Money Advice, Debt Advice & Debt Help
Can you write off debt with a Debt Management Plan

Can you write off debt with a Debt Management Plan

Can you write off debt with a Debt Management Plan

A Debt Management Plan is a flexible solution, but can you use it to write off debt?

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Automatic debt write off?

Unlike formal debt solutions like an IVA, Bankruptcy or a Debt Relief Order, a DMP does not offer automatic debt write off. The essence of the Plan is that you will still pay everything that you owe in full but based on lower payments over a longer period of time.

This is one of the major downsides of this type of debt solution. You are committed to pay all for your debt. You will normally be facing a very significant extension to the number of months and years over which you will have to make payments.

Having said that it is a flexible solution. It is possible to negotiate DMP debt write off. Once you have started making payments you can offer creditors lump sums to settle debts. Creditors are often keen to clear bad debts and may be happy to write off a certain amount of your debt.

The level of debt write off in a DMP is typically much lower than a formal solution like an IVA. However it is still worth negotiating either yourself or through a DMP provider.

Debt write off during a DMP with a lump sum

A lump sum settlement is the offer of a single cash payment towards a debt, on the agreement that any remaining debt is then written off. Using lump sum offers in this way can help you to write off significant amounts of debt and ensure that your DMP is paid off faster.

This is attractive to your creditors is because if you are making small payments towards your debts each month, it will probably take a very long time to pay them in full. Chasing and collecting multiple small payments from you also bears a cost they would rather not pay.

The level of informal debt write off will vary. It could be 50% or more, so it is worth negotiating. It is also better to wait until you have been in a DMP for over 6 months. By then your debt will have passed to collection departments or agencies who have more power to agree settlement deals and forgive debts.

One great advantage with DMP debt write off, is that you can settle debts individually rather than having to deal with all your creditors at once. This means you only need smaller lump sums to start getting the debts cleared.

Options for getting a lump sum together?

Clearly to be able to offer a settlement and try to get some of your debt written off you need to have access to a lump sum. If you are lucky enough to be able to borrow money from friends and family then this is obviously a great option.

However if you have no-one who might be able to lend you funds, the alternative is to start saving a small amount of your disposable income each month to put towards a lump sum.

Making agreements with your creditors by using lump sums in this way is an extremely good way of writing off debt while you are in a DMP and ensuring that the time it takes to repay your creditors is significantly reduced.

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    4 thoughts on “Can you write off debt with a Debt Management Plan

    1. Juliane says:


      I’m just looking at options I’m currently on a DMP but my partner thinks I should just declare bankrupt and everything will be okay. Is this right? I owe about £15,000 and am paying £800/mth. What is your advice?

      1. Hi Juliane

        Bankruptcy is not a sensible option for you. You might not be aware that if you go bankrupt you still have to pay your surplus income towards your debt. These payments last for 3 years.

        As such if your surplus is £800/mth as you say then you would end up paying £28k (£800 x 36 mths). That would make no sense given you only owe £15k. You are better off sticking with your DMP and paying your debt off in the next 18 months or so.

    2. Debbie M says:

      My husband doesn’t work now as he is disabled. He is 65. I am his carer. I have been paying off my DMP for a few years now. It’s getting more and more difficult to make ends meet. Will my creditors write off any of my debt?

      1. Hi Debbie

        You should speak to your DMP company about any help they might be able to offer in regards negotiating debt write off with your creditors.

        If this is not possible and you are not a homeowner, I would then advise you to consider the option of stopping your DMP and looking at either a debt relief order or going bankrupt. Both of these options would mean your debts are written off.

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