To DMP Or Not to DMP

MeeBroke

I've posted on the ask CCCS as well but thought I'd post here for some advice from other debtors.

Picture in a nutshell:

My wife and I are full time teachers. I've been teaching full time for 15 years and my wife 8. We married 10 years ago and were both already in debt with student loans and credit card balances (athough very small). Our teachers salaries were tiny and we tried not to live beyond our means (turning over the couch cushions for change for the lecky meter etc). We seemed to have no disposable income and fell into the trap many teachers do, of using credit during the long holidays to live perhaps beyond our means (not going abroad or anything, just overspending). Our debtload went up considerably when we started to have children and both are still very young.

We have had a mortgage for 8 years. Outside of that we are now £50k in debt. We have never been late on a single payment for any bill of any kind, and have completed HPs for things like cars along the way too.

Our plan was to this year roll our debt into our mortgage and cut up the cards forever. Unfortunately, our lender tells us the value of our house has gone down 33% inthe last 2 months-so our equity is gone.

CCCS is recommending a DMP but we're distraught at the thought of losing our perfect credit rating we've worked so hard to build. The DMP will last 9.5 years. Can anyone think of any other options or do we have to submit to a decade of DMP?

Numpty_Monkey

Well done on contacting CCCS :A

If you post your SOA the clever people can have a look at it see if there and possible savings to be made ,,you'll be amazed at what the clever ones can spot
Use this
http://www.makesenseofcards.com/soacalc.html
A tweak in your budget to give you some extra money to pay of some of your debts ,
You say you have have a" perfect" credit record
Have you checked your credit reports?
Credit Ratings

HTH:A

MeeBroke

Yes, have an account with Equifax and keep an eye on things there. It's perfect except we just applied to Tescos for a consolidation loan and were refused. It is now the only negative listed. They gave no reason for rejecting us and just said 'contact Equifax' etc.

It's really just one CC balance that has lead us to contacting CCCS and to this forum. The balance is £18000 and the interest has just gone from 0% to 29%. We're now at breaking point, largely due to this one balance, as we were managing up until then. I've contacted them (Virgin) and they will no consider any other plan beyond 'pay up at 29%'.

We've already instigated a new regime and have spreadsheeted our outgoings, reduced anything that we can-till it hurts, ordered a water meter, etc.

We've got the paperwork here from CCCS but 10 years is such a long time. I'm giving myself a week to come up with a Plan B.

Numpty_Monkey

It doesn't have to hurt
Cancel the Equifax account,
you might aswell you've got all the info they are gonna give you and save a few extra pounds
You were probably turned down because you are at or near the limit of your credit
Have you tried Experian, go through a casback site get a few extra £s

A bit out of my field and not sure about, it if you have any other credit cards what about phoning and asking them about balance transfers? just an idea

MeeBroke

Numpty_Monkey wrote: »

It doesn't have to hurt
Cancel the Equifax account,
you might aswell you've got all the info they are gonna give you and save a few extra pounds
You were probably turned down because you are at or near the limit of your credit
Have you tried Experian, go through a casback site get a few extra £s

A bit out of my field and not sure about, it if you have any other credit cards what about phoning and asking them about balance transfers? just an idea

Thanks for the replies BTW!

Been down that route. I suppose I can look into transferring the balance to some smaller cards but I was hoping to consolidate this year and cut them all up! I just have this niggling hope that if we could ride out the next year or two, house prices may recover and we can get things sorted properly. We've already put ourselves on a spending plan and will never use credit cards again-we're committed to that.

I've just read through the endless horror stories of letters and phonecalls and bully tactics of CC providers and just don't think we could handle the stress of being teachers, parents to two young kids AND that!

MeeBroke

Wow only take a couple of mins until you're on page two! Suppose there is some perverse comfort in knowing so many people are in a similar position.

Numpty_Monkey

Unfortunatley it dosen't take long to drop off a page
Yes there are horror stories,
but they are also the ways on here to give the CC's and DCA's the finger,

Donedoingdebt

It's debateable whether house prices may recover in a year or 2. House prices have been due for a correction for several years now as they were beginning to climb out of the financial reach of most ordinary income earners.
Some economists have predicted that it could even take 10 years or more to recover to the levels of a year or so ago.
Even then, there are better ways of clearing debt than placing it on your mortgage & paying God knows how many years interest.
As you currently have a good credit record, it may be worth perservering with the 0% balance transfer for the short term. Anything's got to be better than 29%.
If successful, use this method for the balance transfer period & then maybe go for a low interest loan in a year or so when perhaps the Banks may be lending more favourably again & there won't be any recent searches on your credit files.
As you intend cutting up all CCs & not taking out any further credit for a long while, a DMP is not too bad an option if all else fails. Your credit files will only be adversely affected for 6 years from the expected default dates.
Yes, it can be awkward dealing with creditors for a year or so, but if you're dealing with CCCS, for example, they will take a lot of the pressure off you.

MeeBroke

Donedoingdebt wrote: »

It's debateable whether house prices may recover in a year or 2. House prices have been due for a correction for several years now as they were beginning to climb out of the financial reach of most ordinary income earners.
Some economists have predicted that it could even take 10 years or more to recover to the levels of a year or so ago.
Even then, there are better ways of clearing debt than placing it on your mortgage & paying God knows how many years interest.
As you currently have a good credit record, it may be worth perservering with the 0% balance transfer for the short term. Anything's got to be better than 29%.
If successful, use this method for the balance transfer period & then maybe go for a low interest loan in a year or so when perhaps the Banks may be lending more favourably again & there won't be any recent searches on your credit files.
As you intend cutting up all CCs & not taking out any further credit for a long while, a DMP is not too bad an option if all else fails. Your credit files will only be adversely affected for 6 years from the expected default dates.
Yes, it can be awkward dealing with creditors for a year or so, but if you're dealing with CCCS, for example, they will take a lot of the pressure off you.

Thanks for this. You signture says your debt was £100,000 and you hope to be free this year. Did you go the DMP route and has it therefore taken 9 years?

Donedoingdebt

MeeBroke wrote: »

Thanks for this. You signture says your debt was £100,000 and you hope to be free this year. Did you go the DMP route and has it therefore taken 9 years?

Afraid so! Last payment on 16/02/2009. But this is still some 18 months earlier than planned due to being able to work excessive amounts of overtime.
Still have some credit card debt, but that will be the end of my "bad" debt. I'll update my sig. after Feb's payment.

lxpeanut

Can you make the minimum payments on all your debts and have enough money to live on? If you can then a DMP might not be the best thing. Its most suitable for people like me whose minimum debt payments were meaning I didn't have enough money to live on so was getting in more debt. The best thing to do is fill out an statement of affairs at the link Numpty Monkey posted. If that comes up as you can just make the minimum then post it on here and people will make suggestions about cutting your budget back and how to pay the debts off quicker.

If you can't keep up paying the mimumum then a DMP is probably the best way to go. Yes you will get hassel from your creditors at first but there are ways to handle them and people will be able to advise you on that. Also you will loose the fantastic credit raiting but do you really care? Do you want more debt? Remember you have that rating because your the perfect customer you keep getting into more debt and make them massive profits by paying it back slowley. Although you will take the hit in the short term in the long term there are ways to repair your credit rating.

Good luck which ever way you choose.