Your browser isn't supported
It looks like you're using an old web browser. To get the most out of the site and to ensure guides display correctly, we suggest upgrading your browser now. Download the latest:

Welcome to the MSE Forums

We're home to a fantastic community of MoneySavers but anyone can post. Please exercise caution & report spam, illegal, offensive or libellous posts/messages: click "report" or email forumteam@.

Search
  • FIRST POST
    • Lauramags64
    • By Lauramags64 26th Feb 17, 8:58 PM
    • 11Posts
    • 5Thanks
    Lauramags64
    Consolidation or debt management ? Help please
    • #1
    • 26th Feb 17, 8:58 PM
    Consolidation or debt management ? Help please 26th Feb 17 at 8:58 PM
    Hi,
    I've just had a baby & we are going to struggle paying unsecured debt as my hours in work have changed & also the cost of childcare is high. We have spoken to one loan provider (from their money worries contact number) who said they could only help if we show we are struggling and had missed payments...they could offer us a high interest loan over a longer period...so much for us being proactive & getting help from them!! In total, we are in £40,000 debt. If we could get a loan for that amount at 5% over 6 years, we could afford to pay it back... however, any loan I apply for offers higher interest due to the debt I'm in. Does anyone know if this low interest loan agreement would be possible - we would rather this as it would mean we would also have spare money each month to put aside for savings/emergencies etc without then having to put anything on credit. It's a vicious cycle isn't it :-(

    If the loan isn't possible...the step change website suggested a debt management plan based on our circumstances and that we would be debt free in 4 years 9 months paying £950 a month. Can the time be extended so we can pay around £600 each month? I would love to have another baby and I'm not getting any younger so ideally if we paid less each month, we could save to cover my maternity leave and for nursery fees... or is it easy to change terms of the DMP if I fall pregnant? I really don't want to wait 4 years to try for a baby.

    Sorry for all the questions and such a long post. Debt is so horrible, just need to get out of it. But would hate to look back in ten years time and regret that I didn't have more than one child because of paying off debt... anyone in the same boat/been I'm same boat? Help please!
Page 1
    • sourcrates
    • By sourcrates 26th Feb 17, 11:39 PM
    • 11,166 Posts
    • 10,834 Thanks
    sourcrates
    • #2
    • 26th Feb 17, 11:39 PM
    • #2
    • 26th Feb 17, 11:39 PM
    Hi, we move threads if we think they’ll get more help elsewhere (please read the forum rules) so this post has been moved to a new thread. If you have any questions about this policy please email forumteam@moneysavingexpert.com.
    I'm a Board Guide on the Debt-Free Wannabe, Credit File And Ratings, and
    Bankruptcy And Living With It, boards. I'm a volunteer to help the boards run smoothly, and I can move and merge posts there.
    Board guides are not moderators and don't read every post. If you spot an abusive or illegal post then please report it to forumteam@moneysavingexpert.com. Any views are mine and not the official line of MoneySavingExpert.com.

    For free debt advice, contact either : Stepchange, National Debtline, or, CAB.
    For Legal advice see : http://legalbeagles.info/
    • January2015
    • By January2015 27th Feb 17, 1:05 AM
    • 1,723 Posts
    • 4,650 Thanks
    January2015
    • #3
    • 27th Feb 17, 1:05 AM
    • #3
    • 27th Feb 17, 1:05 AM
    General advice from this forum (and definitely from me) is don't consolidate.

    How did you get to be £40k in debt? I'm not judging - see my signature I got to £95k in debt (was over £100k at one point). Most of this was through consolidating and then racking up credit cards or loans again and again, and probably again.

    To get to £40k in debt you have not been living within your means. Consolidating will be a quick fix and you will probably find yourself struggling again each month very quickly. I lied to myself everytime we consolidated. We would only pay one monthly payment, we would be able to save for emergencies, holidays etc. etc. Didn't work for us.

