DMC’s are they good for consumers

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A 'DMC' or DMP' are terms used to describe a Debt Management Plan. This is a a resource for consumers who are finding it difficult to correctly manage their existing credit based commitments. There are a number of companies who are available to consumers who can offer such a service. A DMP allows consumers to place the management of all their debts in a central point or Debt Management Company. Like any consumer market there are positives elements to this service as well as drawbacks. Today we will be investigating this a little further.

Given a DMP is managed by a third party, this means as consumers able to take a step back from working with their lenders directly. In the case of most DMC's a customer will provide all the information concerning their existing accounts to an appointed account manager and then they will contact the creditors directly. Once all the required information has been gathered the DMC will formulate a repayment proposal for each exisiting creditor. Typically the customer will make 1 monthly payment to the DMC and the repayments will be paid directly by the DMC to the creditor on a monthly basis, either via a bank transfer or cheque.

Whilst creditors in a general sense are open to working will DMC's, it is important consumers understand that the responsibility for the debt still lays with them. Due to this fact it is important to maintain a regular relationship with the chosen DMC to ensure the plan is being managed effectively.

So on the positives a DMP give the borrower that distance from the lender if they feel uncomfortable dealing with them, it gives expert assustance in working out budgets and allows them to make just one payment per month for all their debts...So what are the disadvantages then?

Some of the DMC's that exist charge a fee for the service they provide. Where we cannot expect to get 'something for nothing' in todays society, if we are already struggling with money and there is a opportunity to use a free of charge service than we should seriously consider this. Afterall, if we have £100 per month to put towards our debts and even £15 of that is taken as fee by the DMC that means only £85 is paid to the creditors. This will mean not only does it take longer to clear the debt, but costs more overall. Below are a few of the Non Charging DMC's and advice organisations that some of our customers are using.

  • Money Advice Service (
    Set up by the Government, this is a service providing a wealth of information to help people manage their finances, including help with debt management.
  • StepChange (
    StepChange provides expert advice, has online guides and tools, and through them you can set up a DMP.
  • Adviceguide (
    Run by the Citizens’ Advice Bureau providing advice, online tools, and sample creditor letters.
  • PayPlan (
    The largest provider of free debt solutions, PayPlan have been operating for over 20 years and have helped over a million consumers in that time.