A reader asked:
I’m being told a DMP would take more than 10 years. Is that too long – I hope my situation will improve?
Ten years is a long time. But lots of things can happen during a Debt Management Plan (DMP) which will change the time it may take. Here are seven ways the DMP could be speeded up – not all of them may apply to you.
1. No DMP fees
If the DMP firm you are talking to charges monthly fees, these reduce the amount that goes to your creditors so the DMP takes longer.
Talk to StepChange instead! They don’t charge anything, they do all the dealing with your creditors… the DMP is just the same. There are no advantages to paying fees – creditors aren’t more likely to agree to the DMP or to freeze interest.
If you are in a fee-charging DMP your creditors will be very happy if you switch to StepCahnge because they will be repaid sooner, as all your payments go to your creditors without a chunk being taken out for fees.
2. Other commitments end
You may have expenses that you know will reduce or end in the next few years, for example when you become entitled to more free hours childcare.
You may also have priority debts outside your DMP that will be cleared, such as car finance, deductions from benefits, or clearing a tax bill.
Anything like this will allow you to increase your payments to the DMP. so it will finish sooner.
Of course, some new commitments such as a new baby could slow progress in your DMP.
3. Get refunds from affordability complaints
If you have credit cards, catalogues, loans or overdrafts going into your DMP, think about making affordability complaints. See affordability complaint articles where there are details for each type of debt, with template letters you can use.
Winning an affordability complaint will result in the debt in your DMP being reduced or cleared – so the DMP will end sooner. You can also make complaints about other debts that have been settled in the last few years. There if you win any you will get a cash refund.
Making these complaints isn’t a problem for a DMP. A lender will not decide to add interest because you have claimed or refuse to accept the DMP payment.
4. Increasing income
Your income will probably go up over the next few years, but so may your expenses. Sometimes you will feel confident that your income is likely to increase more than your expenses, for example if you are early in your career. This would allow you to increase your DMP payments.
But if your health is poor or you are close to retirement, is it more likely that your income will fall?
5. Partial Settlements
After some time in a DMP, it is likely some or all of your debts will be sold to debt collectors. Debt collectors are far more likely to accept a settlement offer from you than the original lender. So if a relative could offer you some money, or you get a bonus or a refund, or you inherit some money, you could clear £1000 of debt in your DMP for £500 say.
This reduces the debts remaining in the DMP so they will be cleared faster.
6. Creditor unable to produce the CCA agreement
If your DMP has going on for years, and debts have been sold to debt collectors, it may be worth asking the debt collector to produce the CCA agregrrement for a credit card, catalogue or loan. See How and when to ask for the CCA agreement for details. This is more likely to succeed if the account was opened a long while ago or if it has been sold more than once.
If a copy of the CCA agreement can’t be produced by the debt collector, the debt can’t be enforced in court. So you can stop paying and ask for it to be removed from your DMP.
7. Ask for a write off (unusual)
This won’t usually work if your DMP is going well. But if you develop major health problems or there is another reason why you can only make token payments, and this isn’t likely to change, then you may be able to get a debt written off.
Or consider insolvency
But if your DMP is very long because you can only make low payments and none of the above ideas look as though they will make much difference, you should consider if a DMP is the right option for you. Bankruptcy, a DRO or an IVA may be preferable.
Inherit in a DMP or insolvency
Is a DRO always better than an IVA?
Choose between an IVA and a DMP
Frances says
If your income did increase would it be better to manage creditors outside of a DMP? Would that have a better impact on credit rating or is damage done? I guess charges could such as interest could be put back on? Would a debt recovery company give the debt back to the creditor? I guess what I’m asking is could an increase an income put you back to the original arrangement with a view to increase credit ratings? Or is it not worth it for the sake of improving credit rating and just look to finish the DMP sooner.
Sara (Debt Camel) says
If you get a big increase in the first few months and many of the debts haven’t been defaulted, you could look at ending the DMP and asking the lenders to go back to normal payments. but back interest wont be added and their will be arrears showing on your credit record than you can clear, but will still show historically as being there.