    If you go down the DMP route and do have a second child you can adjust your monthly payments as and when your circumstances change. It's very easy to do. If mortgage/rent payments go up, DMP payments go down. If childcare payments go up, DMP payments go down. Priority payments get first dibs at your income and DMP payments get what it left. Creditors can't have what you don't have - simples.

    DMP is not the answer for everybody, but it works for us.
    DFW Nerd No. 1484 LBM 07/01/15 Debt was £95k I'm driving it down
    £1k emergency fund (member #84) £1k/£1k
    Xmas 2017 £1 p/day challenge No. 20 - £420/£730
    Make £10 p/day Feb £74.31, Mar £664.37 Apr £40
    • Lauramags64
    • By Lauramags64 27th Feb 17, 2:14 PM
    • 11 Posts
    • 5 Thanks
    Lauramags64
    • #4
    • 27th Feb 17, 2:14 PM
    • #4
    • 27th Feb 17, 2:14 PM
    Thank you for your reply! Urg, the debt has just got higher & higher from being a student trapped with the student overdraft, then car, wedding, honeymoon, house etc... the 40k would cover everything & it's our joint debt (mostly hubbies, mine is £17k) and yes, we keep getting consolidation loans & have survived... but now our monthly outings on unsecured debt alone is £1,200. With me going part time & paying childcare, we just can't cover it :-(

    With a DMP, can the amount you pay be agreed mutually so there's a possibility of having some spare cash each month to save or is that just pushing it? We would like to save monthly so that when an emergency comes up, we don't then have to pay for something to be repaired on finance...it's just such a vicious cycle! Do you have a mortgage? Did the DMP affect it in anyway?

    Thanks again for taking the time to reply
    • worriedDan
    • By worriedDan 27th Feb 17, 3:09 PM
    • 169 Posts
    • 489 Thanks
    worriedDan
    • #5
    • 27th Feb 17, 3:09 PM
    hello
    • #5
    • 27th Feb 17, 3:09 PM
    Hi

    Well done for taking fist step

    i am am in a similar position to you. Can I ask what your joint monthyl income is?
    Dan
    • Lauramags64
    • By Lauramags64 27th Feb 17, 3:17 PM
    • 11 Posts
    • 5 Thanks
    Lauramags64
    • #6
    • 27th Feb 17, 3:17 PM
    • #6
    • 27th Feb 17, 3:17 PM
    Joint income is £3,329 but outgoing before paying childcare are £3,427...so we are in trouble!! :-s How about you? Have you taken a DMP?
    • sourcrates
    • By sourcrates 27th Feb 17, 3:30 PM
    • 11,166 Posts
    • 10,834 Thanks
    sourcrates
    • #7
    • 27th Feb 17, 3:30 PM
    • #7
    • 27th Feb 17, 3:30 PM
    The thing about a debt management plan is that its totally non regulated, which means there are no rules, only guidelines, those guidelines state that you must treat your creditors fairly, thats why they normally get a pro rata payment, so everyone is happy.

    If you go through stepchange, they will have predetermined amounts for most categories of your budget, but ultimately, as long as its a reasonable amount, its up to you how much you budget, and for what.

    But i must stress this is something you must get right, to avoid problems in the future, when something needs replacing. The more experienced folk on here, will tell you to stop all unsecured creditor payments for a good few months in order to build up a good emergency fund, and i would recommend you do that to, then start your DMP.
    I'm a Board Guide on the Debt-Free Wannabe, Credit File And Ratings, and
    Bankruptcy And Living With It, boards. I'm a volunteer to help the boards run smoothly, and I can move and merge posts there.
    Board guides are not moderators and don't read every post. If you spot an abusive or illegal post then please report it to forumteam@moneysavingexpert.com. Any views are mine and not the official line of MoneySavingExpert.com.

    For free debt advice, contact either : Stepchange, National Debtline, or, CAB.
    For Legal advice see : http://legalbeagles.info/
    • desperado88
    • By desperado88 27th Feb 17, 3:38 PM
    • 65 Posts
    • 21 Thanks
    desperado88
    • #8
    • 27th Feb 17, 3:38 PM
    • #8
    • 27th Feb 17, 3:38 PM
    The thing about a debt management plan is that its totally non regulated, which means there are no rules, only guidelines, those guidelines state that you must treat your creditors fairly, thats why they normally get a pro rata payment, so everyone is happy.

    If you go through stepchange, they will have predetermined amounts for most categories of your budget, but ultimately, as long as its a reasonable amount, its up to you how much you budget, and for what.

    But i must stress this is something you must get right, to avoid problems in the future, when something needs replacing. The more experienced folk on here, will tell you to stop all unsecured creditor payments for a good few months in order to build up a good emergency fund, and i would recommend you do that to, then start your DMP.
    Originally posted by sourcrates
    Do you think that would be good advice before starting a DAS as well sourcrates?
    • January2015
    • By January2015 27th Feb 17, 3:39 PM
    • 1,723 Posts
    • 4,650 Thanks
    January2015
    • #9
    • 27th Feb 17, 3:39 PM
    • #9
    • 27th Feb 17, 3:39 PM
    If you decide DMP is right for you then definitely stop paying all creditors now. Start saving that money for your emergency fund. Work with StepChange (SC) to sort out your DMP but delay the start date of making DMP payments for several months. Explain to SC that you need to build up an emergency fund. If you start the process now (March) I would recommend delaying DMP payments until at least July or even August at the earliest. You will not be able to access credit once you start a DMP. Your credit files will be trashed. This is not a bad thing but you need to be prepared for when cars/washing machines etc. etc. break down.

    The thought of entering a DMP can be daunting. Seriously, it has been the best financial decision we have made in years and years. Life is much better, less worries and we do have enough money to live on. We budget for things now rather than rashly put costs onto credit cards.

    I've sent you a PM as well.
    DFW Nerd No. 1484 LBM 07/01/15 Debt was £95k I'm driving it down
    £1k emergency fund (member #84) £1k/£1k
    Xmas 2017 £1 p/day challenge No. 20 - £420/£730
    Make £10 p/day Feb £74.31, Mar £664.37 Apr £40
    • sourcrates
    • By sourcrates 27th Feb 17, 3:53 PM
    • 11,166 Posts
    • 10,834 Thanks
    sourcrates
    Do you think that would be good advice before starting a DAS as well sourcrates?
    Originally posted by desperado88
    A DAS, or "debt arrangement scheme" is i believe the Scottish equivalent of an IVA.

    Your budget is scrutinized much more closely in a regulated agreement, *so the advice would apply even more, but asset limits apply in some cases, so you need to be aware if that applies to you or not.


    (*with the exception of Bankruptcy and Debt Relief Order)
    I'm a Board Guide on the Debt-Free Wannabe, Credit File And Ratings, and
    Bankruptcy And Living With It, boards. I'm a volunteer to help the boards run smoothly, and I can move and merge posts there.
    Board guides are not moderators and don't read every post. If you spot an abusive or illegal post then please report it to forumteam@moneysavingexpert.com. Any views are mine and not the official line of MoneySavingExpert.com.

    For free debt advice, contact either : Stepchange, National Debtline, or, CAB.
    For Legal advice see : http://legalbeagles.info/
    • Lauramags64
    • By Lauramags64 27th Feb 17, 5:07 PM
    • 11 Posts
    • 5 Thanks
    Lauramags64
    Thanks for all your advice! I'm terrified of losing our house. We only bought it last year. Can having a DMP in place make us lose the house in any way??? Or are we safe as the mortgage is secured debt?

    Going to ring step change tonight but just wondering in the mean time! Feel like a massive cloud of debt is hanging over us, it's horrible! Can't sleep, worrying about it :-(
    • January2015
    • By January2015 27th Feb 17, 5:11 PM
    • 1,723 Posts
    • 4,650 Thanks
    January2015
    Thanks for all your advice! I'm terrified of losing our house. We only bought it last year. Can having a DMP in place make us lose the house in any way??? Or are we safe as the mortgage is secured debt?

