They’ll do a full review of your income and expenditure to confirm your new disposable income, and how much you can realistically afford to pay towards your debts each month. They’ll also be able to give you a new estimated date for how quickly you’ll be able to clear what you owe, based on your new affordable monthly repayment. 

They’ll then contact your lenders to let them know about the increased payments. If you’re dealing with your Debt Mangement Plan yourself, get on the phone and let your lenders know.

And remember, a change in circumstances may mean that the debt management plan you are currently on is no longer suitable and different debt solution will help you get debt free quicker. So, always speak to your debt advisor if your circumstances change.  

It’s informal, so you can change the payments

A Debt Management Plan is an informal debt solution, which means it can be flexible – you can make changes to what you pay and, providing your lenders agree to them, your debt management plan can continue. It’s unlikely that any lender would say no to you offering to pay them back more quickly than you originally thought, which benefits both you and your lenders, as you’ll be debt free much quicker and your lenders get more of the money they’re owed.

Again, it may be the case that your change in circumstances means that another debt solution is more appropriate for you, so tell your advisor so they can review your circumstances with you.   


Full payment


If you find yourself with a position to pay off the whole amount you owe, you should call your DMP provider or, if you feel confident doing it yourself, your lenders and advise them.

So, if you inherit some money and you decide that you’d like to put that towards paying off what you owe, your lenders may be willing to offer you a reduced settlement amount if you pay the whole lot in one go, or they may not.  It will depend on how much you owe, how long you’ve owed it for, where the funds have come from and how long it’s likely to take you to pay it back at the current payment level. Whatever the case, it’s always worth asking.

So, now you know what should happen if your income rises while you’re on a DMP. Remember if you have any further questions about how your debt management plan works don't hesitate to get in touch with us using one of the contact us options and one of our dedicated debt advisors will be happy to help. 







by Shelley Bowers

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