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  • FIRST POST
    • bells on it
    • By bells on it 6th Sep 17, 2:16 AM
    • 120Posts
    • 15Thanks
    bells on it
    DMP - can I keep my current bank account? And am I doing the right thing?
    • #1
    • 6th Sep 17, 2:16 AM
    DMP - can I keep my current bank account? And am I doing the right thing? 6th Sep 17 at 2:16 AM
    Hi I'm after some advice?
    Myself and my husband have decided that we should enter into a DMP with step change as we have been battling with significant debt for many years. We had been getting into a better position with it but then had to get extensive work done to our house meaning we ended up in loads more debt. Most is on a decent APR (mostly under 8%) but I was made redundant and am now on significantly less money and struggling to find a better paid job so we've been living on 198 after all bills / debt and are finding we end up putting on cards because we can't survive on that (have 2 kids under 5 too). We need to drastically reduce our debt repayment because we cannot afford the amount and think a DMP is the best way forward, and if the creditors agree we could be debt free in 6 years (or less if I get a better paid job) and being unable to get credit might be a good thing??
    I just want to know are we being naive?
    Also I have a packaged bank account which actually has great benefits, it covers the phone insurance for both mine and my husbands mobiles and also a great travel insurance and roadside recovery etc. I have an overdraft with this bank but no other debt. My husband has declared the overdraft but we don't know whether that will force us to get new bank accounts? Are we better off taking the overdraft off or will the bank still let me continue?
    Any help and advice will be really appreciated
Page 1
    • bells on it
    • By bells on it 6th Sep 17, 2:17 AM
    • 120 Posts
    • 15 Thanks
    bells on it
    • #2
    • 6th Sep 17, 2:17 AM
    • #2
    • 6th Sep 17, 2:17 AM
    I should add we absolutely don't want to sell our house, and all of our debt is unsecured
    • StokieBecks
    • By StokieBecks 6th Sep 17, 7:37 AM
    • 4,263 Posts
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    StokieBecks
    • #3
    • 6th Sep 17, 7:37 AM
    • #3
    • 6th Sep 17, 7:37 AM
    You need a new bank account that is separate from any of your debts as on a DMP your overdraft will become a debt. You have to include everything you owe

    You just need a basic account, not one you pay for and one without an overdraft

    Have you been meeting all your contractual payments so far?

    I am sure more knowledgeable folks will help you out more but you need to post a statement of affairs showing your incomings and outgoings so people can advise if there is any scope to reduce your spending too
    • zenshi
    • By zenshi 6th Sep 17, 8:08 AM
    • 941 Posts
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    zenshi
    • #4
    • 6th Sep 17, 8:08 AM
    • #4
    • 6th Sep 17, 8:08 AM
    To start with, I had credit card debt alone with mortgage arrears and and overdraft.

    I went straight with self managed onto token payments but prioritised my arrears and OD, so they were paid off first

    If you use a free company for a DMP, then they will want you to include your OD and then you should definitely get new account

    A list of debts and an SOA will help us give a more helpful answer
    LBM.....sometime in 2013 £27,056. 10 creditors
    Aug 17......£18,258.....7 creditors left 32% paid

    £26,200 on interest only part of mortgage (July 16)...will chip away £23,922
    £49,200 repayment mortgage ( July 16) £46,020
    • bells on it
    • By bells on it 6th Sep 17, 8:48 AM
    • 120 Posts
    • 15 Thanks
    bells on it
    • #5
    • 6th Sep 17, 8:48 AM
    • #5
    • 6th Sep 17, 8:48 AM
    We currently owe 57k. All unsecured. We run a very tight shop, basically once all mortgage, utilities, insurances, childcare and debts are paid we have 198 left for anything else, is food, clothing, entertainment etc. There is no scope to reduce anything else as all our bills are essential and debt. We've over the years reduced any spends, I always negotiate my sky package so we've got a very good deal on broadband, line rental and tv, pat less than 70 for the lot and it includes sport, and hubby is a sport fanatic so we really need sport. So there is nothing left to reduce.

    We've managed for years living very tight and we're chipping away at it very slowly.

    I was made redundant earlier this year, the little I got had to buy a car as I had a fleet car with my job.

    I ended up taking a job with a significant pay cut (14k less per year) and have spent the last 6 months struggling to find a job and have been robbing peter to pay Paul. So the cards have gone up in order to be able to feed ourselves. I defaulted for 2 months with one card but other than that we've been committed to paying our debts but they're only increasing and we can't survive on 198 a month.
    • zenshi
    • By zenshi 6th Sep 17, 9:30 AM
    • 941 Posts
    • 1,941 Thanks
    zenshi
    • #6
    • 6th Sep 17, 9:30 AM
    • #6
    • 6th Sep 17, 9:30 AM
    A DMP, either self managed or with the likes of Stepchange is needed. I don't know about IVAs so can't comment. I assume bankruptcy out of the question as you're a homeowner!

