Debt Management Plans: What Creditors Can and Can't Do

Disclaimer: This guide explains how the UK debt management system works. It does not provide financial advice.

A Debt Management Plan (DMP) is one of the most commonly discussed arrangements for people dealing with unsecured debt in the UK. It is also one of the most widely misunderstood — particularly when it comes to what creditors are and are not permitted to do once a plan is in place.

This guide explains the rules, protections, and limitations that apply to creditor behaviour during a DMP. It covers the regulatory framework set by the Financial Conduct Authority (FCA), the legal position under the Consumer Credit Act 1974, and the separate protections available through the Debt Respite Scheme (Breathing Space). Each section draws a clear distinction between what is legally enforceable and what is informal or voluntary.

Understanding these distinctions matters, because a DMP does not carry the same legal weight as a formal insolvency arrangement. Creditors retain significant rights, even when a debtor is making regular payments through a plan.

A DMP is an informal agreement between a debtor and their creditors to repay unsecured debts at an affordable rate, managed by a DMP provider who negotiates with creditors and distributes payments. It is not a legally binding arrangement. This means creditors are not compelled by law to accept the terms of a DMP, freeze interest or charges, or stop taking enforcement action.

However, creditors who are regulated by the FCA are required to treat customers in financial difficulty with forbearance and due consideration. The FCA's Consumer Credit Sourcebook (CONC) sets conduct standards that restrict how creditors can behave — regardless of whether a DMP is in place. These rules prohibit certain types of pressure and unfair practices, but they do not remove a creditor's underlying legal rights to pursue a debt.

Separate from the DMP itself, the Debt Respite Scheme (Breathing Space) provides time-limited legal protections from creditor action for eligible debtors in England and Wales. This is a distinct mechanism with its own eligibility rules and is not the same as being on a DMP.

The Nature of a DMP

A DMP is usually used for unsecured debts; some providers may include certain priority arrears as part of budgeting, but a DMP is not designed to deal with secured enforcement. Common unsecured debts included in a DMP are credit cards, personal loans, overdrafts, and store cards.

The plan is managed by a DMP provider, which may be a commercial firm or a free service. Some providers charge fees for their services; organisations such as StepChange offer free DMPs. The provider's role is to negotiate with creditors on the debtor's behalf and to distribute a single monthly payment across the debts included in the plan.

Critically, a DMP does not legally prevent creditors from taking enforcement action against a debtor. The arrangement relies on creditors voluntarily agreeing to accept reduced payments. While many creditors do cooperate with DMPs, they are under no legal obligation to do so.

The Regulatory Framework

The FCA regulates debt management firms and sets conduct standards for creditors through the Consumer Credit Sourcebook (CONC). Two chapters are particularly relevant: CONC Chapter 7, which covers arrears, default, and recovery, applies to lenders, owners, peer-to-peer platforms, and debt collectors. Debt advice and management activity is regulated by the FCA and relevant CONC provisions apply, including rules on debt counselling and debt adjusting where applicable.

These rules create a framework of expected behaviour, but they operate through regulatory standards rather than through the kind of legal immunity that a formal insolvency procedure would provide. The distinction is important: a creditor who behaves unreasonably may be in breach of FCA rules, but the DMP itself does not strip them of their legal rights.

The Consumer Credit Act 1974

The Consumer Credit Act 1974 sets out procedural requirements that creditors must follow before taking certain enforcement actions on regulated credit agreements. Under sections 87 to 89, a creditor must serve a default notice before terminating an agreement, demanding earlier payment, recovering possession of goods or land, treating rights as terminated, restricted, or deferred, or enforcing security. Section 88 specifies that the notice must be in the prescribed form and give the debtor at least 14 days to remedy the breach.

These requirements apply regardless of whether the debtor is on a DMP. They are procedural safeguards built into consumer credit law, not protections created by the DMP itself.

What Creditors Must Do (Under FCA Rules)

The FCA's CONC rules impose several obligations on firms dealing with customers in financial difficulty. These apply to all FCA-regulated creditors, whether or not the debtor is on a DMP.

