Payment Arrangements

JWM

Hello, has anyone expereince of payment arrangments direct with the CC's individually (as oppossed to a DMP)?

We are thinking of doing that but I need a bit of advice (and moral support). I tried asking on the CC board but didn't get many replies, thought I would try here from a different angle. If you don't mind I will cut and paste my post here as I still have the same questions:

Due to some major changes in our lives, we find ourselves paying £1096 a month minimum payments to various CCs and a loan, which means we are spending £300 a month more than we have (despite cutting all other spending to the bone). I am putting the mortgage on interest only for a year or so (yes I am very aware of the risks), which will save £320 per month. This will still just cover the minimum payments. The loan is with Northern Rock who apparently will not take payment arrangements so we will need to pay that.

We have thought about a DMP but are first going to try to blast the cards. Questions:

1. The most obvious – if I ask to reduce the min payment for a time, and if at all possible reduce the interest rate, what are the chances this being accepted?
2. Should I offer lower than I can afford in case they ask for more, or offer the best I can?
3. M&S is on a lifetime balance rate of 3.9%, am I best just paying the min on this one as if I ask for help is there a danger that I could lose the lifetime rate?
4. I am assuming that once I go on a payment arrangement then I can’t borrow any more on that card or other cards linked to the company (ie Egg and Egg Money)
5. Finally – I am not maxed out on all the cards, I’m trying to control things before I get to that stage, but if I asked for a payment arrangement with Egg would that affect cards with other Companies? So can you be on a payment arrangement with one and operate the other normally? I’m asking as going to keep my Goldfish card for emergency ie zero balance but there if I need it. Also the M&S card is on a good lifetime balance rate so I'm not sure if I want to touch that. Would a payment arrangement with another company affect it? I know with a DMP you are not allowed any unsecured credit so I need to check if it is the same with payment arrangements.

Thank you!

JWM

Just bumping......

So can I assume then from the lack of replies that no one has experience of dealing direct with CCs then?

Should I just bite the bullet and go with the DMP?

skintandscared_2

Hi JWM

I am by no means an expert here and I am going for a DMP with CCCS so can't give advice on going it alone. My only thoughts on your plan are that, as soon as you ask a credit card company for a reduced minimum payment (effectively a reduced interest rate) they will probably flag your account as in default, which will affect your credit file. If they do accept a reduced payment it will probably be for a limited amount of time - say 6 months - then they'll expect you to increase it again.

If you have a clear 0% card can't you transfer the balances from other cards onto it, to cut your payments dramatically for a while but keep your credit rating intact?

It might be worth speaking to someone at the CAB, CCCS or Payplan who can explain your options to you. They are free services and they can handle the whole thing for you and it won't cost a penny. The only problem with DMP, based on what you want to do, is that all creditors are treated the same. So you can't just offer one card a reduced rate but keep the others going as normal. So I can see how that part of it might not suit you.

I'd say you've nothing to lose by approaching one or two cards or just phoning their own advice lines and saying you're having a bit of a tight time at the moment.

I'm sure there are people on here who have approached companies and done it themselves who may have template letters to suggest. Best of luck in whatever you decide to do. Sounds like you're being really sensible and have taken your head out of the sand long before many of us!!

xgingerx

Hi, well what I know, you could set up your own arrangements but usually they will want a Statement of affairs to show all your incoming and outgoings, in theory you are supposed to treat all your creditors fairly and the same. I really would suggest you do a dmp remedy on the cccs site
cccs.co.uk this is a charity which is free and is linked to the financial industry. I used them and to be honest you are more likely to get interest stopped while with them, for me it took about 4 weeks before most interest was stopped but this is upto the creditor and they dont have to do this. While on the plan u r not supposed to take or use any credit but im sure some do but thats at your own risk as if u did get caught out then some creditors could be funny about this and jeopodies your dmp, one big thing to remember is that u can stop a dmp when u want, so if its a short term problem you could start a dmp, take advantage of a time when interest is froze and when u r in a more manageable situation then in some cases you may keep your accounts and some once paid will auto close. I have 11 creditors and was defaulted by 3 and rest are on a payment arrangement, my credit file is shot for the next 6 years but it will take me longer than that to clear my debts. Anyway good luck

JWM

Thanks, I just can't make up my mind.

Wish I could be more decisive......I think!

xgingerx

Hi, it depends how much u owe as well in total, Id call the CCCS tomorrow and have a chat as they will give u good advice im sure.

skintandscared_2

The thing is, you can call CCCS or Payplan and get free advice. You're not committed to do anything. You don't have to go ahead with a DMP but you can get lots of free advice and maybe a few ideas you hadn't thought of.

To be honest I was absolutely terrified before filling out the online CCCS form. But I'm feeling so much better now I've got it all in place to start. Just speak to the experts and I'm sure you'll get a better perspective.

Rabbit-in-headlights

Hi, you might also find this link useful:

It helps you to see the best way to clear your cards based on interest rates etc, I heard about this on this board and MSE Martin has mentioned the same kind of idea, i.e. paying minimum payments only on all but the card with the highest interest and throwing all your remaining funds at that one to get rid as quickly as possible, then repeating on the next highest rate, and so on until they're all gone...

You might feel your budget is too tight right now to do this (mine certainly was - I've just started a CCCS DMP too!:o ) but it's well worth looking at for future reference, in case your cash flow improves.

Best of luck with your decision making - I agree with the others on here, talk to CCCS or NDL (contact details at the top of this board) for unbiased, free advice.


Rabbit