    Going to ring step change tonight but just wondering in the mean time! Feel like a massive cloud of debt is hanging over us, it's horrible! Can't sleep, worrying about it :-(
    Originally posted by Lauramags64
    We had £95k unsecured debt when we started DMP. We own a house with £250k equity. House is safe. Nothing has happened regarding the house. Don't panic. DMP is an informal debt solution for unsecured debts. If you keep in contact with your creditors and pay them what you can afford through a DMP you will not get anywhere near a court for anything let alone seeking anything to secure debt to your home.
    DFW Nerd No. 1484 LBM 07/01/15 Debt was £95k I'm driving it down
    £1k emergency fund (member #84) £1k/£1k
    Xmas 2017 £1 p/day challenge No. 20 - £420/£730
    Make £10 p/day Feb £74.31, Mar £664.37 Apr £40
    • sourcrates
    • By sourcrates 27th Feb 17, 5:34 PM
    • 11,166 Posts
    • 10,834 Thanks
    sourcrates
    Thanks for all your advice! I'm terrified of losing our house. We only bought it last year. Can having a DMP in place make us lose the house in any way??? Or are we safe as the mortgage is secured debt?

    Going to ring step change tonight but just wondering in the mean time! Feel like a massive cloud of debt is hanging over us, it's horrible! Can't sleep, worrying about it :-(
    Originally posted by Lauramags64
    Although you can never say never, the likelihood of a creditor obtaining a CCJ and charging order against you, whilst a possibility, will be unlikely, whilst you are repaying a DMP through stepchange.

    It is dependent on how much you owe each creditor, and if they want to play hard ball or not, as to wether they take legal action, most will accept your DMP without question, an order for sale, is extremely rare, about 1 in a 100 charging orders progress to orders for sale, and these will be the people who are not paying anything.

    I would not worry, once the arrangement is up and running, its just like your making the normal payments to your accounts, and life will continue much as before, seriously all will be fine.
    I'm a Board Guide on the Debt-Free Wannabe, Credit File And Ratings, and
    Bankruptcy And Living With It, boards. I'm a volunteer to help the boards run smoothly, and I can move and merge posts there.
    Board guides are not moderators and don't read every post. If you spot an abusive or illegal post then please report it to forumteam@moneysavingexpert.com. Any views are mine and not the official line of MoneySavingExpert.com.

    For free debt advice, contact either : Stepchange, National Debtline, or, CAB.
    For Legal advice see : http://legalbeagles.info/
    • Lauramags64
    • By Lauramags64 1st Mar 17, 7:01 AM
    • 11 Posts
    • 5 Thanks
    Lauramags64
    Thank you. Had a good chat to step change and feel so much better :-) All will be fine. We are going to switch our bank accounts before applying and start the DMP in June, which will be when I return to work from maternity.

    One question I forgot to ask is about savings. They suggest £35 a month for emergencies...obs this money needs to be put aside monthly to gradually build up, but can you have savings on a DMP? Or if creditors take us to court will we them have to give up the emergency fund building up?? Hmm. I hate the idea of having to store cash in the house!

    Thanks :-)
    • Barbie61
    • By Barbie61 1st Mar 17, 1:09 PM
    • 9 Posts
    • 11 Thanks
    Barbie61
    Thank you
    Hi - that's really helpful to know that if your mortgage goes up the DMP goes down - I am going to stop prevaricating and do the online budget tool and submit - see what advice they give me. Can't cope with the stress any more.
    • January2015
    • By January2015 1st Mar 17, 1:21 PM
    • 1,723 Posts
    • 4,650 Thanks
    January2015
    Thank you. Had a good chat to step change and feel so much better :-) All will be fine. We are going to switch our bank accounts before applying and start the DMP in June, which will be when I return to work from maternity.

    One question I forgot to ask is about savings. They suggest £35 a month for emergencies...obs this money needs to be put aside monthly to gradually build up, but can you have savings on a DMP? Or if creditors take us to court will we them have to give up the emergency fund building up?? Hmm. I hate the idea of having to store cash in the house!

