What Is A Debt Management Plan?
It is an informal arrangement under which you make one monthly payment to a provider, which divides it between the people you owe. The regulator’s own word for it is non-statutory.
A debt management plan is an informal arrangement rather than a statutory scheme. No Act of Parliament creates it, nothing prescribes its form, and it binds nobody by force of law.
- Part of your pay is protected by law
- The deduction is set by statutory tables, not the creditor
- An arrestment can be stopped or replaced
- Free & confidential
- No obligation
Thinking about a debt management plan? Get free advice on how it works.
Free, confidential and no obligation.That matters more in Scotland than anywhere else, because the alternatives here are statutory and the plan is not. The Debt Arrangement Scheme is written into Scots law and a plan is written into a contract.
What makes a plan work is agreement rather than law. Each creditor decides for itself whether to accept the reduced payment, whether to stop adding interest and whether to keep chasing you.
What does informal actually mean here?
It means the arrangement is a matter of agreement rather than statute. The Financial Conduct Authority’s glossary defines a debt management plan as a non-statutory agreement between a customer and one or more of the customer’s lenders.
Read that definition closely and three things fall out
The regulator itself uses the word non-statutory, which is worth quoting to anybody who tells you a plan is a legal process. It is not.
It also requires a third party to administer the plan and distribute the money. So an arrangement you negotiate yourself is a perfectly sensible thing to do and it sits outside the defined term.
And it is an agreement with one or more of your lenders. A plan can exist and run where some creditors have refused to take part.
What is binding, and what is not
What is binding is your contract with the provider, not the plan itself. The creditors are not parties to it.
StepChange’s own client agreement puts the creditor side in the client’s voice: creditors may continue collection activity including defaulting accounts, charging interest and taking legal action, and the charity will try to but cannot prevent it.
The characteristics in one place
| The point | The position under a debt management plan |
|---|---|
| Legal status | Non-statutory. That is the regulator's own word for it |
| What binds you | Your contract with the provider, not the plan |
| What binds your creditors | Nothing. Each one decides separately |
| Interest and charges | Frozen only where the creditor agrees to freeze them |
| Effect on diligence | None. Nothing in Scots law attaches any consequence to a plan |
| Public register | None exists |
| Debt written off | None inherent. The balances are repaid in full unless a settlement is separately agreed |
| Ending it | You can stop at any time, and StepChange's own agreement says so |
| Where it is available | Across the United Kingdom, including Scotland |
Which debts normally go into a plan?
Ordinary unsecured credit. Priority debts in Scotland are normally dealt with separately, because the consequences of not paying them are faster and harder.
The usual split
| The debt | Usual position | Why |
|---|---|---|
| Credit and store cards | Usually included | Ordinary unsecured credit |
| Personal loans and overdrafts | Usually included | Ordinary unsecured credit |
| Catalogue and payday credit | Usually included | Ordinary unsecured credit |
| Council tax arrears | Usually outside a plan | A council uses a summary warrant rather than an ordinary court action |
| Rent and mortgage arrears | Usually outside a plan | The consequence is losing the home, which a plan cannot hold back |
| Gas and electricity arrears | Usually outside a plan | The consequence is disconnection |
| Court fines and child maintenance | Outside a plan | Enforced under their own regimes, which a plan does not reach |
| Ongoing bills of any kind | Never in a plan | This month's rent, council tax and utilities carry on being paid as normal |
Council tax is the clearest Scottish example. A council does not raise an ordinary court action, and our council tax debt advice page sets out what a summary warrant lets it do next.
Practice varies between providers
Some providers will administer priority arrears alongside a plan while the ongoing bills stay outside it, and others will not. Ask yours in writing which debts it has included and which it has not.
Providers generally advise including every eligible debt. A creditor left out may refuse the arrangement on the basis that it is being treated less favourably, and which debts you can include goes through the whole list.
What happens to interest, charges and creditor contact?
No creditor has to freeze interest because you are on a debt management plan. No statute requires it and no Financial Conduct Authority rule requires it.
What the rules do require
What the Financial Conduct Authority does require is forbearance. Its rule at CONC 7.3.4, in force since 4 November 2024, says a firm must treat customers in or approaching arrears with forbearance and due consideration.
Suspending, reducing, waiving or cancelling interest is the first of the Handbook’s examples of what forbearance can look like. Those are examples in guidance rather than a duty to freeze.
The distinction is the whole answer, and no ranking page draws it. CONC 7.3 carries both, and one is a rule while the other is a list of examples.
Two limits that bite hardest in Scotland
Those rules bind only firms the Financial Conduct Authority regulates. They do not reach your council for council tax, HMRC, or the Child Maintenance Service.
Those are exactly the debts most likely to end in an arrestment. National Debtline’s Scottish guide puts the general position in one sentence: creditors do not have to freeze interest under a plan, and the provider has to persuade each of them.