    As you say, this is unsustainable so you're credit rating will be trashed sooner rather than later

    With a DMP, you can usually get interest and charges frozen, so then you can start to make some headway

    It will be tough and it will take time but many of us on here are in the same position and it will get easier
    LBM.....sometime in 2013 £27,056. 10 creditors
    Aug 17......£18,258.....7 creditors left 32% paid

    £26,200 on interest only part of mortgage (July 16)...will chip away £23,922
    £49,200 repayment mortgage ( July 16) £46,020
    • bells on it
    • By bells on it 6th Sep 17, 12:32 PM
    • 120 Posts
    • 15 Thanks
    bells on it
    • #7
    • 6th Sep 17, 12:32 PM
    • #7
    • 6th Sep 17, 12:32 PM
    Yeah as we're a home owner we don't want to go down the bankruptcy route, and we feel like an iva would be a bad thing too as we've read that they can insist you release equity in your house and we feel that as we haven't a huge deal of equity that this would be harmful. Technically we have a 75% LTV but when we bought the house 4 years ago we only had 10% and the majority of the equity we have is down to house price increase and not us clearing a substantial amount so if they crash we'll be in a bigger hole!

    We want to pay our debts off, we just need a more manageable payment and if we could freeze the interest even better. It means we could be free of debt in 6 years? But we know this time we have to be disciplined with saving for things as we won't be able to put emergency purchases on credit etc.

    My worry is that if I have to get a new bank account then the benefits of my packaged account will go which means we have to pay separately for the benefits I get from it and that that will be more??

    My overdraft is the only debt I have with my bank account provider and I don't understand how they work with step change?? Does the overdraft get paid back or what ??
    • glentoran99
    • By glentoran99 6th Sep 17, 12:43 PM
    • 4,578 Posts
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    glentoran99
    • #8
    • 6th Sep 17, 12:43 PM
    • #8
    • 6th Sep 17, 12:43 PM
    I kept my bank account (with overdraft) when I did my DMP, just kept it outside the DMP
    • glentoran99
    • By glentoran99 6th Sep 17, 1:12 PM
    • 4,578 Posts
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    glentoran99
    • #9
    • 6th Sep 17, 1:12 PM
    • #9
    • 6th Sep 17, 1:12 PM
    We currently owe 57k. All unsecured. We run a very tight shop, basically once all mortgage, utilities, insurances, childcare and debts are paid we have 198 left for anything else, is food, clothing, entertainment etc. There is no scope to reduce anything else as all our bills are essential and debt. We've over the years reduced any spends, I always negotiate my sky package so we've got a very good deal on broadband, line rental and tv, pat less than 70 for the lot and it includes sport, and hubby is a sport fanatic so we really need sport. So there is nothing left to reduce.

    We've managed for years living very tight and we're chipping away at it very slowly.

    I was made redundant earlier this year, the little I got had to buy a car as I had a fleet car with my job.

    I ended up taking a job with a significant pay cut (14k less per year) and have spent the last 6 months struggling to find a job and have been robbing peter to pay Paul. So the cards have gone up in order to be able to feed ourselves. I defaulted for 2 months with one card but other than that we've been committed to paying our debts but they're only increasing and we can't survive on 198 a month.
    Originally posted by bells on it

    its a luxury, you don't NEED you are living beyond your means you have to cut out luxuries I guarantee if you posted a SOA the good folks here could save you money
    • WorriedFriend2017
    • By WorriedFriend2017 6th Sep 17, 1:18 PM
    • 22 Posts
    • 6 Thanks
    WorriedFriend2017
    As above. Also, you had debts already but then did work to the house - that probably hasn't helped you at all? The £70/m for Sky could be used to pay some of the food bill. If you post an SOA we can take a look.
    • lynz68
    • By lynz68 6th Sep 17, 1:45 PM
    • 302 Posts
    • 274 Thanks
    lynz68
    You need to post an SOA people can't really provide much advice without it and will possibly spot areas where you can cut back that you haven't picked up on yourself.

    £70 a month for Sky is ridiculous when you have £57k of debt. Paying for a bank account when you don't have enough money for food also ridiculous. While you think the benefits are good how many times have you actually used them. I use to have an account like that but never used the benefits all I was doing was paying the bank money.

    Going into a DMP is about cutting back and focusing on the debt not about trying to maintain a certain lifestyle.

    Apologies if that sounds really harsh I don't mean it to be.

