Leaving a DMP - any advice?

crapwithcash82

Hi All,

I am giving some consideration to coming out of my debt management plan and handling the creditors myself. At the moment I have four creditors to whom I pay the following per month:

Lloyds TSB: £70.79
Egg: £41.33
Lloyds TSB Credit Card: £91.31
Northern Rock: £58.37

Ideally I would like to pay them each £100 per month, with the possibility of additional payments as and when I have spare money to do so. Any spare money I would equally divide between all four creditors so that I could not be accused of favouring one over the others.

Can anyone offer any advice on this? I just think I would feel more in control if I dealt with them directly. I don't receive monthly statements of what I owe or anything, just a receipt from my DMP company (not one of the charity ones because I set it up before I found this fantastic site ) stating the amount each creditor has received.

I've worked out if I did this myself it would pay off the debts just under 2 years earlier than if I continued with the DMP and that is without any additional payments.

Any comments or suggestions would be much appreciated!!

MrsTinks

Firstly then leaving your DMP company is a GOOD thing! Why on earth you want to pay anyone to manage it for you is beyond me...
Either going it alone or going through one of the charities then i would suggest that you don't just give each £100 - it has to be split fairly - so if you owed each the same mount then yes 25% to each of the 4 creditors - if you owe one 50% and the others 10, 20 and 20% then you must split the "debt repayment pot" the same way... so if you had £400 to give them then you should pay one £200, the others £40, £80 and £80... You can't give preference to any creditor as the second you do that the others will stop playing nice and demand full payments again.
Over payments... i would suggest instead of overpaying saving any extra money you have... put it aside in a pot and make full and final offers when you have about 40% of the remaining debt set aside

crapwithcash82

Thanks MrsTine!! So because I am increasing my payment from £308 to £400 per month, I should work out what percentage each credit should get in relation to the percentage of the total debt I owe?

Also, would I just write to the DMP company and advise that I am taking over the management of my creditor accounts? I would then also need to write to my creditors to advise this change too, is that correct?

I like the idea of the full and final settlements, but that will require lots of self-discipline from me to not touch the money if I am saving up!! :P

dozy-debtor

if you use the budget planne on the national debtline website there is a handy tool that wil work out how much you should pay to each one

crapwithcash82

Thanks dozy-debtor, I'll have a look on that website.

Does anyone know if there are any template letters to send to DMP Companies to exit your agreement with them?

Treacle1983

Don't divide any extra money equally - work it out pro-rata which is fairer:

eg: if you have £100 and owe 1: £5000 and another £2500

Give 1: £75 and the other £25

I left my dmp and had no problems dealing with the creditors by myself - as i explained to them - it gave me £47.50 a month extra to give to them rather than the dmp's pockets.....

Me_Myself_2

Just a quick point, use the budget planner on the national debtline website because it's easy to make a mistake.

E.G. In the above scenario, the split should be:
Debt 1 - £5000 - Pay £66.67 (2/3 of £100)
Debt 2 - £2500 - Pay £33.33 (1/3 of £100)

MM

crapwithcash82

Treacle1983 wrote: »

Don't divide any extra money equally - work it out pro-rata which is fairer:

eg: if you have £100 and owe 1: £5000 and another £2500

Give 1: £75 and the other £25

I left my dmp and had no problems dealing with the creditors by myself - as i explained to them - it gave me £47.50 a month extra to give to them rather than the dmp's pockets.....

Thanks for that Treacle! Just out of curiousity, how were your DMP company when you advised them you were leaving them? Did you do it in writing? Also, did you just contact your creditors in writing to advise them that you were taking back control of the accounts?

Sorry for all the questions, but its always good to hear it from someone who has been there before you! Thanks!