Should I consider a debt management plan?

dangerousdodo

Hi all,

I have recently joined the site having a serious debt problem of £33500. I have done an SOA and with losts of really helpfull advice from many of you guys have actively started to cut down on the nasties and making the lifestyle changes and have managed to make some big savings, but its still a work in progress.

I have started to look at addressing the debts and looked at snowballing, also been in touch with a company to see if I could get a loan to aid with the biggest debt which is Virgin at £20k at 26%. They rejected me for a loan but put me in with a debt consolidation company called Churchwood.

I was very sceptical, having read articles on debt consolidation organisations , however I decided out of curiosity to run through my figures with the adviser.

They have told me that they would be able to organise a total repayment on my debts of £35508 over 6years at with an initial monthly payment of £628 which includes fees followed by £494/month based on a fixed fee of 16.99% of the debt. They say that debt is unsecured, its not an IVA and I could repay more to repay it earlier if I wished and wouldnt be penalised and the interest would remain at £2k.

My current repayments are on minimum repayment at £850/ month so it would considerably reduced this, and I would aim to keep the repayment at this rate to clear the debt earlier so it could be cleared in 3.5 years.

The snowball seemed a good approach , but when I checked what the interest repayments would at £850/month would cost about £30k in interest and would take over 6 years. I would consider with the savings paying more , but the interest would still be considerable.

I have also been onto some websites to read reviews and they range from scarily bad to very good. I did pick up that some of the people with bad reviews were in a worse position than me in that they were already defaulting on payments after taking up the agreements.

Should I consider this or am I being naive??

Thankyou
DD

dangerousdodo

Sorry i just realised i have posted this twice, first time round i didnt think that it went on so i resent.

GeorgeUK

If you are currently able to meet your minimum payments, then don't do a DMP - your credit rating will be shot for quite a few years.

Also you can set up a DMP with Payplan or CCCS for free - why pay fees to a company when you can do it for free?

Churchwood cannot guarantee that interest would be stopped or charges would not be applied to the account. Only your creditors would have a say in this.