Claiming While On A DMP
A Debt Management Plan (DMP) is an informal arrangement to pay creditors at a reduced rate. Unlike an IVA or bankruptcy, a DMP is not a legal insolvency process and your assets — including the right to bring an unaffordable lending complaint — remain yours. You can complain about lending that was given before, during or after the DMP, and any redress is yours, although you can choose to use it to reduce the DMP balance.
Check your agreements on Recoup, our claim partner’s site
The starting position
A DMP is a contractual arrangement, not a court-supervised insolvency. The key practical points:
- Your debts remain owed in full (or, where creditors have agreed write-offs, at the agreed level).
- Interest and charges are typically frozen by participating creditors during the plan.
- You make a single monthly payment to the DMP provider, who distributes it pro-rata to creditors.
- The DMP can be terminated at any time, by you or by your DMP provider.
- Assets, claims and refunds remain yours — there is no trustee or supervisor.
Bringing a complaint while on a DMP
You can bring an unaffordable lending complaint about any of the credit on your DMP — or about credit that has since been settled or written off. The fact that the debt is in a DMP does not prevent the complaint, and the DMP provider does not need to be involved in the complaint itself (though it may help to keep them informed).
The complaint is made to the original lender in the normal way, with the same evidence base — SAR, bank statements, credit file. The lender’s eight-week response window is the same. Escalation to FOS is the same.
How redress interacts with the DMP balance
Where the unaffordable lending complaint succeeds and there is still a balance owed (within the DMP), the typical mechanics:
- The redress is calculated as normal — refund of interest and charges, plus 8% statutory interest.
- The lender (or debt collector if the debt has been sold) applies the refund against the outstanding balance first.
- Any surplus is paid out to you in cash.
- Adverse credit-file entries linked to the unaffordable lending are removed.
- The DMP balance for that creditor is reduced, which may shorten the overall DMP term or reduce monthly payments to that creditor.
Redress on debt that has been sold
Where the original lender has sold the debt to a third party (Lantern, Cabot, Lowell, Intrum), the affordability complaint is still made to the original lender. The mechanics for handling the redress vary:
- The original lender pays redress to you.
- They notify the third party of the affordability finding.
- You can then negotiate with the third party for a corresponding reduction in the balance — particularly persuasive where FOS has formally upheld the case.
In some structures, the third party applies the redress directly against the balance with the original lender’s involvement. Read the redress statement carefully to understand who is doing what.
Should you tell your DMP provider?
Yes, generally. Your DMP provider doesn’t need to authorise the complaint, but they should know:
- A complaint is being made (so they can answer questions if creditors raise them).
- A redress payment is expected (so they can update the DMP records when it arrives).
- Whether you want to apply any cash surplus against the wider DMP, or take it as a personal payment.
Free DMPs from charities like StepChange and Christians Against Poverty are well-used to dealing with affordability complaints alongside the plan. Commercial DMP providers should be similarly supportive — if yours isn’t, that may be a reason to consider switching to a free provider.
What if the unaffordable lending caused the DMP?
It often does. Many DMPs are necessary because of accumulated unaffordable credit — multiple credit cards, payday loans, doorstep loans. Where unaffordable lending was the cause of the wider problem, complaints across multiple lenders can substantially reduce the DMP’s scope. The right approach is usually to:
- Identify all the lending on the DMP that might be unaffordable.
- Bring complaints in parallel rather than one at a time.
- Coordinate the redress with the DMP so that as each complaint succeeds, the relevant balance is reduced.
- Recalculate the DMP periodically based on the corrected balances.
A claim partner that handles multiple lenders can be useful for this kind of co-ordinated approach.
Risk of DMP creditors objecting
A creditor in a DMP cannot prevent you from making an unaffordable lending complaint, and a successful complaint reducing their balance is not “unfair” to them — it reflects what they should have charged in the first place. There is no contractual or legal mechanism for a DMP creditor to pull out of the DMP because of an affordability complaint.
Where the affordability finding produces a refund larger than the balance, the surplus is yours. The other DMP creditors do not have a claim on it. If you want to apply that surplus voluntarily to other DMP debts, you can — but it is your money to keep if you prefer.
After the DMP has ended
If you have completed a DMP — typically by paying off the debts at the reduced rate, or having them written off after a period — you can still complain about the original unaffordable lending. The redress is paid to you in cash (since there is no balance to apply it against), with the standard credit-file correction.
Related guides
- Claiming in an IVA or after bankruptcy
- What if you still owe the lender money?
- Will a claim repair my credit file?
- Do I have an unaffordable lending claim?
- How a claim works step by step
Check If You Could Be Owed Compensation
You may be eligible to complain if a lender gave you credit you couldn’t afford. Start a free check in minutes — no paperwork needed. No win, no fee if you choose to proceed.
