Debt Management Plan, it is worth it?

ohenriquez

Dear members
I would be most grateful if you could possibly give me some advice at the present time, I believe that several people are experiencing the same difficulties.
We contacted a company Debt Advisory Line because we wanted some help with our finances:
They assesed the situation and recommended a “Reduced Payment Plan” meaning that they would be able to speak with our creditors and have our interests frozen (but paying the same total amount of money)
We are a married couple, and we have a debt of £25000 in flexible loans and credit cards, we have a mortgage, and total income salary of £ 4100 after tax, to be honest we are not struggling to make the payments, but my wife is going to be unemployed next month. We will still be able to make the minimum repayments, but the debt is going to take longer to clear.
They told us that making minimum repayments without any debt management plan we would have to pay £40000 or more in the long run, but if we take this plan with them, we pay only £25000 in the long run plus £90 per month administration fee (we would pay a sum of roughly £1000 monthly, covering all the credit cards and loans) He also explained us that the impact of this deal is less negative on the credit score than an IVA
We like the idea of not paying extra several thousands of pounds on interest in the long run, but we are not sure about the real consequences, we have been looking for more information in web sites, but there is no clear information, we also see “you may have difficulties in obtaining credit in the future”
We are not very interested in “obtaining more credit” in the future like loans, but some of our common questions are: After paying the debt, it is going to be difficult to get a new mobile broadband/phone deal? It will be difficult to get finance for a new car? Will I be able to remortgage at a good rate?, How long does the credit score to get back to “normality?”
Our final question is: It is worth saving several thosand pounds in the long run but having "temporary " adverse credit score?

I appreciate very much your support

DrO

Numpty_Monkey

If you need a DMP contact one of these, not a fee chargeing set of leeches
Non-profit Debt Counsellors' List

If you are paying and can afford the minimum repayments a creditor is very unlikely to freeze interest, they may reduce intrest rates if you ask them

A good place to start is to do an SOA list of all income and out goings, use this link
http://www.makesenseofcards.com/soacalc.html
If you, want to put the results up on here the clever people will be able to make suggestions on where you can trim your budget, freeing up more money to pay of your debts.

With a bit extra money you could snowball your debts, pay off the highest APR first,still pay minimum on the rest,when thats paid of the money you were paying on that goes to pay off the next highest APR
use this calc
http://www.whatsthecost.com/snowball.aspx?country=uk

:A

elsie52

I second what Numpty has said, do NOT go with a fee paying company,. They cannot do anything more for you than Payplan or CCCS, and the money they charge you could be going towards your debt.

We were in a similar position last year, we could afford our minimum payments, just........but we would never have got out of the debt, by going on a DMP we know that there is light at the end of the tunnel. We started out with £74k of debt and we know that roughly within another 3 years, it will all be paid off.

Do what Numpty says and post your SOA, you never know we may be able to help.

tishywish

Definitely don't go with a fee paying company - I'm with Payplan which means all my payments go to the creditors and no fees to the company.

As for is it worth going on a DMP, I'd say yes. I could barely manage my minimum payments - I was keeping up until a year ago when I had to lose hours at my second job, and the car needed major surgery. Going on a DMP was the best move I made, it was quite stressful to start with but now I no longer dread the post, or the phone calls. I'm in for the long term - it might take 16 years to clear my debt - but the way I was going a year ago I'd never have cleared anything.

ohenriquez

Oh, excellent advice!!. I won't use their services. I will consider other options.
I will revise again if I would be able to pay more than the minimum required and consider the independent agencies as a last resource.

Thank you very much for your advice

Omar

Wilmot1428

Ive been in a DMP with Payplan for 3 years now and its the best thing i ever did - I was struggling with the phone calls and letters from my creditors and since Ive bene in my DMP I very rarely hear from them

Numpty_Monkey

ohenriquez wrote: »

Oh, excellent advice!!. I won't use their services. I will consider other options.
I will revise again if I would be able to pay more than the minimum required and consider the independent agencies as a last resource.

Thank you very much for your advice

Omar

Thats where the people here are amazing, they can spot things in your budget, that you would never think off:A, and soon free up some cash

ohenriquez

In case that I take this DMP, how much is the credit score affected? I understand that they put a default notice in my credit filee.Will I be able to get a new mobile broadband deal? or change the car? Will I be able to remortgage at a good rate?

Thank you very much for your help

Omar

elsie52

can't help you on this I am afraid, I live in rented accommodation, we don't even think of changing the car, it will be mended time and time again until we can afford to save up and pay cash for another one. Never, ever will credit be in my home again, and I think most people will say the same. I think if we got into this state once with credit, we woul be likely to do the same again, so its best not to go down that road again.

Numpty_Monkey

I think the best way to describe it is, your credit record will be shot:embarasse

Part of the DMP agreement is that you don't get new credit
I'm on a DMP with CCCS:A,
they are very easy to talk to and they treat people as individuals, so getting a new BB contract I wouldn't think would be a problem
Remortgage or car loan might be different

A DMP may not be needed:D:rolleyes:, maybe just a tightening of your budget, a few changes, might be all that is needed

have a look at CCCS Debt Remedy
https://www.cccs.co.uk/debtremedy/(S(pyvvas55abxsnbjkzygl11fb))/start.aspx?hp=8

CLAPTON

You need to post up an SOA to receive good advice... at the moment it's simply not clear what you can afford.

However, just to note that if you default on your debts (i.e. do a DMP) then potential lenders will see you can't cope with your existing debts and so will almost certainly not lend to you.
In addition your existing creditors can apply for CCJs and apply to put a charging order on your property.
A DMP is not an easy option but without seeing your SOA it's impossible to say whether it's appropriate to your circumstances.