But once defaults have been added or the debts sold to debt collectors, you can’t undo this harm to your credit score. It’s better to just be glad you can clear the debts very fast with a higher income and no interest being added.
The harm caused by defaults to your credit score drops after 2 years, and then again after 4 years. And as the debts are cleared, lenders will be more prepared to lend to you regardless of the credit score.
Frances says
Thank you so much. That’s great. Two of my debts on the plan are also with my mortgage provider which mortgage is up to date but it does worry me when my deal ends if they will say anything. Thanks for your response to my original comment.
Andrew MOORE says
Absolutely agree had a DMP with Stepchange in 2013 and predicted end in 2023 but circumstances changed and all paid off by 2020 and that included getting divorced. The only thing I will say is its hard work and you have to be strict with yourself particularly on your budget but also be realistic.
Sara (Debt Camel) says
Good to hear!
Dave says
Hi Sara,
Been on a DMP with step change for about 5 years now originally owed 50k but now down to 13k. Currently paying £700 a month so as it stands looking at another 18 months to pay it off. I am expecting a bonus early next year to hopefully pay it off early but given what i pay already each month do you think the creditors would likely accept 50% as partial settlments on the remaining balances? or is this even a good idea given i am near the end of my DMP anyway?
All the debts are from credit cards as a result of gambling and have all defaulted some time ago so have been sold on.
Thanks,
Dave
Sara (Debt Camel) says
The 700 a month is affordable?
Dave says
Yes currently on 60k salary.
Sara (Debt Camel) says
In this case your creditors may be unlikely to accept a 50% settlement because they will be paid in full within 18 months. If it is very early next year you could try say 75%? it wont save you much but its more likely to be accepted.
Georgie says
I started a DMP with Stepchange in Dec 2021. This was for 6 credit cards debts. 3 of those are now with PRA, one with Arrow Global and 2 with the original lender. They total £21k.
At the rate I am currently paying, it will take 17 years to clear! I could now increase my payments following a job change, and clear the debt in approx 4 years.
But I frequently receive settlements offers and am considering this. I have the opportunity to borrow an amount from a trusted relative, to offer a a settle to which Stepchange have said it is likely will be accepted.
But which option is better for my credit rating and future mortgage possibilities? Paying in full in 4 years or settle my now? I am likely to need to remortgage in 3-5 years time. I have never defaulted on my current mortgage. Thanks
Sara (Debt Camel) says
what sort of offer do Stepchange is is likely to be accepted? This is to end the DMP – StepChange aren’t suggesting something called “a single payment IVA” are they?
have all the debts in your DMP been marked with a default date on your credit record?
Georgie says
This would be a partial settlement to close all debts, not an IVA. Stepchange think a 40% offer would be accepted.
All debts are currently showing on Credit Karma as marked as default every month since I started the DMP.
Which is worse…the default markers for the next 4 years + til i clear the DMP, or a partial settlement now and no more default markers? Thanks.
Sara (Debt Camel) says
If the default dates were all early 2022, then the debts will drop off our credit record in early 2028 whatever you do – carry on with the DMP, make a partial settlement now or up the DMP payments and repay them in full over 4 years.
If borrowing this money from a relative (can they really afford it???) allows you to settle them at 40%, you would save quite a bit of money doing that.
Georgie says
The first defaults are shown as the month the DMP started. But all 6 debts are marked as ‘default’ for every month since then, including last month. Will they still all drop off 6 years from the first default date, or 6 years from the date the last one is added?
The relative can afford it, thankfully!
Thank you so much for your input. Much appreciated.
Sara (Debt Camel) says
6 years from the first default date.
Georgie says
Okay, that’s great. Thank you.
What are the negative ramifications on my credit score/future mortgage lending potential, if I go ahead with a partial settlement now vs full settlement in 3-5 years time?
There is a risk I can’t manage to pay If off in full in that time, and will need to remortgage while I still have a balance on the DMP. Thanks
Sara (Debt Camel) says
this is an almost unanswerable question. Different mortgage lenders may view things differently. And who knows what the mortgage market will be like in 3-5 years time?