• Firms must not pressurise customers to pay debts in ways that would have adverse impacts on their financial circumstances. FCA rules prohibit pressurising customers to pay in unreasonably large amounts, within unreasonably short periods, or by raising funds through inappropriate means (such as further borrowing or selling essential assets). FCA guidance specifically notes that pressurising a customer to take pension lump sums is likely to breach these requirements.
• FCA rules require firms to avoid contacting customers at unreasonable times and to respect reasonable contact preferences. The FCA does not specify exact times, but "unreasonable times" would typically include late night or early morning contact.
• Firms must not unfairly disclose or threaten to disclose information about a customer's debt to a third party. They must also take reasonable steps to avoid revealing the debt to third parties through communications or conduct.
• Under CONC 7.15, a firm must not mislead a customer about whether a statute-barred debt is enforceable in court, and must not press for payment if the customer has stated they will not pay because the debt is statute-barred.

Suspension of Recovery Activity

When a customer informs a firm they are developing a repayment plan — for example, through a debt counsellor — the firm must suspend active pursuit of recovery for a reasonable period to allow a repayment plan to be developed (often around 30 days, sometimes extendable where progress is evidenced). This applies whether the customer is working with a debt counsellor, another person acting on their behalf, or developing a plan themselves.

Default Notices

Before taking certain enforcement actions on regulated credit agreements, creditors must serve a default notice under the Consumer Credit Act 1974. The notice must specify the nature of the alleged breach, the action required to remedy it (if capable of remedy) and the date before which action must be taken, or the sum required as compensation (if the breach is not capable of remedy). The date specified must not be less than 14 days after the date of service of the notice.

Annual DMP Reviews

DMP providers should review plans periodically (commonly at least annually) to ensure that a DMP is still the most appropriate arrangement and that the monthly payment realistically reflects what the client can afford.

Breathing Space Protections (England and Wales Only)

The Debt Respite Scheme (Breathing Space) Regulations 2020 provide legal protection from creditor action for eligible debtors in England and Wales. This is a separate mechanism from a DMP, with its own eligibility criteria and legal force.

• There are two types of Breathing Space. A Standard Breathing Space lasts for 60 days, starting the day after the debtor's details are placed on the breathing space register. A debtor can only have one standard breathing space in any 12-month period. A Mental Health Crisis Breathing Space lasts for the duration of the person's mental health crisis treatment plus an additional 30 days after treatment ends. There is no limit on how many times a debtor can enter this type.
• To be eligible, a debtor must have at least one qualifying debt and live in England or Wales. They must be unable or unlikely to be able to repay all or some of their debt when it falls due. Only an authorised debt advice provider can start a breathing space. For a standard breathing space, the debt adviser must review the debtor's financial situation and explore alternative options before starting the process. For a mental health crisis breathing space, no such review is required if the person is receiving crisis mental health treatment.
• Breathing Space covers many personal debts, but eligibility depends on the Regulations and the specific debt type. Some debts are excluded (for example, certain secured lending and some court-ordered liabilities).
• When a breathing space is in place, creditors must stop all recovery and enforcement action on qualifying debts; must not contact the debtor about collecting qualifying debts; and must freeze interest, fees, penalties, and charges. Creditors can only contact the debtor about non-qualifying debts, ongoing liabilities, if the debtor asks to discuss a breathing space debt, in response to queries or complaints, or for court-allowed actions. Protections apply from the start date set out in the breathing space notification.

"My creditors have to freeze interest during a DMP" This is not the case. Creditors do not have to freeze interest and charges during a DMP, and there is no legal mechanism to compel them to do so. While most creditors do agree to freeze or reduce interest when a debtor is on a DMP, this is a voluntary decision. As confirmed by multiple authoritative sources including StepChange and the FCA, a DMP cannot force creditors to stop adding interest.

"Being on a DMP means creditors can't take me to court" A DMP does not legally prevent creditors from taking enforcement action. Creditors can still obtain a County Court Judgment (CCJ) against a debtor who is on a DMP. Being on a DMP demonstrates a willingness to make regular payments, but it does not prevent court action. A CCJ remains on a debtor's credit file and the public register for six years. If paid within one month of the judgment date, the judgment can be removed from the Register. If paid later, it is marked as satisfied but remains visible for six years.

"My creditors can't contact me once I'm on a DMP" Creditors can continue to contact a debtor directly during a DMP, including sending statutory notices required by the Consumer Credit Act 1974. CONC 7.12.3G clarifies that it may be justified for a firm to contact a customer directly when sending a statutory notice, provided the firm takes reasonable steps. DMP providers encourage creditors to direct contact through the provider instead, but they cannot force this.

