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Debt Management Plans In Scotland

Different Types of Debt Management Plans

How Do They Work?


An adviser looks at your income and expenses. They work out how much you can afford to pay to your debts.


The adviser contacts your creditors and gives them your details. They explain why you need a reduced payment. They ask for interest and charges to get stopped by creditors.


Your creditors are likely to agree to a fair repayment plan. They’re likely to agree to stop interest and charges. Neither of benefits are guaranteed. You rely on the goodwill of your creditors.

Benefits Of Debt Management For Residents Of Scotland

  • Help dealing with your creditors


  • Make a single payment every month


  • Money set aside for bills and expenses


  • Interest might get stopped


  • The plan can change if needed


  • You can end the plan at any time


Drawbacks Of Debt Management For Residents Of Scotland

  • Damaged credit rating


  • Creditors may not agree


  • Interest and charges may continue


  • A restricted budget during your plan


  • No debt written-off


How Long Is A Debt Management Plan?


These plans don’t run for a fixed time period. You continue making payment until your debts are cleared.


If your debts are modest, the repayment term may be short. If you can pay a large amount each month, the repayment term might be short.


The opposite may be true of your debts are large. It may also be true if you can’t afford to repay very much. In these cases a debt management plan might last too long.


Will Interest And Charges Get Frozen?


Creditors often suspend interest and charges. They accept you’re in financial difficulty. They want to be seen to assist you. Their regulator expects them to assist you.


A debt management plan does not guarantee interest will stop. Each creditor makes a separate decision. Where they do agree, this may not be immediate.


Will Creditors Accept Debt Management Plans?


Creditors tend to accept fair debt management plans. They accept you’re in financial difficulty. Accepting a reduced payment demonstrate they’re supporting you. Their regulator expects them to support you.


Acceptance isn’t guaranteed. Creditors retain the right to chase the debts. They retain the right to take legal recovery action.


Can You Enter A Joint Plan?


You can enter a debt management plan alone, or together with your partner.


Can You Switch Out Of A Plan?


You’re not bound into an informal debt management plan.


You can choose to cancel the plan and deal with your debts another way.


Will It Affect My Credit Rating?


Like other debt solutions, a DMP will affect your credit rating. The effect will be negative.


It’s initially less damaging than personal insolvency. Personal insolvency includes trust deeds and bankruptcy.


A debt management plan may last for a long time. The negative effect on your credit rating may be extended.


Who Regulates Debt Management Plans?


This service is regulated by the Financial Conduct Authority. Only authorised firms can deliver the service.


You can check whether a firm is authorised by the FCA here.


Is My Money Safe?


Debt management payments may be covered by the FSCS.


If you make payment to an authorised firm that fails, your money should be protected.


What Fees Are Payable?


You have a choice. Commercial providers of debt management charge you a fee. This fee should get agreed before you go ahead.


Free-to-client debt management services are also available. Contact the Money Advice Service. They can connect you to free debt management services.


Is There A Public Record Of Debt Management Plans?


Unlike formal debt solutions, no public record gets kept.


This may be helpful if you have a special reason to stay off public registers.


Can Debt Management Be A Short-Term Measure?


You may have a temporary financial problem. Are you expecting to receive a lump sum in the future? Are you expecting your income to increase in the future?


Debt management could help to manage your creditors in the short-term. You’ll be free to leave the plan in the future.


Prevented from starting a trust deed due to recent gambling activity? A DMP could be a temporary measure to manage your debts.


Can I Leave A Debt Out Of A Debt Management Plan?


You cannot leave debts out of formal debt solutions. Debt management may be more flexible.


The provider will decide whether they’ll accept this. They’ll want to know that it’s in your best interests. They’ll need to assess whether your other creditors will support this.


This may apply to a guarantor loan. There are scenarios where it makes sense to leave guarantor loans out of plans.


This may apply to family and friends debts. You may not be prepared to stop paying them. It might not be possible to pay them while using formal debt solutions.


Contact us if you’d like to discuss a special situation like this.


Can I Operate My Own Debt Management Plan?


You don’t have to use a professional service to manage your debts.


It’s possible to contact your own creditors. You can try to make direct arrangements with them.


Be ready to discuss your income, expenditure, assets, and other debts. Also be ready to send them the regular payments that get agreed.




Informal debt management plans can be helpful. They are often successful. Your debts can get cleared over time. The lack of creditor protection is one major flaw. The chance that interest continues to get charged is another risk.


The Debt Arrangement Scheme (DAS) may be a better option. You will have increased protection and certainty.


You should also review trust deeds and bankruptcy. They might be a cheaper and faster way to deal with your debts.


Getting Advice


Please contact us for advice about debt management plans.


We can explain the pros and cons of starting a DMP. We will advise you about your other options.


Author: Andrew Graveson

Qualified Debt Adviser & Founder


Page last updated: 13/08/2019



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Telephone calls may be monitored or recorded. Authorised and regulated by the Financial Conduct Authority., Clyde Offices, 2nd Floor, 48 West George Street, Glasgow, G2 1BP. Tel: 0141 2490416.


(c) Channel Active Limited. Company Number: 06412452. Data Protection Registration: Z1332750.

Telephone calls may be monitored or recorded. Authorised and regulated by the Financial Conduct Authority., Clyde Offices, 2nd Floor, 48 West George Street, Glasgow, G2 1BP. Tel: 0141 2490416.