In general I would say:
1) most mortgage lenders don’t care if you have made partial settlements with other lenders – and if the debt has dropped off your credit record they could not tell anyway (unless the lender was part of the same banking group and the mortgage lender you apply to.)
2) by the time you apply for a remortgage with a different lender, you want to EITHER (a) have settled the DMP at least 6 months before and also to have no debts that were in the DMP still showing on your credit record OR (b) have partially settled the debts years before.
3) it isn’t just your credit record that matters here. If you can partially settle the debts you will be able to have saved more money as less will have gone to the debts.
Georgie says
Thank you, Sarah. You’ve been incredibly helpful. Much appreciated.
Stewart Lee says
Hi, I am thinking about going into a dmp with payplan. £1800 per month to pay of £92k of debt. My questions are. I have a credit card, a bank account and a mortgage with Halifax, would they close my bank account if I have no overdraft? Also if I’m not in arrears with any creditors would it go down as an arrangement to pay instead of a default? Would it be better to default first then set a dmp up? And lastly how likely would a debt collector come to my home if I stick to payments? All this affected my mental health and I don’t know what to do. I’m worried about ccjs and charging orders aswell. Apologies for the long post
Sara (Debt Camel) says
£1800 a month is affordable?
I have a credit card, a bank account and a mortgage with Halifax, would they close my bank account if I have no overdraft?
I always suggest people change to a different bank if they have a credit card debt going into a DMP. Otherwise it’s possible that Halifax will take some money to set off against the card debt. It dies often happen but better safe than sorry. Starling has a great app with good budgeting features.
Also if I’m not in arrears with any creditors would it go down as an arrangement to pay instead of a default? Would it be better to default first then set a dmp up?
It’s stressful stopping paying until they have all defaulted. Will take many months during which time you have a lot of cross creditors.
I usually suggest not paying for a couple of months and telling creditors you are Taking debt advice.
You can complain to any creditors that don’t default you in the first 6 months.
how likely would a debt collector come to my home if I stick to payments? All this affected my mental health and I don’t know what to do. I’m worried about ccjs and charging orders aswell.
Normally it’s very unlikely. Payplan will be able to advise if they think any of your creditors are likely to be particularly difficult.
Stewart lee says
Yes it is it’s the moment I am currently paying out £2880 and have not much left after that
Graeme says
I’m thinking of going into a dmp, I currently have a joint bank account, but my wife as her own account and a savings account with the same bank will her accounts be affected, she doesn’t use the joint account, any assistance would be appreciated.
Sara (Debt Camel) says
Is there an overdraft on the joint account?
Graeme says
Hi, thanks for the speedy response, yes the account is overdrawn.
Sara (Debt Camel) says
Then her credit score will be affected. If you don’t want this to happen, then the only way is to clear the overdraft and then close the account.
Graeme says
Again thanks for the reply, we’re more concerned about if they can take money from her personal account or savings account to pay back the overdraft?, I also have credit cards with the same bank but these are in my name?
Sara (Debt Camel) says
They can’t take money from her account to pay a debt on an account that is not hers such as your credit cards.
But that overdraft IS her account, the fact she doesn’t use it is irrelevant. So in theory the bank could do this. In practice it is unlikely – but a disaster if it happens?
I think she should seriously consider using her savings to clear the account before your DMP and close it.
Graeme says
Great service, there isn’t enough money in either account to pay the overdraft, would you advise new bank accounts for both of us?
Sara (Debt Camel) says
yes. And for your partner to move her savings.
Starling has a good reputation for a great app with neat budgeting software.
Graeme says
Thanks 😊, really appreciate your help.
Gary says
Hi just after some advice, been on a DMP for around 4 years and have 17 month left owning 12k just seen your article about CCA agreements and contacted the companies, 2nd of which can’t produce the agreements owning around £6k Would you recommend taking them off the DMP and focusing on the others debts to pay off sooner and possibly offering a partial settlement at the end of the DMP to the company I owe the £6k to?
