Can I Pay Off My Debt Management Plan Early? StepChange (2024)

FAQs

Can I pay StepChange early? ›

Debt management plans (DMP) are flexible. This means you may be able to pay off a DMP early. You can do this by increasing monthly payments or paying a lump sum.

There are no penalties for making extra payments on a debt management plan. The good news is that making extra payments on a debt management program is completely penalty and fee-free. You won't get charged anything or face early repayment fees as you see with some types of loans.

When your DMP ends, you can close the accounts you've paid off, or start making full payments again. Your score should recover over time if you continue to meet all repayments. Records of your debts will take six years to drop off your report, but lenders may pay less attention to them as they age.

You can aim to include all debts in a debt management plan, but not all debt will qualify. Mortgages and other secured debts are not covered by a debt management plan, but in many cases it makes sense to include all of the debt that qualifies.

The accounts you are repaying your DMP through will already be listed on your credit report, and once the DMP is complete the marker will be removed and the accounts themselves will be marked as closed – they will then remain listed for six years from the settled date.

Paying your credit card early does not affect your credit score in and of itself, but how it impacts your other finances does. If you pay your bill early and lower your credit utilization from 70% to 30%, that can have a positive impact on your credit score.

2. Don't make extra payments to your creditors on top of your DMP payment. This could suggest to your creditors that you've got extra money to pay towards your debts, or that your budget is inaccurate.

DMPs and Your Bank Account

You can often continue using your current bank account as normal. However, as specialists in DMPs, we recommend that you change your bank account if you have an overdraft that you have used and are now applying for a DMP.

The 6-Year Mark in a DMP

In the UK, most negative information stays on your credit report for 6 years. This includes missed or late payments, defaults, and other markers of financial difficulty. Therefore, after 6 years, these markers start to disappear from your credit file, which can improve your credit rating.

Do Debt Management Plans hurt your credit? ›

If you're in a debt management plan (DMP), it may have an impact on your credit rating. This could mean you find it more difficult to get credit in the future.

it may take longer to pay back your debt because you'll be paying less each month. your creditors won't necessarily freeze the interest and charges on your debts, so the amount you owe might go down by less than you think.

It is not possible to get a payment break on a DMP or TPP. Your budget should be put together in a way that means you can afford to make payments toward your debts and household living costs.

Do I have to include all of my credit cards on the plan? All unsecured debts should be included on your debt management plan. However, exceptions can occasionally be made. Discuss any accounts you'd like to keep open with your counselor.

You can start rebuilding your credit rating when you pay off your IVA early. The IVA stays on your credit report for six years from the date that it is approved. That means: It may affect if you can get credit.

You can make a payment with your debit card over the phone by calling us on 0300 303 5300. Our opening hours are Mon to Fri 8am to 6pm.

You can make payments to our account through internet banking or bank transfer. Usually, payments can be sent to us before the 15^th of the month without issue, but please call us first to confirm the cut-off date.

Don't make extra payments to your creditors on top of your DMP payment. This could suggest to your creditors that you've got extra money to pay towards your debts, or that your budget is inaccurate.