    Get SOA done and you will get lots of helpful advice.
    • Bewildered Banshee
    • By Bewildered Banshee 6th Sep 17, 3:14 PM
    • 31 Posts
    • 23 Thanks
    Bewildered Banshee
    If you use the debt remedy tool on Step change it will allow you to plan a budget and advise a reasonable amount for creditor payments.
    It's a good starting point, I'm just starting a dmp and found it and the step change staff very helpful. make sure the budget is sustainable. My overdraft was included so I had to change banks. I now have a Barclays account which is not a basic one - they allow you to apply and see what you get. I was in a very similar position to you. Don't beat yourself up- it's a very positive move. (my repayments were over £1k and now 280 a month - but it's going to take me a long time to pay back). Good luck.
    • EssexHebridean
    • By EssexHebridean 6th Sep 17, 3:59 PM
    • 7,774 Posts
    • 40,236 Thanks
    EssexHebridean
    I agree with those saying post an SOA I'm afraid. Maybe we won't find any savings, but you're already revealed that there are most definitely wants as opposed to needs on there so who knows, perhaps there may be other stuff where we can spot savings that you've missed? It's easy to get bogged down in your own situation - we're used to looking dispassionately at just the figures and so can often find savings that the "owner" of the SOA might not even have thought of.

    the paid bank account - you say that if it goes you'll "need" to pay for the benefits separately - but that isn't necessarily the case. Taking just the things you've mentioned - phone insurance - time to start being ultra careful with phones then! They'll be covered on Contents insurance anyway albeit with an excess. Travel Insurance - on 57k of debt it might be a good idea to accept that at least for the next couple of years holidays are not in your game plan, so that removes the need for that. Breakdown cover: Yes you do need this, but how basic can you get your cover? Martin has a great guide which is worth a read - have a browse on the main site. We have comprehensive UK cover (inc homestart, hire car, get-you-home cover etc) and for the past two years we've paid less than £120 per year to cover both cars - it's actually possible to get it for less than this so it seems likely that you might still save money? Guessing that your packaged account costs in the region of £10 - £15 per month?
    MORTGAGE FREE 30/09/2016
    Sainsbugs 0% card: 22/12/16 £1229.00/£504.92 (29/08/17)
  • National Debtline
    Hi bells on it

    From what you’ve said a DMP sounds like it could be a sensible option for you. 6 years is a reasonable amount of time to pay your debts back, it won’t put your home at risk and you could pay it off even quicker if, fingers crossed, you get a better paid job.

    With regards to your overdraft you must include it in your DMP. It’s really important to treat all your creditors fairly and in the same way as each other. That will mean getting a new account somewhere you don’t have any debt. Basic accounts are recommended as you can’t go overdrawn and you shouldn’t incur any bank charges, but you can usually still have the normal features like a debit card and direct debits.

    EssexHebridean gives some good advice, shop around to see how cheaply you can get the individual policies, and think about which ones are really needed. Think of it as getting a completely fresh start by including every single debt in your DMP. Good luck with it all.

    Susie
    @natdebtline
    We work as money advisers for National Debtline and have specific permission from MSE to post to try to help those in debt. Read more information on National Debtline in MSE's Debt Problems: What to do and where to get help guide. If you find you're struggling with debt and need further help try our online advice tool My Money Steps
    • glentoran99
    • By glentoran99 6th Sep 17, 4:39 PM
    • 4,578 Posts
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    glentoran99
    Hi bells on it

    From what you’ve said a DMP sounds like it could be a sensible option for you. 6 years is a reasonable amount of time to pay your debts back, it won’t put your home at risk and you could pay it off even quicker if, fingers crossed, you get a better paid job.

    With regards to your overdraft you must include it in your DMP. It’s really important to treat all your creditors fairly and in the same way as each other. That will mean getting a new account somewhere you don’t have any debt. Basic accounts are recommended as you can’t go overdrawn and you shouldn’t incur any bank charges, but you can usually still have the normal features like a debit card and direct debits.

    EssexHebridean gives some good advice, shop around to see how cheaply you can get the individual policies, and think about which ones are really needed. Think of it as getting a completely fresh start by including every single debt in your DMP. Good luck with it all.

    Susie
    @natdebtline
    Originally posted by National Debtline


    I didn't and encountered no issues, so its not a MUST
    • bells on it
    • By bells on it 6th Sep 17, 8:03 PM
    • 120 Posts
    • 15 Thanks
    bells on it
    You need to post an SOA people can't really provide much advice without it and will possibly spot areas where you can cut back that you haven't picked up on yourself.

    £70 a month for Sky is ridiculous when you have £57k of debt. Paying for a bank account when you don't have enough money for food also ridiculous. While you think the benefits are good how many times have you actually used them. I use to have an account like that but never used the benefits all I was doing was paying the bank money.

    Going into a DMP is about cutting back and focusing on the debt not about trying to maintain a certain lifestyle.

