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How to pay a Debt Management Plan early

How to pay a Debt Management Plan early

It is a good idea to pay off a Debt Management Plan early. There are a number of ways this can be achieved.

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Why would you pay your Debt Management Plan early?

A Debt Management Plan (DMP) only finishes when your debts are paid or settled in full. As such if you are paying a relatively small amount into it every month the agreement can last a very long time.

The problem is that this is demoralising. It can feel like you are paying each month but never getting any closer to becoming debt free. As a result you might consider giving up. Trying to pay off the Plan early will help overcome this.

It is also unlikely that your credit rating will start to improve until your debts are paid in full or settled. If you are thinking about getting a mortgage in the future you will first need to complete your Plan.

A DMP will last for as long as it takes you to pay or settle your debt in full. Based on monthly payments this could take a very long time.

Pay off your DMP early by increasing your payments

One way to pay off your DMP early is by increasing the amount you pay into it each month. If you do this your debts will be paid faster and your Plan will end sooner. Of course increasing your payments is not going to be easy.

You can try to do this by regularly reviewing your living expenses. See if you can make any savings which would allow higher payments. Of course if your income improves you can more easily increase the amount you pay.

If you are able to make extra money available simply increasing your Plan payment may not the best option. Instead you could use a process called snowballing. Concentrate on overpaying one debt. When this is paid move to the next.

Snowballing can be a useful way to pay off a DMP early. You will feel good each time one of your debts is paid off. You can also use it to target difficult creditors who may still be adding interest.

Use a lump sum to settle your DMP debts

It is possible to pay off your DMP early using a cash lump sum. Your creditors will often be willing to accept a one off cash payment and in return write off the balance of the debt.

If you have been in your Plan for 6-12 months creditors will often accept a lump sum of just 50% of the outstanding balance. Depending on the circumstances they might accept less than this. Perhaps as little as 30%.

If you are able to earn extra income you could save the money required to make settlement offers. Alternatively you could use a cash windfall you have received such as a compensation payment or borrow from a family member or friend.

As and when you have available cash lump sums you can settle your debts one at a time. Those remaining will also be paid off faster.

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    10 thoughts on “How to pay a Debt Management Plan early

    1. Sanjay says:


      I am currently in a dmp and have an amex credit card debt thats a part of it. Can I call amex and ask to if they would accept a settlment payment or should i call the company that has made my dmp?

      1. James Falla says:

        Hi Sanjay

        In theory you can approach any creditor and negotiate a settlement payment with them at any time during your DMP. Most debt management companies will support this. You can approach the creditor yourself or get your debt management company to help you.

        If you have been in your DMP for 12 months or more, most creditors will accept an offer of 50% of the outstanding balance.

        The only time this may not work is if your dmp is being managed by Stepchange. Generally speaking they do not support early settlement of debt unless you can afford to settle all your debts at the same time. They do not like you settling one and not the others. As such if you are with Stepchange it is always worth checking with them before contacting any of your creditors. At the end of the day they cant stop you but they may cancel your plan with them and you would need to move to another company.

    2. Sall says:

      If a dmp is settled earlier for a lower amount, does this have a more negative impact on my credit score than paying it off in full

      1. James Falla says:

        Hi Sall

        If you settle a DMP early, this will not be any better or worse as far as your credit score is concerned than if you continue to pay your plan as normal. It would have no immediate beneficial effect on your credit rating. The record that your debts existed (although now settled) will still remain on your credit file (normally for 6 years from the date of the settlement).

        That said, once your debts are settled you can start improving your credit rating. So in this way your credit score will get better faster than if you continued paying your plan and eventually paid your debt in full.

    3. Pauline says:

      If I pay off my DMP early by increasing monthly payment can I get 50% off

      1. James Falla says:

        Hi Pauline

        Of course, you will pay off your DMP more quickly if you increase your monthly payment. However, simply doing this will not mean you get 50% off your debt.

        The only way to achieve this would be to offer a lump sum payment. So if your total remaining debt is £8000, you could offer £4000 to clear the lot. This would normally be acceptable.

        Alternatively, if you can’t afford 50% of your total debt then it is normally possible to “pick off” one debt at a time by offering 50% of that debt to that creditor.

    4. Fiona says:

      Should I let the company dealing with my DMP negotiate with my creditors for early settlement reduction or contact the myself as then I won’t have to pay DMP company a fee

      1. James Falla says:

        Hi Fiona

        It is entirely up to you. If you feel confident to negotiate yourself, there is nothing to stop you doing so. If this is going to save you money, I would recommend it it.

    5. Amy M says:

      Hiya I was just wondering, if I clear my debts on my debt management plan early does my credit rating improve or am I still blacklisted for the 6 years from when the plan started?

      1. James Falla says:

        Hi Amy

        If you pay your debts early, your credit rating will not improve immediately. The record of the debts and the fact you were behind with the payments will remain on your credit file for 6 years from the date you pay them off. As such your credit rating will initially remain poor and you will still struggle to get credit in the short to medium term.

        That said, once your debts are paid, there are things you can do to start repairing your credit rating. One of the best ways of doing this is by using a credit repair credit card.

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