DMP, DRO...Advice?

LJayDow · 18 November 2010 at 9:07PM

Hello I am new here, and would much appreciate some advice on where to turn.

I am 23 years old, and 22 weeks pregnant. I was temping, but that job ended and am now currently looking for work. I owe about £4500 - £5000, primarily to Lloyds (overdrafts and horrendous bank charges), plus Vodafone, a credit card and a couple of other places. I am on a debt management plan, paying £79 a month to CCCS, but with no work this I can see being a bit of a problem repaying. I got a copy of my credit report, and I have 4 defaults (Lloyds, screwed me over and would not help me at all), and my credit score is 132. This is the first time I have seen this, and I feel very deflated to be honest.

I am renting (£800 pm) and live with my partner. He is saving to go bankrupt as he owes about £70k, and I do not want to stretch him more by asking him to not only pay for me, but my debts too as it is not fair.

I do not know what to do. I understand that this debt management plan, whilst I am on it, will not allow me to improve my credit rating, and the defaults will be on my file for 6 years. The debt relief order seems ideal as I do not have any savings, cannot repay my debts (im sick of threatening letters and phone calls) and do not own an expensive car - however I am very sceptical. It feels almost like a bankruptcy, and being 23, soon to be with a child, I dont want to throw myself into making the wrong choice. An online debt advisor told me that regardless of going with the DRO or staying on the DMP, my credit rating will be affected for 6 years - So I am better off going with the DRO.

What would you all advise? I feel totally out of my depth here, and very much like a failure. With my partners debts, I was hoping I might be able to achieve a good credit rating to help us along in times to come, but it doesnt look like I can.

Any advice would be so appreciated, as I dont really know what to do and do not wish to burden my partner with this.

Thank you so much,

Laura

PS - I am also absolutely terrified of the idea of my partner going bankrupt, as I have the idea that it will be the endof the world, and we will not be able to move house should we need to due to credit references, and will struggle horrendously. I have been told in reality it is not that bad, but I am not convinced - what is it like realistically?

Tixy · 18 November 2010 at 9:40PM

Hi and welcome

You say a DRO almost feels like bankruptcy, well thats what is it really, a mini bankruptcy, so you are right to be cautious about taking this option.

From what you have posted it sounds like you have a couple of options - either to contact CCCS and arrange to pay much lower payments (token payments) until you find work or considering your pregnancy until you find work after your maternity. Or to consider a DRO. But if you are thinking about a DRO then CCCS are the people to contact anyway as they already know most of your financial situation.

The defaults are to be expected on a DMP and I know its easy to say but do ignore the credit score (in fact don't buy it its not worth anything). The fact that you have started a DMP means that your file will be wrecked for the 6years and you couldn't get any new credit within the terms of your DMP anyway.

I know the permanancy of a DRO or bankruptcy sound scary but for some it is the right decision, and it won't affect your ability to get credit forever, just for the next 6years, so you'll only be 29 then, which is still plenty of time to rebuild a credit score if you want to be able to get a mortgage or whatever at some point in the future.

I know you say you'd like to have a good rating to help you along in times to come but it sounds like with him going bankrupt and you doing a DRO your outgoings would be so much less that you would be able to afford to live within your means without any more credit.

My advice would be to talk it through with CCCS to start.

For experiences of people post bankruptcy the bankruptcy board on this forum has plenty of people who have been through it and faced the issues of needing deposits for moving home etc, its not easy but its manageable if its the right option.

Good luck

LJayDow · 18 November 2010 at 9:48PM

Thank you very much for your reply.

We have spoken about childcare etc, and it is better financially if i do not go back to work, so I will be paying off my debts little by little for the forseeable future.

If the defaults really will affect me for 6 years, then the DRO seems like a better option as then at least I will be debt free, just concerned that I would be taking on something more serious by doing the DRO. A lady I spoke to today said as long as I am on the DMP, there is no way of improving my credit, but on the DMP after a couple of years people might start lending again.

I spoke to CCCS who are going to send me another statement of earnings to fill out and then we can arrange a lower payment, but this hasnt stopped people from ringing and sending harassing letters still. I am concerned that even if i were go get JSA for the time that I am not on maternity leave, the money I would actually give them would be so little that I wouldnt be getting anywhere fast.