"There's a set number of times creditors can call me" The FCA's rules in CONC 7.9 do not specify numerical limits on contact frequency. The rules prohibit contact at unreasonable times and require firms not to act in ways likely to be publicly embarrassing, but they do not quantify a maximum number of contact attempts per day or week. The general principle is that excessive contact may be considered improper practice, but no specific numerical cap is defined in the regulations.

"Breathing Space and a DMP are the same thing" They are not. A DMP is an informal, voluntary arrangement with no legal binding force on creditors. Breathing Space is a legally defined moratorium under the Debt Respite Scheme Regulations 2020, available in England and Wales, which legally prevents creditors from taking recovery action for a defined period. A debtor may be on a DMP and also apply for Breathing Space, but the two operate independently under different rules.

Joint Debts

A DMP entered by one joint debtor does not bind the creditor, and the creditor can pursue the other joint debtor in line with the agreement and applicable rules. Joint debts are subject to "joint and several liability," meaning each person is individually liable for the full debt. The DMP only covers the debtor who has entered the arrangement; it does not extend any protection to the other party.

Charging Orders

In most cases, creditors can apply for a charging order to secure an unsecured debt against a debtor's property even during a DMP. Because a DMP is informal and does not legally prevent court action, a creditor who has obtained a CCJ may then seek a charging order. Once a charging order is granted, the creditor may apply for an order for sale, but courts treat this as a separate step and it is not automatic. The risk may be reduced by being on a DMP, but it is not eliminated.

Token Payment Plans

According to published guidance from StepChange, a debtor can receive a CCJ while on a token payment plan (TPP), but it is unlikely that the court would order higher payments than the token amount. This reflects practical court behaviour rather than an absolute legal rule, and outcomes may vary depending on individual circumstances.

Ongoing Liabilities During Breathing Space

During a Breathing Space, a debtor remains legally required to pay ongoing liabilities, including mortgage or rent payments, utilities, and council tax. Breathing space is not a payment holiday. The debt adviser must cancel the breathing space if the debtor has not met these obligations, unless the adviser considers the debtor did not have the financial means to do so.

Statute-Barred Debts

Creditors cannot enforce a statute-barred debt through the courts. However, the rules about when a debt becomes statute-barred depend on jurisdiction and debt type. Under CONC 7.15, firms must not mislead a customer about whether a statute-barred debt is enforceable in court, and must not press for payment if the customer has stated they will not pay because the debt is statute-barred. Limitation periods vary across England, Wales, Scotland, and Northern Ireland.

Provider-Specific Eligibility

There is no universal income threshold or debt-to-income ratio that determines eligibility for a DMP. Eligibility criteria vary by provider, and each provider assesses affordability based on individual circumstances. According to National Debtline guidance, clients may be able to have a free DMP if they can afford to pay at least £5 to each debt every month, though this figure is specific to that provider and may not apply elsewhere.

The practical reality of a DMP sits between two extremes. On one hand, it is not a legal shield — creditors retain the right to add interest, pursue court action, obtain CCJs, and apply for charging orders. On the other hand, the FCA's conduct rules create meaningful constraints on how creditors can behave, requiring forbearance and prohibiting pressure tactics that could worsen a debtor's financial situation.

The FCA's rules mean that while a creditor is not legally bound by the DMP, they are regulated in how they treat customers in financial difficulty. A creditor who ignores a reasonable repayment arrangement and engages in aggressive recovery tactics may be acting in breach of CONC rules, even though they are technically within their legal rights to pursue the debt.

When a customer informs a firm that they are developing a repayment plan, the firm must suspend active pursuit of recovery for a reasonable period to allow a repayment plan to be developed (often around 30 days, sometimes extendable where progress is evidenced). This creates a practical window during which the DMP can be established, but it is not an indefinite pause.

For debtors in England and Wales, the Breathing Space scheme provides a separate, time-limited legal protection that goes further than anything a DMP can offer. During a standard breathing space, creditors must legally stop all recovery action and freeze interest and charges on qualifying debts for 60 days. This is a legally enforceable moratorium, distinct from the informal goodwill that underpins a DMP.