You are entitled to be told what happened
CONC 8.8.1R, a rule in the debt management chapter requires a provider to tell you what came out of the negotiations, including where a creditor refused to freeze interest or charges accruing.
So you should hear creditor by creditor rather than working it out from statements. Whether a plan freezes interest deals with the question in full.
Who runs a debt management plan, and how are they regulated?
A firm authorised for two regulated activities, in most cases. Article 39E of the Regulated Activities Order is debt counselling and article 39D is debt adjusting.
Who needs authorisation, and who does not
| The activity or term | What it covers | Where it comes from |
|---|---|---|
| Debt counselling | Giving advice to a borrower about the liquidation of a debt due under a credit agreement | Article 39E of the Regulated Activities Order |
| Debt adjusting | Negotiating terms for the discharge of a debt on the borrower's behalf, taking over the obligation, or any similar activity | Article 39D |
| Who needs authorisation | Any firm carrying on either activity by way of business, including a not-for-profit debt advice body holding those permissions | CONC 8.1.1R, with CONC 8.1.2G |
| Who is outside it | Five exclusion articles cover people connected to the agreement, certain energy suppliers, certain land agreements, members of the legal profession and pensions guidance | Articles 39H to 39L |
| The Handbook term "debt management firm" | Defined to exclude a not-for-profit debt advice body, so some rules aimed at firms do not bind the charities | Glossary definition G3206 |
CONC 8.1.1R, a rule, applies the debt management chapter of the Handbook to every firm with respect to debt counselling and debt adjusting. CONC 8.1.2G is the guidance confirming that reaches not-for-profit bodies holding those permissions.
One Handbook term is narrower than it looks
The glossary defines a debt management firm so as to exclude a not-for-profit debt advice body. So a rule addressed to a debt management firm does not bind StepChange, Christians Against Poverty or National Debtline.
There are also exclusions in articles 39H to 39L. We are not going to tell you whether your solicitor or your energy supplier is inside one, because the operative wording was not read.
Checking a firm before you deal with it
The Financial Conduct Authority tells consumers to check its Financial Services Register to make sure the firm is authorised and has permission for the services it is offering. How to check a firm is authorised sets out what to look for.
Struggling to keep up with several debts at once? Get free help
Free, confidential and no obligation.How does a plan show up on your credit file?
The plan is invisible and the accounts are not. StepChange says both halves in one place: nowhere in your credit report shows you are on a plan, but each account in it can show that payments are made through one.
Why the accounts are different from the plan
The accounts inside a plan are consumer credit accounts held by lenders who report to the credit reference agencies. They are being paid less than the contractual amount, and that is what gets recorded.
Experian says creditors should add a flag to the account entries to show that payments are coming through a plan, and that a creditor may record a default even where it has agreed the plan.
What sets the six years
Not law. No statute, no statutory instrument and no Financial Conduct Authority rule sets it, and whether a plan affects your credit score sets out who does.
The published sources give six years and disagree about when it starts, some from the date of the marker and some from settlement or default. The two positions do not reconcile and no source resolves them.
Check the date shown against each account on your own file rather than assuming which one applies.
What does a debt management plan not do in Scotland?
A plan does not stop enforcement. It has no statutory effect on diligence at all.
What can still happen while a plan runs
A charge for payment can be served, an earnings arrestment can go to your employer without any further court step, and a bank arrestment can be executed. Whether a plan stops a wage arrestment is the page that answers this properly.
National Debtline’s Scottish guide is blunt about it, and says a debt payment programme under the Debt Arrangement Scheme is usually a much better option than a free debt management plan.
What does have legal force here
| The route | What it does | Where it comes from |
|---|---|---|
| A debt management plan | No statutory effect at all | There is no Act and no regulations |
| A time to pay direction | Applied for at or before decree | Section 1 of the Debtors (Scotland) Act 1987 |
| A time to pay order | Applied for after decree, and the sheriff must recall an existing earnings arrestment | Section 9(2)(a) of the same Act |
| A statutory moratorium | Six months of protection from new diligence | Part 15 of the Bankruptcy (Scotland) Act 2016 |
| A debt payment programme under the Debt Arrangement Scheme | Freezes interest and charges, and approval recalls an arrestment of your income | The Debt Arrangement Scheme (Scotland) Regulations 2011 |
| Sequestration or a protected trust deed | Formal insolvency, binding on every creditor | The Bankruptcy (Scotland) Act 2016 |
The difference between a plan and the statutory scheme sets the two out against each other, and a plan against sequestration does the same at the other end of the scale.
One more Scottish point worth knowing
Under section 6 of the Prescription and Limitation (Scotland) Act 1973 an obligation can be extinguished after five years without a relevant claim or acknowledgment.
