How does a Debt Management Plan actually reduce my total debt?

A DMP does two things: it simplifies your payments, and it works to reduce the total cost of your debt.

Simplified:

• Several EMIs become one monthly payment based on your disposable income.
• No more tracking multiple due dates, amounts and lenders.

Negotiated (not guaranteed — each lender decides):

• Interest rates — lenders sometimes agree to lower rates to make sure they recover the principal.
• Penalty charges and late fees — often partly or fully waived as part of restructuring.
• In some cases, part of the accrued interest.