Payday Loan Hole - Debt Management Plan

gwon

Hey all, looking for some practival advice.

I have got a horrible situation of payday loans, I got one ages ago to try and tide me through...The ease of extensions and massive interest has caused me to enter a spiral of payday loan usage.

I'm now at a position where even just to pay the extension fees I'm getting left with no money to live on.

I was contacted by a Debt Management company (Fresh Start Finance - fsfm.org.uk), who went through my expenditure etc to see how much I was able to afford.

I understand that they're a money making firm, and their aim is to make money out of me..However they have a £300 setup fee, which they work into your early payments, and then charge 17.5% each month.

Now, I understand that they're taking money - but if they do what they say and get the payday loan folk to leave me alone, that price is a drop in the ocean compared to what the payday loan people are charging - and if they're only taking £150/month for 18 months, I can actually afford to start living again.

However, I can't find any real information on the company online so I don't know how trustworthy they are, and if they're really going to pay the creditors etc.

I read the sticky threads on here that massivley advise against that kind of firm....but what are my other options?

I have bad credit so can't get a personal loan. The debt alltogether is probably less than £2k, it's just the way they charge it, it never gets any smaller. I need them to stop taking all my money STRAIGHT AWAY and start paying what I can afford, and this debt management company, if they are to be believed really would help out here...

I think alarm bells started ringing when he said to cancel my debit card and to simply not pay the PayDay loans, and when they call me to chase I should simply point them to fsfm's phone number, give my finance managers name and my client number and not engage further in conversation... This sounds a bit shady... BUT I can see where they're coming from because these payday loan companies are evil and will pull the money out of your account if they can get away with it..

So I think my questions boil down to:

1. Are these debt management companies legit? Do they do what they say they're going to? I'm not concerned about they fee they charge, if I really can get down to £150/month straight away.

2. If this is not the best route to follow, what should I do to stop losing every penny I have every month just to keep the debt at the same level...

Help appreciated.

gwon

Just to add to this. I do actually have an OK income. And can afford to pay 100-200/month to clear this.

RAS

Hi

Your starting point is going to have to be to open a new bank account, which may well have to be a basic one.

What you should be doing is either setting up a debt managment plan with one of the debt charities, or stop paying the payday loan, then arrange your own repayments as several people here have done.

Insomniac666

Hi there, I'm in same position, I've stopped paying the loans and cancelled my card, luckily i do have another account (basic) to put my pay into via online banking.

check this thread.. http://forums.moneysavingexpert.com/showthread.html?t=2074567

my situation with one of the payday loan companies is that i stoppe dpaying they referred me to a debt collection agency and I've arranged a £30 a month standing order to clear my £780 loan. (Pounds till Payday via Clarity Credit Management), I wouldn't bother with the other company try and do it alone (with our help first).

Insomniac666

Is it just the one payday loan? if it is haggle a small payment as you can I offered £30 and it was accepted straight away. then if you can afford to save some money keep it and depending on the size of your loan after a few monthly payments get a F & F offer letter to the company? you might get it paid off for a far smaller percentage.

Make sure you only deal witht the companies in writing though not on phone.

gwon

From what I'm reading the debt management charities only really step in if your debts exceed £8k.

I know that the fsfm.org.uk are money makers, is there something out there that does the same without speaking to dodgy people.

Remember my total debts only ammount to around £2k.

berna123

Hi Gwon
I have entered into a DMP with CCCS. This is the best thing i have ever done in my like. (I am 53!!) They will do for you exactly what
Fresh Start Finance are going to do but without any charges.
Please don't pay anybody to sort your debts. Go on the CCCS website and have a look and give them a ring. I promise you will not regret it.
Well done for coming on here and talking about it.

x
Berna

gwon

Insomniac666 wrote: »

Hi there, I'm in same position, I've stopped paying the loans and cancelled my card, luckily i do have another account (basic) to put my pay into via online banking.

check this thread..

my situation with one of the payday loan companies is that i stoppe dpaying they referred me to a debt collection agency and I've arranged a £30 a month standing order to clear my £780 loan. (Pounds till Payday via Clarity Credit Management), I wouldn't bother with the other company try and do it alone (with our help first).

It's very much NOT a single payday loan. There are about 3 of real ammounts (500, 800, 800). And more small ones.

I know it's loads, but over the last few years it's been the only way I could afford to eat each month.

And on the new bank account front: If I change my debit card, do I still need to change to a new bank?

Insomniac666

gwon wrote: »

From what I'm reading the debt management charities only really step in if your debts exceed £8k.

I know that the fsfm.org.uk are money makers, is there something out there that does the same without speaking to dodgy people.

Remember my total debts only ammount to around £2k.

I really wouldn't go with that company, there is nothing they will do that you can't here.. there are plenty of template letters, you can use and I'll send you copies of what i sent to my payday loan company... by the way who is the company?

gwon

berna123 wrote: »

Hi Gwon
I have entered into a DMP with CCCS. This is the best thing i have ever done in my like. (I am 53!!) They will do for you exactly what
Fresh Start Finance are going to do but without any charges.
Please don't pay anybody to sort your debts. Go on the CCCS website and have a look and give them a ring. I promise you will not regret it.
Well done for coming on here and talking about it.

x
Berna

Going to call this afternoon!

Thanks

Does it make a difference that I'm in Scotland?

dancingfairy

I've not heard that debt management charities will only help if you have over 8k off debt - that doesn't sound right to me.
Why not get in touch with one of the free organisations eg CCCS/National Debtline or your local CAB - they may well recommend a dmp but without paying a seperate company to do it or they may have a different solution for you.
Have you got a credit union near you? they may be able to help - I think you have to save for a little while with them - even if it's a couple of pounds to start with and then they may be able to help you with a loan which you can afford and get rid of the payday loan people - have a look and see if there is a credit union in your area.
df