A DMP is an informal agreement between you and your creditors for paying back your non-priority debts. Non-priority debts are things like credit cards, loans and store cards. You pay back the debt by one set monthly payment, which is divided between your creditors.
Most DMPs are managed by a DMP provider who deals with your creditors for you. This means you don't need to deal with your creditors yourself. A DMP is not legally binding, meaning you're not tied in for a minimum period and can cancel it at any time.
A DMP may be a good option if the following apply to you:
you can afford the monthly repayments on your priority debts (such as mortgage, rent and council tax) and your living costs, but are struggling to keep up with your credit cards and loans
you’d like someone to deal with your creditors for you
making one set monthly payment will help you to budget.
However a DMP may take longer to repay all the debt as you are making a lower payment on your debts. And your credit rating will be affected negatively as you are not making contractual payments on the debts. And unlike an IVA, creditors in a DMP don’t have to freeze interest (though the often do). Finally some DMP companies do charge fees.