DMP, Yes or No

Elloyd

Hi

I have been on here a couple times with my SOA's and have been adviced to contact cccs to see if I can arrange a DMP. I am really worried about this, as I dont want to fall into even more debt than what I am already, and by only offering my creditors a token payment of £1, that is what is going to happen. So I was just wondering what people thought of DMP's and whether they are worth it. And what is the long term solution with DMP's, do you stick to it until all the debts are paid, or are they just a quick fix?

HappyMJ

Had a very quick look at your previous posts... A DMP will cause the interest to be frozen so you will be paying them off very slowly. You have a house with equity and a reasonable income so it's probably the best choice for you.

missal

Hi,

I went the cccs route (diy documents) a few years ago and offered token payments, which i found ok but like you say your not really touching the amount of debt but if token payment is all youcan afford then, it's simple that's all you can afford! If you're anything like me it'll bug you like mad that you have debts that aren'tbeing paid but needs must sometimes.

I have recently gone onto a managed DMP with Gregory Pennington (i pay them to deal with everything i think 15%/month - at the time of taking out the dmp i was desperate to start making some progress with my debts and they offered this to me, in actual fact what they done was start taking money but not actually paying the debts so be careful who you use) it's ok now as all of my companies are getting paid regularly and are not bothering me (at all!!) but i am planning to take over very shortly myself as i feel much more in control.

Where the original creditor is still looking after the debt they have marked my payment as upto date on my credit file (which i great) but where the debt has been passed on for collection by agency then the debt shows as in default on my account.

The thing is like i said above if you can't afford your contractual payments then it's better to start small and lke me everytime you find an increase in salary etc let your companies know and increase your payments.

I started at £1/month and am now on about £220/month and making good dents in my debts every months, i have a few where the payment is less than £50 to settle and am hoping to pay these off within the next few weeks, this also means the bigger debts will be getting a bit more money.

This is my take on the matter but ultimately it's your choice, there's loads of advice on here though

Missal

HappyMJ

Had a closer look at your SOA. The childcare element of Child Tax Credits pays 80% of your childcare costs. Are you getting that? It's not under benefits and could be worth quite a bit as your childcare costs are around £500 per month. Once interest on credit cards of what looks like an average of 21% is frozen you will be so much more comfortable that an offer of 1-2% of the debts each month looks quite feasible. I'd say you'd then be debt free in 60 months.

Tixy

Hi Elloyd

Token payments and a DMP are not quite the same thing. Token payments would be where you pay your creditors all the same amount each month, its usually done just until your situation improves.
A DMP is using your surplus available for debt repayments to pay off your debts. Its usually lower than the minimum payments but higher than token payments.

HappyMJ - whilst on a DMP/token payments you would ask creditors to freeze interest this is never guaranteed, often most creditors will but sometimes some won't which can mean the debt is increasing.

Elloyd - I suppose the thing with DMPs is what other choice do you have? if you can afford to keep up with minimum payments than you should. If you cannot then a DMP is often the only alternative to bankruptcy or an IVA.

Usually once you are on a DMP people stick with it until a) their debts are repaid or b) their circumstances change and they can go back to making payments at of above the minimum payments as per the original agreements.

Elloyd

Hi, Thanks for your posts.. I feel the same as you did Missal, paying £1 is going to take the rest of my life to pay the debts off, and I cant sleep at night as it is with worry.
Happy MJ, we are entitled to tax credits, but because my husband was out of work at the beginning of the tax year, and I was on SMP, we received a high amount, now I am back at work, and my husband is working, we now apparently owe them over £1000, so they have stopped our payments.
Debt free in 60 months, how do you think I could do that, I cant see the wood for the trees at the moment. Can you point me in the right direction??
Tixy, i didnt realise they were two different things... Thanks for the advice.

HappyMJ

Tixy wrote: »

Hi Elloyd

HappyMJ - whilst on a DMP/token payments you would ask creditors to freeze interest this is never guaranteed, often most creditors will but sometimes some won't which can mean the debt is increasing.

Agreed. Capital One didn't freeze my interest probably as it was only 3.9% anyway but all the others have but then they also reduced all credit limits to the outstanding amounts. I'm on JSA so it's a temporary thing for myself.

HappyMJ

Elloyd wrote: »

Hi, Thanks for your posts.. I feel the same as you did Missal, paying £1 is going to take the rest of my life to pay the debts off, and I cant sleep at night as it is with worry.
Happy MJ, we are entitled to tax credits, but because my husband was out of work at the beginning of the tax year, and I was on SMP, we received a high amount, now I am back at work, and my husband is working, we now apparently owe them over £1000, so they have stopped our payments.
Debt free in 60 months, how do you think I could do that, I cant see the wood for the trees at the moment. Can you point me in the right direction??
Tixy, i didnt realise they were two different things... Thanks for the advice.

Ring tax credits again and give them the new information. It's only an estimate. I don't think you'll get away with token payments though. The SOA is teetering on the edge but with fine tuning it'll be fine. You have to cut back and/or find that job that pays the previous salary.

Elloyd

I think I am just going to have to bite the bullet and go for a DMP. I have been dragging my feet with it because I feel its giving up, my other half is against it too.. He would rather stick his head in the sand, but, if it means we will be able to get out of this mess, and not have the stress month by month on trying to find the money to pay them all, then I guess its a good thing.

Mummyofmany

Why don't you ring Consumer credit counselling service or payplan and they'll be able to tell you what you can afford to pay rather than you worrying, i expressed my concerns when i made the intial call and they really do help and offer very good advice that will make you feel tons better x

BUT....Honestly don't be tempted to use a company where you pay a percentage of what you pay off your debts because they say they'll sort it straight away, they don't do it any quicker really and when you think about it, it's in their interest to squeeze as much as possible out of you as the more you pay the more they earn! Use the free ones