    Thanks :-)
    Originally posted by Lauramags64
    Savings accounts do not show up on credit reference files. Creditors won't know you have any savings.

    You should really save the amounts allocated for emergencies, repairs, maintenance, etc. etc. so that when those events crop up you will have the funds available to pay for them without panicking - because you will no longer have any access to credit. I literally have a standing order set up from my basic bank account to a savings account for the total amount of all those little pots that Stepchange allowed. This includes clothing, dental/health, car repairs, etc. etc. It builds up nicely in the savings account and when the car service is due, or a dental appointment comes round I just don't worry and transfer it back from savings.
    DFW Nerd No. 1484 LBM 07/01/15 Debt was £95k I'm driving it down
    £1k emergency fund (member #84) £1k/£1k
    Xmas 2017 £1 p/day challenge No. 20 - £420/£730
    Make £10 p/day Feb £74.31, Mar £664.37 Apr £40
    • worriedDan
    • By worriedDan 1st Mar 17, 1:55 PM
    • 169 Posts
    • 489 Thanks
    worriedDan
    Joint income is £3,329 but outgoing before paying childcare are £3,427...so we are in trouble!! :-s How about you? Have you taken a DMP?
    Originally posted by Lauramags64
    No, we aren't really eligible for a formal DMP as we can afford to repay it. I did the Stepchange debt remedy tool online and it recommended a monthly repayment plan. We can afford to pay the minimums, plus an over-payment but I think that we would have soon been in a situation that was umnageable if I had not had my LBM
    • chelseablue
    • By chelseablue 1st Mar 17, 2:07 PM
    • 2,034 Posts
    • 2,493 Thanks
    chelseablue
    Could you post your SOA on here? There may be things people can advise you to cut back on
    Baby Boy born May 2014

    Mortgage starting balance 26.02.16 £231,294
    Mortgage after Year 1 £225,078
    • Barbie61
    • By Barbie61 17th Mar 17, 11:10 AM
    • 9 Posts
    • 11 Thanks
    Barbie61
    Stop unsecured payments?
    Hi - you mean don't pay them for a few months? I thought you should carry on paying them - gosh I'm confused. I have 0 in the bank now and just about to contact Stepchange.
    • sourcrates
    • By sourcrates 17th Mar 17, 3:04 PM
    • 11,166 Posts
    • 10,834 Thanks
    sourcrates
    Right we seem to be crossing threads here a little.

    Advice given here applies to anyone wishing to start a debt management plan, but if anyone has a specific question about there own situation, please start a new thread by clicking the big blue "new thread" button at the top left of this forum.

    Then we dont confuse one another.
    I'm a Board Guide on the Debt-Free Wannabe, Credit File And Ratings, and
    Bankruptcy And Living With It, boards. I'm a volunteer to help the boards run smoothly, and I can move and merge posts there.
    Board guides are not moderators and don't read every post. If you spot an abusive or illegal post then please report it to forumteam@moneysavingexpert.com. Any views are mine and not the official line of MoneySavingExpert.com.

    For free debt advice, contact either : Stepchange, National Debtline, or, CAB.
    For Legal advice see : http://legalbeagles.info/
Welcome to our new Forum!

Our aim is to save you money quickly and easily. We hope you like it!

Forum Team Contact us

Live Stats

1,560Posts Today

6,870Users online

Martin's Twitter
  • Byebye! I'm about to stop work & twitter, to instead spend glorious time with Mrs & mini MSE. Wishing u a lovely summer. See u in 10 days.

  • WARNING Did you start Uni in or after 2012? The interest's rising to 6.1%; yet it doesnt work like you think. See https://t.co/IQ8f0Vyetu RT

  • RT @JanaBeee: @MartinSLewis Boris is the anomaly (coffee), the others are versions of normal (beer). Lots of same candidates = vote share d?

  • Follow Martin