Sara (Debt Camel) says
2 of which can’t produce the agreements owning around £6k
When did you ask for the CCAs? Have they said they cannot produce them or have then asked the original lender for the CCA?
Have both of these debts defaulted on your credit record? How long ago?
Garry says
I asked for them at the beginning of the year, one came back saying they don’t have the original agreement and the other hasn’t responded (same company) currently investigating.
Yes both defaulted on my credit record. They were passed to the PRA group around 3 years ago.
Sara (Debt Camel) says
so thats been a couple of months – yes you can reasonably ask the DMP firm to stop paying them.
If the CCAs ever turn up, you will need to add them back into the DMP.
It’s unlikely the firms will agree to a low settlement at the end. You either have to decide to pay them or refuse and live with them on your credit file not settled until they drop off, 6 years after the default date.
Gary says
Thanks you appreciate you help
Sara C says
Hi I have £40k debt on a DMP. I want to move to a better area and my mortgage is with Natwest. Part of my DMP is an overdraft of around £800 and credit card for 6k with natwest. Only porting 90k mortgage house worth 230-240k.
Questions:
-Is it better to do a part and final settlement now before I sell and purchase a home or best to do it after I have moved.
-if I do part settlement how long do I have to wait before trying to port mortgage over 6-12months?
Natwest said on soft credit check that as I am already a client and not missed a payment they would give offer in principle to me for a house I wanted, however I did not win the closed offers for the house.
-Am I likely to not pass the final credit check and application for porting with £40k debt? .
– do I call natwest and ask what their preference is with a DMP and part settlement or full debt with a DMP.
– do I get Payplan to ask creditors if they will accept the part settlement of 8k now will that affect my credit score?
Things are difficult where I live as neighbours dogs constantly bark and gives me stress but they are council tenants so council are rubbish and mine is private and I love my home but can’t cope with nextdoor it’s been 10 years of angst.
Help!
Thankyou
Sara (Debt Camel) says
when does your current mortgage fix end?
Sara C says
Hi current 5year fixed rate of 1.19% ends February 2027 (term is 14 years)
Sara (Debt Camel) says
how much cash do you have for a settlement now?
have you talked to a broker about this?
Sara C says
Thankyou for your speedy response. £9/10k if I cash in an old pension. I can take a lump sum. I get taxed 20%. I was going to keep it towards the next property but I didn’t think DMP would let me? They just said I have to move first to see how much excess I have for partial settlement.
I just frightened I won’t be able to pass main mortgage porting credit check. If I can’t move I’d rather do partial settlement so it’s gone. I have 2years left from start of DMP and defaults. Thanks
Sara (Debt Camel) says
“They just said I have to move first to see how much excess I have for partial settlement.”
That is sensible advice. It doesn’t make sense normally to raid your pension in order to clear debts in a DMP, especially if you have to pay tax on it.
Once you have moved, you will have a better idea of your new living costs. It may be that you will have to reduce the DMP payment… that would make a lower settlement offer more likely to be accepted.
You need to talk to a broker urgently. It may be there won’t need to be a credit check to port the mortgage. It may be that if there is a credit check you would fail it even if you have settled the DMP debts.
Sara says
Hi apologies for the delay in responding.
My pension only has 11k in it so after tax it’s around 9/10k.
Very good advice thankyou. I have already spoken to payplan mortgage brokers ‘clever mortgages’ and they didn’t know the answers to almost every question which is strange considering Payplan use them for their clients. Does anyone know of any that specialise in DMP mortgage queries? I think the best information I have found is on this site and the advice you have given others.
Oh is an old pension from years ago (2009) hence the low value. I have an NHS one I’ve been paying into from 2010 until Covid hit when I lost my job. I have started a new one for my current roe with Legal and general as the NHS one doesn’t apply in higher education
Sara (Debt Camel) says
I suggest you talk to a different broker. I’m sorry but there is zero point in me guessing about porting your current mortgage.
Sara says
Will do thankyou.
