Paying off a debt management plan early

If you’re on a DMP, you may be able to pay off your debts early by increasing your monthly payments or paying a lump sum towards your debts. 

Increasing your monthly payments

You may be able to increase your monthly payments if your income goes up or your expenditure goes down.

If this happens and you’re keen to pay off your debts as soon as possible, let your DMP provider know. They’ll be able to work out how much more you can afford to pay each month. 

Pay a lump sum

If you come into some money during your DMP, e.g. a bonus, redundancy payment or inheritance, you may choose to put it towards paying down your debts.

If you want to do this, let your DMP provider know and they’ll advise you on your options.

You may be able to:

Split the money between your creditors

If the amount you’ve received isn’t enough to settle your debts, your DMP provider could split it fairly among your creditors, meaning you’ll pay off what you owe more quickly.

Full settlement

If you’ve received enough money to pay off your debts in full, you could pay what you owe and your DMP will come to an end early. 

A full settlement will stay on your credit file for six years from the date it was agreed. If you’re looking to borrow again during this time, creditors may look favourably on the fact that you paid back what you owed in full.

Partial settlement

A partial settlement involves paying off part of your debt and asking for the rest to be written off. You can either ask your lenders directly for a settlement figure or your DMP provider can do it for you. 

Be aware that your credit file will show you made a partial settlement for six years after it was agreed. During this time, creditors may be more reluctant to lend to you than if you’d paid back your debts in full.

A DMP is an informal agreement so you’re free to cancel it whenever you want but you’ll need to work out another way to pay off your debts. If you just stop paying creditors who have agreed to a DMP, they may take further action to recover what you owe.

If you’re thinking of cancelling your DMP, get in touch with your provider to make sure you won’t be worse off.

Your credit score will usually start to improve after your debts have been cleared, so paying off your DMP early could speed up this process.