DMP - Some quick questions - Answers Please

Moustacheman

1. Does being in DMP leave you with no spare cash each month? e.g to buy presents for birthdays etc

2. If I move back home with my parents, will it affect their credit rating, or will there be a black mark against their house?

3. Is it a fixed monthly payment or can you pay more off quicked to get out of the DMP?

4. How long will the fact that you have been in a DMP stay on your creedit file, and once it is off your credit file, is it still likely to affect you?

Please help, I'm just really not sure if a DMP is the right thing to do or not.

[Deleted User]

DMP consolidates all of your unsecured debts into a single and more affordable monthly repayment which is then paid to you creditors on a pro-rata basis over an agreed period of time.

Following a detailed review of your finances, you agree with the debt counsellor how much you can afford to pay in one lump each month. This lump sum is then shared out on a pro rata basis amongst the creditors.

The monthly amount must be what you can afford after your living expenses have been deducted from your income.

Living expenses will be priorities such as council tax, rent/mortgages,utilites etc... but you will be able to tell the debt counsellor what else you NEED to live on. You will not be left with nothing.

I have no idea how credit ratings or credit files work so cannot say whether moving back with your parents would affect them in that way or how long a DMP would be on your file.

Have you been to CAB? They can offer free and confidential advice before you decide.

draconian_2

I think I may be able to offer some help on your latter request.

After my marriage breakup I moved in with my parents. Initially I moved (told all my credit card & bank, loan companies etc) and all my accounts did too. I soon realised with over £60,000 of debt that bankruptcy seemed the only way out, so I allowed everything to default, and this affected my father (who wanted to kick me out!). He investigated everything and I signed a letter of dissasociation which meant we had no financial link.
Then things cleared up pretty quickly. Now the law is a little different, when you apply for credit - some people ask if you want just your name to be searched (excluding other names at the same address) or not. So in theory you should not affect your parents ratings.
One thing I did do however was setup a PO Box (£50 per annum) and get all my creditors to send letters there, then I told them all that my parents address was no longer my home and that I wa sof no fixed abode but offered a place to send my post and gave them my number (mobile) and I never failed to return their calls.
That way I reverted my bad debt away from my parents house.
One or two creditors would not belive I was NFA but I explained that I travelled for work (which I did) and lived in hotels and stayed with friends and family, and would continue to live off my employer and family until I could pay back my debts whilst essentially living rent free!! hey could not argue with that.

Hope this helps a bit!
D

Bargain_Rzl

In answer to your fourth question:

Any "black marks" against you on your credit file (defaults/arrangements to pay) will remain there until six years after you have settled them. So, if you magically came into enough money to pay off your debts right now, any defaults you currently have will fall off your credit file six years from tomorrow. If you enter into a DMP, you should expect all information relating to your DMP to disappear from your file six years after you have FINISHED with the DMP.

Moustacheman

So if the Dmp takes me 6 years to pay off and its on my credit file for 6 years once I have paid it off, that is a total of 12 years? Is that right?

So does that mean that I wont be able to do things such as Rent a house, Get a mobile phone, or change bank accounts for 12 years??? Because you have credit checks done when applying for all of these????

tattooed_lady

Moustacheman wrote:

So if the Dmp takes me 6 years to pay off and its on my credit file for 6 years once I have paid it off, that is a total of 12 years? Is that right?

So does that mean that I wont be able to do things such as Rent a house, Get a mobile phone, or change bank accounts for 12 years??? Because you have credit checks done when applying for all of these????

No, the default will stay on for 6 years from when it was issued, eg if it was issued today it would drop off your file 6 years from today. Even if the DMP takes 10 years to pay off, the defaults would still drop off after 6 years satisfied or not. If you pay off the debt that you defaulted on it would still stay on your credit file for 6 years but would show as settled/satisfied. HTH!

Northernbird_2

I find the best way of viewing a DMP is that you're using a central person (ie CCCS or PayPlan) to negotiate with your creditors to pay a smaller amount than originally agreed to each of them. Your DMP is with the central person, as far as the creditors are concerned you're simply paying reduced payments. A DMP would not show up on your credit file, just the individual debts as they would if you were paying normally. Each creditor will decide how to update your credit file. Some will issue defaults, others won't. After 6 years the debt will drop off your file regardless of if you're still paying it or not.

If you're having trouble in keeping up with payments, a DMP can be a good option, depending on whether your creditors agree to freeze interest and charges.

Moustacheman

and what happens if my creditors decide not to freeze interest and charges. Where will that leave me?

Northernbird_2

I think it depends on who you use. Someone like the CCCS are funded by the financial institutions they negotiate with so they're generally pretty good.

Choosing a DMP depends on your circumstances, your income, your surplus etc. If you can keep up with the agreed payments, brilliant, do it. If you can't, the alternatives are DMP, IVA or Bankruptcy (in that order of seriousness). A DMP can be much more flexible with reviewing your income (especially if it drops for some reason), an IVA is a legally binding arrangement, failure to keep to will definitely result in bankruptcy, which is the final option.

Give CCCS a call and go through your options. If anyone wants to correct me on this, do.

I know it can be scary thinking about a DMP, I wish I knew years ago what I know now. I would have done things a lot differently (hindsight is a beautiful thing!). With a DMP, it may seem daunting, but if your income increases over the next couple of years, and you can bring your expenditure down, you could pay your creditors back even quicker. From a creditor's point of view, bankruptcy is a last resort for them as well. It's expensive, they get a fraction back of what they lent, they want you to pay back as much as you can and so they should be pretty reasonable. Mine have been.

Good luck chuck. :grouphug: