Future implications of going on a debt management plan

LISAJB_3

Hello,
I am new to the forum so apologies if this subject has been covered previously. I am hoping thats someone could please clarify whether or how going on a debt management plan affects your credit score and future in terms of getting credit for mortgage.

Due to loss of my income we are now relying soley on my husband’s income and as it stands our outgoings far exceed our incomings.

We have been into Citizens Advice and they have given us a debt management plan to complete and in the mean time have asked us to contact each of our (non-priority) unsecured creditors to advise them of our situation and inform them that we are hoping to come to some payment arrangement etc.

Although we never intend to apply for more credit in the future we will of course need to re-mortgage when our current mortgage comes to an end in 2 years time. Also the type of employment my husband is in, it requires him to have nothing "untoward" (ccjs etc) on his credit report. At this stage we have not yet ever missed any payments but with our current situation being as it is, we will struggle to make future payments.

We have a 3 month old baby so I am not in a position to go out to work right away and pay for child care etc, but I would hope that certainly by this time next year I will be back in work and that we will be able to come off a debt managemet plan and resume payments as normal.

Can anyone advise and explain both the short and long term affects of going on a debt management plan?

Thank you

Lisa

Tixy

Hi Lisa

I'd have thought that CAB would have gone through this before suggesting you complete it.

When you go into a DMP you agree not to take on any more credit for the duration of the DMP.

A DMP will affect your file, you will get defaults on your credit accounts after anything from 3-6months, and you account made be marked as 'arrangement to pay'. This would signify to any potentia lender that you are having debt difficulties, however it also shows that you are tackling your problems not ignoring them.

Even on a DMP you could get the odd creditor who won't accept the pro-rata payment and decides to go for a CCJ against you. If this happens they may only be given a judgment for the amount you have offered but it will put a CCJ on your credit file.

So your credit file is likely to be affected for a minimum of 6.5 years after entering your DMP and could potentially be affected for up to 6 years after you finish your DMP (although the effect will be more minor after the DMP credit accounts are shown as settled & closed).

You are able to remortgage whilst in a DMP but in reality you will find that the best deals /APRs are not available to you.

Hopefully someone will read and reply who has experience of remortgaging whilst in a DMP to give you their experiences.

Fire_Fox

Why don't you post up a Statement of Affairs so we can see where savings can be made? Never seen one without wiggle room!
http://www.makesenseofcards.com/soacalc.html

Also have a read through the 'Up Your Income' board for lots of ideas for money-spinning that you can do around your new baby - online surveys, cashback, mystery shopping, matched betting (NOT gambling).