Debt Help Agency questions

Reformed_Money_Waster

I have a few questions about PayPlan and CCCS.

My wife and I are currently sorting our finances, switching credit cards, bank accounts, insurances, phone suppliers etc. Using the MSE budget spreadsheet we are currently around £160 per month short of covering our expenses, although we hope to shave some more off this after all our shuffling, and I will post a SOA for everyone to pick apart once things have settled.

I don't know how, but we have managed not to miss any payments *yet* although the credit card balances have crept up a little, and if after all the changes, and our SOA has been reviewed here, we are still short I am going to have to contact one of these agencies for help, and I would like a little bit of information on them.

1. Will they work out a DMP if we are only a *tiny* but short of our expenses, or even if we have enough but only *just*?

2. Does having a DMP have a major impact on your credit rating if the monthly payments are only reduced very slightly?

3. How long after a DMP ends does it take for your credit rating to go back to normal?

4. Do they make allowances, however small, for you to budget for things like Christmas? Will they allow my children to have any pocket money?

5. I assume I will still be able to make my mortgage payments in full, and the other bills will be worked out around that?

6. Will I be asked which household items I own, such as audio/video equipment, computer, and be expected to sell them? Not that I have anything like this of great value.

7. Is having an ISP an acceptable monthly expense, or will I be expected to lose broadband?

TIA.

kathfisch

Hi there! I don't profess to be an expert on these things, I'm sure someone will be along soon with more details. I have heard, though, that all the companies put the emphasis on devising a budget that is reasonable and possible for you to live on (taking into account annual expenses like christmas etc). Obviously this is within reason but there is no point in trying to work to an impossibly small budget and becoming demoralised. This would, I presume, include a bit for pocket money, ISP etc, I've not heard anyone say these companies are too harsh!!

The process would prioritise your debts and so your mortgage payments would obviously be high priority, together with utilities, food etc which are essential. I would think they would avoid any default on your mortgage if at all possible.

I've not heard of people having to sell assets, certainly not small things such as computer equipment etc. As you say, unless there's anything of huge value one presumes there would be little benefit in selling things off. The idea is to devise a budget that you can sustainably live with until the debts are payed.

With regard to your credit rating, I understand that most companies would record a default at the beginning of the process (as I suppose you are sort of defaulting on your agreed payments). These stay on your file for 6 years but there could be mention on your file later on in the process too, I don't know. This is not necessarily bad though, many people appreciate the thought that they can't get more credit for some time and therefore are forced to live within their means.

I think the general advice would be, continue without a DMP if you can manage (and really cut down spending as much as you possibly can) but if things are spiralling out of control for you then consult one of the companies asap, apparently most people wait too long before seeing them and the situation is harder to get out of.

Certainly post your SOA and we will take a look and try to find ways you could save some money!

Best of luck

Kath

Reformed_Money_Waster

kathfisch wrote:

With regard to your credit rating, I understand that most companies would record a default at the beginning of the process (as I suppose you are sort of defaulting on your agreed payments). These stay on your file for 6 years but there could be mention on your file later on in the process too, I don't know. This is not necessarily bad though, many people appreciate the thought that they can't get more credit for some time and therefore are forced to live within their means.

Six years, that's not too bad as I'd imagine it would take at least that to clear my debts, so by the time my DMP ends I should have a clear record again.

moxie_2

I'm with Payplan and found them to be very fair. I still have Sky (cheapest package) and also broadband. I still run a car (although I am seriously thinking of selling it) and they have made allowance in my budget for me to support my daughter at university. I am even given an allowance for cat food and pet insurance for my cat!

lou_lou_skinty_poos

hi there i too am trying to sort my debts out ive chosen to go to pay plan and have found them to be very helpful. ive beeen told by them that when i enter into my dmp it'll be on my file for 6 years and they hope i'll pay my debts off in 5 and a half years so it works out quite well for me. am in the process of directing my wages away from my account with barclays as they are one of my debters and then the ball will be rolling with my dmp. any wisdom i get while going through it will post to you

kathfisch

Reformed_Money_Waster wrote:

Six years, that's not too bad as I'd imagine it would take at least that to clear my debts, so by the time my DMP ends I should have a clear record again.

I would hope that that's how it would work. I guess provided your creditors accept your lowered payment amounts and then you never default on these they should have no reason to put any black mark on your report (beyond the initial one). Also i would have thought that keeping a clean payment record on your mortgage will be very much in your favour because it will prove that you've not abandoned all repayments in a reckless way!! Hopefully after 6 years (or more) of debt repaying is up you'll never want to get in that state again if you can help it!!

Best of luck

poppy52

Mortgage would be safe - they work out what you need for essential bills like mortgage, council tax, utilities and living expenses and then your excess income is divided up pro rata between your creditors. I am allowed expenses for son at uni, pet insurance for 2 cats, I have a basic Sky package and broadband. I didn't put things like going to the pub on my living expenses though - that can get wrapped up in food costs. For some things they have trigger figures and if you go above these the creditors may refuse to accept the plan - food is one, clothes are £20 per month per person, there are set amounts for glasses, prescriptions and the dentist. I have been on one since September and although things are tight they are very manageable and I can even budget for the occasional treat. But first put your budget on here and people will give you loads of advice about how to reduce it - you may not even need a debt plan. Mine will take about 5 or 6 years to pay off and my credit record is damaged hugely for that time, but that's what got me into trouble in the first place. I have a basic bank account now with an electron card and a pre-loaded 'credit card' for things you can't use electron for. But I have money left over in my bank at the end of every month - not much but some, and for the first time in many months I can sleep easily.