To DMP or not DMP; that is the question...

mcrfan

Hi all

Not to put too fine a point on it I am in the poo.

Briefly I am 25, live with parents and owe 31k spread over cards, overdrafts, loans, mail order. Shameful I know It's no excuse but I have been depressed for a number of years and I was in complete denial about my spending and it was only when I ran out of credit that I realised I had a problem. I have no one to talk to who is in this situation so I feel very lonely.
I am making my minimum payments and am not in arrears with anything.

I can't decide what to do!

I have been reading up on DMP/IVA but I have so many doubts and questions. I am a worrier so I don't like uncertainty and questions! I feel more worried about doing something about my debt than not if you get what I mean.

My options are:

Stay as I am and keep paying minimum payments on everything (not getting very far due to extortionate APR rates on credit cards - 26.9, 27.9 and 35.9) and try to scrape together whatever I can. I'm not really going to get very far with this option plus I think that as I have a buy now pay later credit due to kick in from April I am going to struggle to even afford my minimum payments. But I feel almost safe doing this even though I obviously am not going to pay things off quickly. I was hoping that if I could keep going and in a year or so I could get a loan but I have been declined for credit many times over the past year and I don't think the recession is going anywhere fast so I think it is unlikely that I could get a consolidation loan.

Not struck on the IVA idea - although the advantage is that it is legally binding so can't get issued against/hassled, but I also find it scary that it is legally binding. Plus they have to get voted through by the creditors so what happens if they won't vote it through??

Or DMP: I did a budget thing on CCCS and was quite impressed at all the prompts for the categories - things that I really should budget for but conveniently forget - like car tax and mot - they totally slip my mind except for the months when they are due! I think this is where I have been going wrong - last year I really tried to stick to a budget but it never worked because of things like this that I had forgotten about. Plus I had some relapses and some impulse spends.

My main worries are: does anything I do affect my parent's credit score? (I live with them and we use some of the same financial institutions)
How common is it that people who are on DMPs are taken to court? This is something I find very scary.
Do creditors hassle you while you are on the DMP? Even if you are making the regular payments? Are they constantly ringing demanding more?

I have contacted payplan and have done the CCCS online remedy. I have contacted them for advice but I really can't decide what to do. I would like to hear from people who are on a DMP and their experiences?

So what do you think, do I need to take action and try to do something? Even though I find it risky? Or do I keep my head in the sand sort of and hope for a miracle. I think I know what you will say but let me have it anyway...

Gemmzie

Could you do an SOA for us? We might be able to save you some money so it's not needed but it gives us a fuller picture. Try this one > http://makesenseofcards.com/soacalc.html

mcrfan

I'm taking it out now due to paranoia!!

kimdegsidash

Hi MCRFan and welcome to your LBM! :beer:
I think if you read through some of the other posts you will find lots of great advice while waiting for some of the more experienced DFWs to reply to yours. You have already taken some great steps in dealing with your situation, but you really should do the minimum payments calculator as well. Hope someone will post you a direct link, but it is available on MSE. That really helped me to see that I would be in debt for about 41 years if I carried on making just the minimum payments.
My advice would be to take the plunge and speak to a counsellor at CCCS or Payplan. They are fantastic people and non-judgemental.
Keep posting and lurking on this site too, it will really help you to keep focussed on reducing your debt.
Next thing to do is a snowball calculator. That helps you to plan a date by which you will become debt free, and is a great motivator too!
I'm fairly new to this, and I am sure you will get more replies from more expericenced DFWs, but good luck and hope you achieve your goals.:T

MyLastFiver

It is looking like a DMP is by far your best option. According to your budget you will have to offer reduced payments to your creditors of about 85%. They will almost certainly accept this and stop interest etc.

WHile you are setting up your DMP don't pay any of them - or rather pay them all token payments. This will save you £700 per month for two months or so. Keep this money as a "buffer" in case your car conks out, you lose your job etc.

elsie52

Hi,

Speak to the professionals and go on a DMP... We were in the same situation of paying only minimum payments, and it would have taken forever to pay our debts off. We are about to start our 2nd year on a DMP, and its the best thing we have done. We can pay our debts, save a little by being careful with everything, and budget for the important things, like Car Tax, MOT. etc. Its hard, don't think its not, but it wont be forever, there is light at the end of the tunnel, even if some days it feels as if there isn't. Yes you will get creditors ringing, but once the dust settles it gets less. You can always tell them that you will only discuss the matter in writing. Good luck, and keep posting, you will get great advice and help from the people on this site.

HHH_2

I am on a dmp with CCCS and its fab. You will have to tell your parents though as to begin with you will get nasty letters and phone calls from your creditors. they usually stop once your dmp has been running for a couple of months. you must also start living within a budget, not as difficult as it sounds actually. if you keep your head in the sand you may well end up in a worse situation than you are now. there are 1000,s of people on dmps and it's very satisfying seeing your debts go down instead of up. if you keep paying only the minimum you will probably never pay off your debts. with a dmp often they get passed to a DCA and interest stops. dont be frightened ( easy to say I know) have a look the the dmp support thread and you will see how relieved people are and the sort of problems they have had to deal with. good luck

mcrfan

Thanks for your replies everyone. I've got a lot to think about!

Another (!) big worry: How much do your creditors scrutinise what you have been spending on? I have big shopper's guilt and in particular I have just bought something on one of my catalogues that is slightly large and I am now worried about how they will view this. Am I being paranoid? I'm feeling guilty about the amount of crap I have bought on my credit cards too...do they judge you?
I have visions of them sat there going through my statements looking at it all....£100 in new look, £50 dorothy perkins, £50 amazon...etc..... :eek:

I am planning on waiting a few months before doing anything dmp-wise so will it look better if I don't buy anything non-essential for the next few months?!

How much do they examine your spending while you are on a dmp? Can they request your bank statements/receipts to see what you are buying??

Do I have a big brother complex or something?!

mcrfan

kimdegsidash wrote: »

Hi MCRFan and welcome to your LBM! :beer:
I think if you read through some of the other posts you will find lots of great advice while waiting for some of the more experienced DFWs to reply to yours. You have already taken some great steps in dealing with your situation, but you really should do the minimum payments calculator as well. Hope someone will post you a direct link, but it is available on MSE. That really helped me to see that I would be in debt for about 41 years if I carried on making just the minimum payments.
My advice would be to take the plunge and speak to a counsellor at CCCS or Payplan. They are fantastic people and non-judgemental.
Keep posting and lurking on this site too, it will really help you to keep focussed on reducing your debt.
Next thing to do is a snowball calculator. That helps you to plan a date by which you will become debt free, and is a great motivator too!
I'm fairly new to this, and I am sure you will get more replies from more expericenced DFWs, but good luck and hope you achieve your goals.:T

Thank you. I have used the calculator before and I think it said something like 40 years because of the high interest on my cards :eek:

I'm just still not convinced that they will freeze the interest!!

Damita

Welcome and good luck

mcrfan

MyLastFiver wrote: »

It is looking like a DMP is by far your best option. According to your budget you will have to offer reduced payments to your creditors of about 85%. They will almost certainly accept this and stop interest etc.

WHile you are setting up your DMP don't pay any of them - or rather pay them all token payments. This will save you £700 per month for two months or so. Keep this money as a "buffer" in case your car conks out, you lose your job etc.

I'm just not convinced that they will freeze the interest? Does this commonly happen on DMPS?

The idea of saving that money is great, but I'm too worried about being hassled. Do you have to miss payments when starting a dmp? Do you not get zillions of calls and letters and threats?!