LJayDow · 18 November 2010 at 11:31PM

Just feel very worried that both of us doing some sort of "bankrupcy" might put us at a disadvantage later on down the line

Im so worried about the money now there is a child to think about too

LJayDow · 22 November 2010 at 11:41AM

Does anyone else have any advice they can give me on this situation?

greentrader · 22 November 2010 at 2:47PM

Hi Laura

I feel the same pain as you, I am in a position that is very similar to you except I do have equity in my house. Unfortunately I have a disable children and moving house (if we're forced to sell) would cause pain beyond description.

I will tell you a little bit about my problems and then hopefully you will feel less alone in your awful position. For the last 2 years (it may actually be longer) I have paid as much as I could on my debts. I never missed a payment apart from one time when a Credit Card company requested payment 3 days before the agreed date. I complained but they were having none of it. I had a phone call from them on the hour every hour! They also managed to text me around eight times a day. You may wonder why I am mentioning this, well, it was the final straw that broke the camels back.

As I mentioned I have paid everything on time for at least two years. My wife and I were working as hard as we could but my business took a complete nosedive. I was having a great business experience until somebody did the dirty on me. I invested money into a business project, a six-figure sum and lost it all when the main contractor went into liquidation. As usual the small businessman was right at the bottom of the pile and despite attending all the creditors meeting I never received a penny. To add insult to injury the guy I was working with did a runner and I was left to carry the can. I managed to sort that problem but it basically left me in serious debt. I then became very stupid because I used credit cards to prop up my business and pay for other items. It was completely my fault and I just didn't want people to see me as a failure.

When I had all the hassle from the credit card company I sat down with my wife and told her we could not continue. It never stressed our relationship as such we just battled through it together. She has a well-paid job but when we paid all the bills we were left with nothing. I realised that despite working hard and ensuring I met all my payments none of the creditors were concerned about me or my well-being. I called them all and asked if they would consider lower payments or freezing the interest whilst I tried to improve my circumstances. I was given a categoric no by all of them.

My wife had been using this site to find special offers and so having used it myself previously I decided to look for help. Everyone was really helpful and I had decided having read the site to contact the CCCS. I was very nervous but I knew I had to do something. I was amazed at how good CCCS were. They didn't judge me they didn't snigger they just listened they sympathised and they advised. I gave them my details and explained my situation and then I was given a time for a counsellor to call me.I spoke with the counsellor who was equally as good and they told me exactly what to do.

I cannot tell you how much better I feel the relief is unbelievable.

I would strongly advise you to call one of the national agencies listed on this site. You can use the CCCS or perhaps one of the other free agencies you can find on this site. Stay away from the companies you see on TV because they want money out of you.

I'm sorry to waffle on I just hope you can understand that you are not the only person in debt and that many people on here will understand and do everything they can to help.

All the best

GT

mumofflo · 23 November 2010 at 9:58PM

Hi Laura
You could try getting advice from your local Citizens Advice Bureau or look at adviceguide.org.uk for further information about DRO and DMP. You could look at the timing of your pregnancy as a good thing as you are unlikely to have an upturn in finances for the next year, and this makes you a prime candidate for a DRO. I also went bankrupt prior to having my first child and the relief was immense. It meant that I could focus on looking after my child without the pressure of debt forcing my arm when making decision re returning to work etc. I am now 8 years down the line, 23 weeks pregnant with my second child and my credit rating is repaired sufficiently to get a reasonably mortgage. A DRO is not the end of the world, neither is bankruptcy. Believe me (and the other poster) you are not the only person in this position, it is very common in the current climate, given the instability of work etc. I would definitely recomend calling your local CAB as they will be able to outline all of the pros and cons attached to each option. They may also be able to help you with the DRO fees. They will also be able to do a benefit check to make sure you are claiming everything you should be - maternity allowance? health in pregnancy grant (you will just qualify!), surestart maternity grant? (depending on your partner's income) etc etc. Good luck, I hope all goes well with the baby!
Mumofflo

DMP, DRO...Advice?

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