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A Debt Management Plan is an informal arrangement between a debtor and all their unsecured creditors, and it is used to help people who are struggling to keep up repayments on their unsecured debts. It is generally most suitable as a debt solution when somebody has a temporary change in personal circumstances, i.e. a temporary loss or reduction in income, or a temporary rise in expenses, and needs a brief respite from their normal debt repayments.

The Debt Management Plan (DMP) replaces the normal monthly repayments to all unsecured creditors with a single, reduced, monthly payment, which is based on affordability. As the Debt Management Plan (DMP) is an informal arrangement, there is no guarantee that creditors will recognise the Debt Management Plan (DMP), and as such, there is no guarantee they will freeze the interest on the debts, or stop adding late payment charges, and creditors may also continue to take legal action against a debtor who chooses a Debt Management Plan (DMP).

The Debt Management Plan (DMP) replaces the normal repayment schedule until either the debtor is able to re-establish the full monthly repayments or the debt is repaid in full through the Debt Management Plan (DMP).  It is because of the reduced payments and possible added interest that Debt Management Plans (DMPs) will extend the time it takes to repay the debts, and therefore should only be considered a short-term debt solution.

A Debt Management Plan (DMP) will, however, allow the debtor to protect their assets, and because a Debt Management Plan (DMP) is an informal agreement, the debtor is not obliged to inform the creditors of any property or assets they may own.