Debt Management Plans?

rsjg80 · 6 October 2008 at 8:59PM

I came on here a few months back and have been tiptoeing around the situation until, basically today it all hit the fan in that we have no money left anywhere for anything and owe people left right and centre.

We earn loads really, (circa £2.5k bring home pay a month) but have it spread everywhere so it has become completely unmanageable.

To cut a long story short my girlfriend looked at MoneySupermarket for advice and quickly got phoned: the guy took absolutely everything that comes in and out into account and said we earn too much for an IVA but suggested a Debt Management Plan. We owe £28k jointly and he's said we'd pay £500 a month for 5 years and 8 months for all of it - we'd have approximately £750 a month left after everything comes out (inc food/ petrol etc etc) if this was done. So what's the con?!

I know we can't have a credit card/ personal loan but he said we could keep contract mobiles, car loans and would be able to get HP stuff if needed (say a washing machine if desperate!!) so where's the catch?! We also need to change bank accounts (good!) but he seemed to imply we would still have one SOMEWHERE.

So what's the catch?!

longforthesun · 6 October 2008 at 9:06PM

Hi. I am no expert but am on a DMP with CCCS. The whole point of a DMP is that you are addressing your debts but still being able to live a decent quality of life. One catch I suppose is your credit rating will be affected.

Which company are sugesting the DMP? make sure they do not take a fee from you as there are charity's that can help for free such as CCCS or payplan. CCCS have a budget that gives you allowances for items and as long as they are not excessive ie £100 a month for sky or a mobile then these can be accepted, but as I say I am just begining on my DMP journey so may not be the best to offer advise.

PErhaps you could post you SOA for the eperts to have a look and see if they can help you with the budget.

Edit: You will need to change bank accounts if any of your debt is with your exsisting bank.

poorandindenial · 6 October 2008 at 9:08PM

The con is the company, NEVER pay someone to run a DMP for you, you can DIY or use a free debt advice agency http://www.moneysavingexpert.com/loans/debt-help-plan#help

Have you got a SOA?? (statement of affairs, there is a calculator www.makesenseofcards.com that is really handy) if so pop it up here and we can have a look and see if we can free up some money for you to throw at your debt.

rsjg80 · 6 October 2008 at 9:29PM

To be honest if it's sorted I don't care how - that might not be the right attitude but whoever sorts it, if that's the terms, I just don't care.

The company is the debtyadvisoryline I believe. He's said paperwork has been sent, look through it and then make a decision and send it back. If it can be done I'm happy with it - but what's the long term impact? As in after it's finished - mortgages/ credit etc)

chevalier · 6 October 2008 at 9:48PM

STOP PANICKING!

Right take a deep breath. Here are the reasons NOT to go with a fee paying company

1) If you have £100 to pay 10 creditors, and they take £10 a month as a fee. That is only £9 a month for each creditor. So say it would take 6 years to pay off with the fee paying company. BUT if you went with CCCS or Payplan WHO DON'T CHARGE A FEE, then all the £100 goes to your creditors, SO IT TAKE LESS TIME TO PAY THEM BACK.

2) Some companies have been known to be taking your money and using the first 6 or so months to cover their costs so NO money is going to creditors. Result unhappy creditors.

3) CCCS or Payplan (did I mention they were FREE), are well respected in the industry and so you are more likely (but not guaranteed) to have a DMP run by them accepted by your creditors than by other companies

4) The person your gf spoke to is counting on you to not really check the paperwork and just sign it because you are panicking. That is the WORST time to sign anything, as in the cold light of day you may find the terms are very bad.

5) I think you will find that a DMP will fail if you take out other credit whilst you are on it. Taking out a HP agreement is CREDIT, so you could pay them loads of money in fees, and then have it fail because you followed their advice and got more credit. The point of a DMP is that you draw a line in the sand and say that is the end of the credit for me. It is about CHANGING your attitude to money totally.

6) Yes it will affect your ability to get a mortgage at normal rates, BUT you will still be able to get one somewhere, just not at as good a rate as before. So putting up a Statement of Affairs on here is a good idea. Why? Because maybe we can find things you can cut back on that would mean you can make it through to the new year, and thus get a new mortgage deal before you go on a DMP. And are you looking for a new mortgage now by the way, as they take a fair old time to come through.

Sorry if this is a little blunt, but I would hate to see you railroading yourselves into an agreement that ONLY HAS THE COMPANY'S INTEREST AT HEART NOT YOURS!
chev

Numpty_Monkey · 6 October 2008 at 9:56PM

rsjg80 wrote: »

To be honest if it's sorted I don't care how - that might not be the right attitude but whoever sorts it, if that's the terms, I just don't care.

The company is the debtyadvisoryline I believe. He's said paperwork has been sent, look through it and then make a decision and send it back. If it can be done I'm happy with it - but what's the long term impact? As in after it's finished - mortgages/ credit etc)

Throw what you get from them in the bin

They will take your money and leave you in more dodo

please read what chevalier has posted

:A :T :A

rsjg80 · 6 October 2008 at 10:14PM

chevalier wrote: »

STOP PANICKING!

Right take a deep breath. Here are the reasons NOT to go with a fee paying company

1) If you have £100 to pay 10 creditors, and they take £10 a month as a fee. That is only £9 a month for each creditor. So say it would take 6 years to pay off with the fee paying company. BUT if you went with CCCS or Payplan WHO DON'T CHARGE A FEE, then all the £100 goes to your creditors, SO IT TAKE LESS TIME TO PAY THEM BACK.

