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New Year, New Debt? We’re here to help you

The start of the New Year can be a difficult time for people trying to deal with debts leftover from Christmas. Citizens Advice Peterborough is here to help with a few top tips on paying off your debts.

If you’re struggling to keep up with debt payments on things like credit cards, loans and store cards, a debt management plan (DMP) may be right for you.

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.

What are priority and non-priority debts?

Priority debts include:

  • mortgage or rent arrears
  • gas and electricity arrears
  • council tax or rates arrears
  • magistrates’ court fines
  • arrears of maintenance payable to an ex-partner or children
  • income tax or VAT arrears
  • TV licence or TV licence arrears.

They’re called priority debts because the consequences of not paying them can be more serious than for other debts. You can’t include these debts in a DMP so you need to make sure you’ve got a way to deal with your priority debts before you set up a DMP.

Non-priority debts are less urgent and include things like bank loans, credit cards, student loans, water charges and benefits overpayments.

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