    Apologies if that sounds really harsh I don't mean it to be.

    Get SOA done and you will get lots of helpful advice.
    Originally posted by lynz68
    Hi really appreciate the advice and don't think you're being harsh you're being honest, I will get the SOA on here - is that all bills?? Or just non debt so you can see where we might be able to make savings.

    In terms of sky it's not £70 for the tv, that includes line rental and broadband which is around half of that. We need broadband without doubt so have no choice but to pay for line rental.

    For the holidays I get what you're saying and we by no means have any wild plans, our holiday this year was a 4 night sun newspaper holiday, and we've taken our tent away for a couple of nights. We try to get time away with the kids, purely as it's total family time! Next year we've another sun holiday which cost £42 and we are sensible with eating we cook in as we would at home. But I still like to have the insurance as I actually had to claim on it this year for damaged property but yep I can buy a policy as and when I need it.

    We rarely go out, only times would be to a friends house or vice versa for drinks.

    I'm sure there are the odd things? So I'll get the details on here
    • bells on it
    • By bells on it 6th Sep 17, 8:16 PM
    • 120 Posts
    • 15 Thanks
    bells on it
    My packaged bank account costs £25 a month, it was beneficial as it gave me a lower apr on my overdraft, phone insurance for both mine and my husbands phone, family travel insurance, home emergency and car emergency.

    The work we had done to the house were essential. Unfortunately we live in a 1900s house, we started to get extensive damp and water ingress, so we're getting plaster come off the walls and brown staining upstairs. We had to get the house repointed and exterior paint removed as water was getting trapped behind failing masonry paint (painted over natural stone). Then the boiler failed so we had to buy a new boiler and cylinder. Then to add to that the house wasn't earthed, so our house was technically live so we had to get electric work done, and then we had a burst water main on our driveway and unfortunately we were liable (and on a water met with which was forced when we moved in) as it was within our boundary. Thankfully I was able to find a few schemes with the water board i.e. Lead replacement and leak stop so they contributed to the overall bill.

    Trust me, none of the work was unnecessary , we've only painted 4 rooms in the 4 years we've been here, and 10L of that paint was free because I complained to dulux that their paint quality was poor so they gave me FOC. We've also had only one of the rooms replastered and patched up the rest that suffered from damp. We're here for the long term and I think we've pretty much had all that we could go wrong with the house and never anticipated (naively) that I'd be made redundant losing my car so had to use the redundancy to buy one and have only managed to find a job that's paying 14k less per year. I'm still searching for the right role, but with 2 kids under 5 and one just going to school I have to be realistic on the commute. currently it's over 1 hour each way

    Hope I don't sound like I'm being off and I'm not trying to get you to feel pity either, the debts were our mistakes in the first place and frustratingly we paid debts off in excess of 20k twice in the last 13 years then things went wrong with the house and it started to spiral.
    Last edited by bells on it; 06-09-2017 at 8:19 PM.
    • glentoran99
    • By glentoran99 6th Sep 17, 8:41 PM
    • 4,578 Posts
    • 3,579 Thanks
    glentoran99
    Hi really appreciate the advice and don't think you're being harsh you're being honest, I will get the SOA on here - is that all bills?? Or just non debt so you can see where we might be able to make savings.

    In terms of sky it's not £70 for the tv, that includes line rental and broadband which is around half of that. We need broadband without doubt so have no choice but to pay for line rental.

    For the holidays I get what you're saying and we by no means have any wild plans, our holiday this year was a 4 night sun newspaper holiday, and we've taken our tent away for a couple of nights. We try to get time away with the kids, purely as it's total family time! Next year we've another sun holiday which cost £42 and we are sensible with eating we cook in as we would at home. But I still like to have the insurance as I actually had to claim on it this year for damaged property but yep I can buy a policy as and when I need it.

    We rarely go out, only times would be to a friends house or vice versa for drinks.

    I'm sure there are the odd things? So I'll get the details on here
    Originally posted by bells on it


    all income and outgoings


    http://www.stoozing.com/calculator/soa.php


    and be honest, you need to know where your money is going
    • EssexHebridean
    • By EssexHebridean 7th Sep 17, 9:37 AM
    • 7,774 Posts
    • 40,236 Thanks
    EssexHebridean
    Yep - Glentoran is right in their final line there - the SOA needs to be entirely honest and accurate - it also needs to reflect the way things are right now - NOT what you think we expect to see.

    £25 a month is a ludicrous cost for a bank account - get rid ASAP, include the overdraft in the DMP and replace the cover from the account with the essentials in terms of insurances - ie not phone cover.
    MORTGAGE FREE 30/09/2016
    Sainsbugs 0% card: 22/12/16 £1229.00/£504.92 (29/08/17)
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