Making a payment is an acknowledgment, so paying under a plan keeps a debt alive. If any of your debts are old, take advice before making a payment on them.
How many people in Scotland are on a debt management plan?
Nobody publishes a figure. The Accountant in Bankruptcy excludes informal plans from its statistical releases in terms, and no charity or agency publishes a Scottish count.
The exact position
Its April to June 2026 release, published on 22 July 2026, says non-statutory debt solutions are cases where debtors make their own arrangements with creditors or enter informal debt management plans through a debt management firm, and that these are not included.
StepChange’s Scottish report gives a number of new advice clients rather than a solution breakdown, and its United Kingdom statistics page does the same. Neither is a plan count.
Why that is worth saying rather than working around
A figure would be easy to invent by borrowing a United Kingdom number or by treating an advice client as a plan client. Both would be wrong and neither would be a source.
It also tells you something real about the product. There is no register because there is no statute, and how a plan works follows from that at every stage.
Where to get help deciding
Citizens Advice Scotland, StepChange, National Debtline and Advice Direct Scotland all give this advice at no charge, and whether plans are free or charge fees explains how a free provider is funded.
Nobody in Scotland has to pay to set up or run a plan. That is worth knowing before you agree to anything.
Frequently asked questions
Is a debt management plan legally binding?
The plan does not bind your creditors, and the Financial Conduct Authority’s own glossary calls it a non-statutory agreement. What does bind you is the contract you sign with the provider.
Does a debt management plan appear on a public register?
There is no register of debt management plans in Scotland. The Accountant in Bankruptcy also excludes informal plans from its statistical releases, because they are non-statutory arrangements.
Do you have to use a company to set one up?
No, and you can negotiate directly with your creditors using your own budget, with National Debtline publishing guidance for doing exactly that. The Handbook definition of a plan assumes a third party administers it.
Are all providers regulated?
Any firm carrying on debt counselling or debt adjusting by way of business needs authorisation, and that includes not-for-profit debt advice bodies holding those permissions. Check the firm and its permissions on the Financial Services Register.
Will your creditors stop adding interest?
They do not have to. No statute and no Financial Conduct Authority rule requires it, and the Handbook’s interest wording sits in guidance giving examples of forbearance rather than in a duty to freeze.
Can you include council tax arrears in a plan?
Council tax is a priority debt in Scotland and is normally dealt with separately, because a council enforces by summary warrant rather than by an ordinary court action. Some providers will administer priority arrears, so ask yours.
Can your wages still be arrested while you are on a plan?
Yes, because a plan has no statutory effect, so a creditor with a decree or a summary warrant can still instruct an earnings arrestment. Get advice quickly if a charge for payment arrives.
How long does a plan usually run?
Until the included balances are cleared, so the length is your total debt divided by your monthly payment. The free plan National Debtline refers clients to screens for whether the debts can be repaid within ten years.
Related guides
- How Does A Debt Management Plan Work? One monthly payment worked out from what is left after your household costs, split between creditors, and what it will not stop in Scotland.
- How Do You Set Up A Debt Management Plan? What to have ready, whether to use a provider or do it yourself, the steps in order, and what to check in the paperwork before you sign.
- Which Debts Can You Include In A Debt Management Plan? The unsecured credit a plan is built for, the priority debts that stay outside it, and why council tax works differently in Scotland.
- Does A Debt Management Plan Freeze Interest And Charges? Why nothing forces a creditor to freeze interest, which debts the FCA rules never reach, and what to do when a creditor keeps charging.
- Are Debt Management Plans Free Or Do They Charge Fees? Which providers charge nothing, how the free ones are paid, what a fee takes off your balance, and how the Debt Arrangement Scheme compares.
- Does A Debt Management Plan Affect Your Credit Score? Why the plan itself never appears, which markers creditors add to the accounts, how long they last, and what happens once the plan ends.
- Does A Debt Management Plan Stop A Wage Arrestment In Scotland? Why an informal plan has no effect on a running arrestment, what does stop one in Scotland, and what a statutory moratorium covers.
- What Is The Difference Between A Debt Management Plan And The Debt Arrangement Scheme? Who has to agree, what happens to interest and charges, which debts go into each, what each one costs, and what reaches a public register.
- How Do You Check A Debt Management Company Is FCA Authorised? How to read a firm's entry on the Financial Services Register, which permissions it needs, and how to tell an adviser from a lead generator.
- Is A Debt Management Plan Better Than Sequestration In Scotland? Which route protects you from a wage arrestment, what happens to interest, what each costs, how long each lasts, and what shows publicly.
Written as general information about Scottish debt law rather than regulated financial or legal advice, and your own circumstances may change the answer. Free, impartial help is available from Citizens Advice Scotland, StepChange, National Debtline and Advice Direct Scotland.