DMP providers should review each plan periodically (commonly at least annually). According to published guidance, DMP providers typically advise that if a plan looks like it could take more than 10 years to complete, a DMP may not be the most appropriate arrangement unless the debtor's circumstances are likely to change. This is guidance rather than a legal limit, and individual assessments will vary.

Does a DMP stop my creditors from contacting me? No. Creditors can continue to contact a debtor directly during a DMP. This includes sending statutory notices required under the Consumer Credit Act 1974. DMP providers encourage creditors to direct communication through the provider, but they cannot compel this.

Can my creditors still charge interest while I'm on a DMP? Yes. There is no legal requirement for creditors to freeze interest or charges during a DMP. While many creditors do agree to freeze or reduce interest voluntarily, this is not guaranteed and cannot be enforced.

Can I get a CCJ while on a DMP? Yes. A DMP does not legally prevent a creditor from obtaining a County Court Judgment. A CCJ remains on a debtor's credit file and the public register for six years. If paid within one month of the judgment date, the judgment can be removed from the Register. If paid later, it is marked as satisfied but remains visible for six years.

What is Breathing Space, and is it the same as a DMP? Breathing Space is a legally defined moratorium under the Debt Respite Scheme Regulations 2020, available in England and Wales only. It is not the same as a DMP. A standard breathing space lasts 60 days and legally prevents creditors from pursuing recovery action or adding interest and charges on qualifying debts. A mental health crisis breathing space lasts for the duration of treatment plus 30 days. Only an authorised debt advice provider can start a breathing space.

How often is my DMP reviewed? DMP providers should review plans periodically (commonly at least annually) to ensure the arrangement remains appropriate and that payments reflect what the client can afford.

What happens if I have a joint debt and enter a DMP? A DMP entered by one joint debtor does not bind the creditor, and the creditor can pursue the other joint debtor in line with the agreement and applicable rules. Joint debts are subject to joint and several liability, meaning each party is individually responsible for the whole debt.

Can creditors call me at any time? FCA rules require that firms must not contact customers at unreasonable times and must pay due regard to reasonable requests about when, where, and how contact is made. However, the FCA does not specify exact permitted hours or a maximum number of contact attempts.

What is a default notice? A default notice is a formal notice required under the Consumer Credit Act 1974 before a creditor can take certain enforcement actions on a regulated credit agreement. It must specify the breach, the required remedy, and give the debtor at least 14 days to respond. This requirement applies whether or not the debtor is on a DMP.

Can a creditor force me to sell my home while I'm on a DMP? In most cases, a creditor can apply for a charging order to secure a debt against a debtor's property, even during a DMP. If a charging order is obtained, the creditor may then apply for an order for sale, though this involves further court processes and is not automatic. The risk may be reduced but is not eliminated by being on a DMP.

• A DMP is an informal arrangement with no legal binding force on creditors. It is managed by a DMP provider and covers unsecured debts only.
• Creditors are not legally required to freeze interest, stop contact, or cease enforcement action because a debtor is on a DMP. Most creditors do cooperate voluntarily, but this is not guaranteed.
• The FCA's Consumer Credit Sourcebook (CONC) sets conduct standards that restrict how creditors can treat customers in financial difficulty. These rules prohibit pressure tactics, unfair contact practices, and misleading claims about debt enforceability — but they do not remove creditors' underlying legal rights.
• The Consumer Credit Act 1974 requires a default notice giving at least 14 days to remedy a breach before certain enforcement actions can be taken on regulated credit agreements.
• Breathing Space is a legally enforceable moratorium available in England and Wales, separate from a DMP. A standard breathing space lasts 60 days and freezes interest, charges, and enforcement action on qualifying debts. A mental health crisis breathing space lasts for the duration of treatment plus 30 days. A debtor can only have one standard breathing space per 12-month period.
• A CCJ can be obtained against a debtor who is on a DMP. It remains on the credit file and public register for six years.
• DMP providers should review plans periodically — commonly at least annually.
• Joint debts remain subject to joint and several liability. A DMP entered by one party does not protect the other joint debtor.

Related: IVA vs DMP vs DRO Compared | [How UK Debt Repayment Plans Work](/guide/how-uk-debt-repayment-plans-work-a-complete-guide-to-the-available-systems) | Breathing Space Scheme Explained.