2) Some companies have been known to be taking your money and using the first 6 or so months to cover their costs so NO money is going to creditors. Result unhappy creditors.

3) CCCS or Payplan (did I mention they were FREE), are well respected in the industry and so you are more likely (but not guaranteed) to have a DMP run by them accepted by your creditors than by other companies

4) The person your gf spoke to is counting on you to not really check the paperwork and just sign it because you are panicking. That is the WORST time to sign anything, as in the cold light of day you may find the terms are very bad.

5) I think you will find that a DMP will fail if you take out other credit whilst you are on it. Taking out a HP agreement is CREDIT, so you could pay them loads of money in fees, and then have it fail because you followed their advice and got more credit. The point of a DMP is that you draw a line in the sand and say that is the end of the credit for me. It is about CHANGING your attitude to money totally.

6) Yes it will affect your ability to get a mortgage at normal rates, BUT you will still be able to get one somewhere, just not at as good a rate as before. So putting up a Statement of Affairs on here is a good idea. Why? Because maybe we can find things you can cut back on that would mean you can make it through to the new year, and thus get a new mortgage deal before you go on a DMP. And are you looking for a new mortgage now by the way, as they take a fair old time to come through.

Sorry if this is a little blunt, but I would hate to see you railroading yourselves into an agreement that ONLY HAS THE COMPANY'S INTEREST AT HEART NOT YOURS!
chev

I genuinely LOVE blunt!! Blunt is what I need.

However I'm not sure I made myself clear. I'm certainly not looking for a mortgage until AFTER we'd be off the DMP (five years odd - save a deposit in meantime) and am not looking for any credit at all on top of this (was just saying IF an emergency came up we COULD have credit, e.g. broken washing machine). In fact if this all went through I'd just pay the DMP, rent etc and save a majority of the rest and live 'normally'.

There was no mention of cost (although I already assumed it must be built in) but in effect it seemed like a very cheap loan. I know it's the wrong attitude but if they can sort it (they seemed to imply there was no question of it being sorted) then what future problems do we face AFTER the DMP has finished?

I would post my SOA but it's too long winded for this time of night and doesn't include the fact we are now behind on a few things and have one off payments coming. I'll probably speak to this CCCS or whomever but time is of the essense here and if this company already have the paper work on the way then I'm half tempted just to forget it and let them do it and just have to think about £500 a month outward rather than closer to £1500!

poorandindenial · 6 October 2008 at 10:26PM

The reason the charities are free is because they are funded by the credit industry (but don't operate in their interest, it isn't sinister), this means that the credit industry seems to look favourably on them when they are helping people through DMPs because they act responsibly. The company may offer you a DMP but if your creditors don't accept it it is worthless. If they think that you having £750 left is too much then your creditors will not go for the offer which means you will have more delay in the system as they will have to be renegotiated with.

Also if you can get your interest frozen with one of the charities then you will be debt free in 56 months, if you go with the deal that the company are offering (but may or may not be able to negotiate for you) you will be paying for 66 months.

BUT if you do go with this company that you have spoken to (and we have all been there with the feeling of wanting to get on and get sorted) then you can usually get out of it and go to one of the free ones if it all goes t*ts up

pau11n3 · 6 October 2008 at 10:34PM

rsjg80 wrote: »

I genuinely LOVE blunt!! Blunt is what I need.

There was no mention of cost (although I already assumed it must be built in) but in effect it seemed like a very cheap loan. I know it's the wrong attitude but if they can sort it (they seemed to imply there was no question of it being sorted) then what future problems do we face AFTER the DMP has finished?

OKAY...you need blunt..i'll be blunt...... THIS IS NOT A LOAN!!!! its a Debt management plan!!! completely different!!!! no one is loaning money to anyone!!! on a DMP the DMP company deal with your creditors...they help get charges and interest stopped....

CCCS and PAYPLAN DO NOT CHARGE..others DO!!! why would you even consider going to one of those companies!!! i know alot of creditors refuse to work with the charging companies anyway..so before you make a HUGE mistake Ring either payplan or CCCS and wake up!!!!!! blunt enough!!!!!!

after your plan end the defaults stay on your credit record for 6yrs in England 5yrs in Scotland....

ringing CCCS was the best descison we ever made!!!!

Pauline

Ossireo · 6 October 2008 at 10:34PM

My you are a strange one :rotfl: I don't think I have ever met anyone who would rather pay for a service when there is a better more reliable one for free.

CCCS and Payplan do exactly the same service as the company you are referring to. Its not a cheap loan, its basically them taking your payment and dishing it out to your creditors, they are not paying everything off for you then you paying them back.

With CCCS for example you still pay over for example £500 a month but ALL of this goes to your creditors. Lots of the companies that charge you for Debt Management may not even make payments to your creditors for several months as they use that money to cover their fees. Of course when they spoke to you on the phone they made it sound so easy and trouble free as thats the way they get their commission!

Before you sign anything that comes through just take a few minutes and give CCCS or Payplan a call, just give yourself a comparison before you commit yourself to something that will end up costing you something

longforthesun · 6 October 2008 at 10:37PM

You are asking what are the implication after your DMP finishes in regards to getting credit, well as i said i am only just starting out on my DMP however a few of our creditors are threatning to default us if they do this then it is recorded on your credit file for 6 years from when they default you and this will make it harder for you to obtain credit.

So if one of your creditor defaults you straight away then although your DMP will finish in 5 years your credit file will be damaged for 6 but the creditor could go along with your DMP for 6 months or so then default you. Hope this makes sense.

Debt Management Plans?

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