How a Debt Management Plan works

1. We build your budget
We look at your income and essential spending to work out what you can realistically afford each month. This makes sure your payment is manageable and leaves enough for your day-to-day living costs. Learn more about how Debt Management Plan payments are calculated. 

2. We contact your creditors
We explain your situation and offer a reduced payment based on your budget. We’ll also ask them to freeze interest, charges and any legal or recovery action. They don’t have to do this, but many do. Find out more about how we negotiate with creditors on your behalf. 

3. You make one monthly payment
You pay us one amount each month. We take our fee and distribute the rest between your creditors. Making reduced payments can affect your credit rating, which can make it harder or more expensive to get credit in the future.

4. We share your payment fairly
Payments are made on a pro rata basis, meaning the largest share goes to the creditor you owe the most to.

5. We manage communication for you
We deal with your creditors on your behalf, including updates and ongoing contact. Some creditors may still contact you directly, so it’s important not to ignore this. Let them know you’re on a DMP with Money Advisory Centre and pass the details to us so we can handle it.

6. We review your plan when things change
Your plan is flexible. We review it regularly, and you can ask for a review at any time if your circumstances change. Your payment can be adjusted to keep it affordable. If your situation changes for the better, you can pay more to clear your debts quicker. Read more about the benefits of a Debt Management Plan. 

Creditors don’t have to accept a DMP.

However, many do accept reduced payments when they can see:

• your budget has been assessed by a debt adviser
• the payment is fair
• you’re paying as much as you can realistically afford

If you can’t afford your original payments, reduced payments may be the most realistic option. This can make your debts more manageable, but it usually means it will take longer to repay your debts and could cost more overall.

While we’re setting up your plan, creditors may continue to:

• contact you for payment
• add interest or charges
• take legal or recovery action

We’ll work with your creditors to explain your situation and try to reach an agreement. If you’ve already missed a payment, it may help to understand what happens next after a missed credit card payment. 

If a creditor doesn’t accept the proposal, we’ll continue negotiating and discuss next steps with you. There may be small adjustments that help, or we may talk you through alternative options.

A DMP may be suitable if:

• you’re struggling to keep up with repayments
• you have more than one unsecured debt
• you have a regular income
• you can afford a reduced monthly payment

If a DMP isn’t suitable, there may be other options available.

You can explore these on our debt solutions page or give us a call for tailored advice.