Jamie says
Hi, I am currently arranging a DPP through Stepchange and I’m awaiting the last couple of statements from my bank to send to them so they can begin their process.
How long is it likely to take – I read up to 42 days but now I’m concerned it could be done quicker.
Would they be likely to take a payment before the 28th of June? That’s when I get paid and there wouldn’t be enough to meet the payment before then. Would not be a good start. Will they discuss a date prior as I’ve already posted the dd mandate.
Sara (Debt Camel) says
StepChange will agree the first payment date with you. Most people prefer a date that’s soon after they get paid.
Have you already cancelled payments to the debts in your DMP? It’s a good idea, see https://debtcamel.co.uk/stop-debt-payments-before-dmp/. Also this is a good time to open a new bank account if you need one – if you have an overadraft (needs to go into your DMP) or you own your bank for a loan or a credit card, open a new account with a bank you don’t own any money to.
Esh says
Hi Sara
I’m commenting to say a big thank you for all of the advice on this website. I finished my DMP in April 24 and for a very long time , my creditors petrified me. The threatening letters, the scary emails , I was at their total mercy. However, since trying to be more financially literate and informed at the end of last year, I have had a 60% reduction of a debt with a full and final settlement and have also had 3 unaffordable lending claims upheld by the ombudsman and my creditors ( one was compensation of £4000) I currently have 3 more creditors assigned to case handlers at the ombudsman.
You have been invaluable at teaching me that I fo have rights and to know my worth. My creditors did treat me unfairly and I spent too long being too scared and ashamed to see it. I’m not afraid anymore and tackling them head on.
You won’t believe just how much this had changed my life!
Eternally grateful , E x
Sara (Debt Camel) says
Brilliant!
Dominic says
Hi – I have have a DMP with PayPlan set up for a few months now. There are 6 credit cards that have now closed the account with the outstanding balances passed on to a debt collection company (perfectly normal so I’ve told).
I think it’s time to plan my next steps of getting debt free and some advise/confirmation of my next steps would be appreciated.
The six credit cards were all taken out between 20-35 years ago and I doubt they have the original credit agreements. All these cards kept on increasing the limits to such an extent that I became totally reliant on the cards, some lending me in excess of £15k. I think I’m going to go after the credit card companies for unaffordable lending and hopefully get something back. The issues I have are that at over the years I managed to pay off these cards only to build the debt up again. Also more recently the companies slashed my credit limits when I paid them off again, one from £18k down to £500. This caused real issues as I intended to use the credit for work on a house I purchased. I also don’t have the dates etc. when increases occurred but will be more than 7 years.
Do I also now approach the companies that have been passed this debt asking for the copies of the credit agreements? If they are unable to produce the credit agreement what should I do next?
My fear is that the DMP that has been set up might be terminated because of my actions and I certainly am unable to pay my outstanding debts of around £31k
Sara (Debt Camel) says
Can you list the debts in the DMP – original lender, current creditor, rough balance?
Dominic says
Barclaycard – £7522.00
Barclaycard – £3062.00
HBOS – £4425.00
Lloyds – £6203.00
MBNA – £394.00
M&S – £7727.00
As yet I have not been informed who has taken these debts over but all the above credit cards have informed me these are being passed over to another company.
Sara (Debt Camel) says
No loans? So you paid all the cards off from income not consolidation?
Dominic says
No Loans – the Credit cards were paid of from proceeds from House/home Sale, downsizing. They reduced the limits without warning, just did it which caused me issues.
Sara (Debt Camel) says
And the previous times you paid Them off?
Why were you downsizing?
Dominic says
Yes – always from selling a house. My wife & I buy our main home, do it up and sell it on, usually every 3 years. Because of the reduction in credit limit it has halted this process and led us into DMP.
Sara (Debt Camel) says
I think you will find it hard to argue that the credit cards were “unaffordable” when this approach was working well for you for many years. Nor can you argue that the lenders reducing your credit limit is unfair – that is their choice as lenders.
I suggest you ask about the CCA agreements when you know who the current creditors are – if they cannot be produced than the current debts are unenforceable.