In some cases store cards can be an expensive way of borrowing money. On the one hand, if you pay back the debt in time, you need never pay any interest at all. On the other hand, because of the high interest rates a lot of cards come with, the debt can grow quite quickly if you don’t pay it all back in good time.

This can lead to debt problems. And even if you’re managing your debts well, a sudden change in your circumstances (e.g. a cut in your working hours, or an increase in your mortgage costs) could leave you unable to pay back what you owe the way you agreed to.

If you can’t afford to repay your store card debts – or any other debts – for any reason, it’s important that you find an approach that can help. One option may be a Debt Management Plan (DMP).

What’s a Debt Management Plan?

A DMP is an informal agreement between you and your unsecured lenders for reduced monthly debt repayments based on what you can afford. This can last until your circumstances improve, or until your unsecured debts have been cleared.

Your lenders are under no obligation to agree to this, but they may well do if they can see that you genuinely can’t afford your existing repayments. If they do agree, you may also be able to negotiate a freeze or reduction in interest and other charges, which can stop your debt from getting any bigger.

However, there are a few downsides. Failing to make the payments you originally agreed will have an impact on your credit rating, and because you’ll have to pay as much as you can towards your debts, you won’t have much money for anything except essentials.

Is a DMP right for me?

DMPs are only suitable for people who are really struggling with their debts. You must be able to demonstrate to your lenders that you can’t afford your existing repayments, but can still afford to repay your debts in full with smaller payments.

However, even if you qualify, it may not be the best debt solution for your specific circumstances. There are a range of debt solutions that may be available, and it’s important that you speak with an expert debt adviser about which one best meets your needs before you commit yourself to anything.