I really need some advice

syk

I've a total debts of £8k, and i'm about to start a DMP with payplan by the end of this month with a repayment of £200p/m.

breakdown of my debts,

HSBC personal loan - £4k
Halifax credit card - £2k
Barclay credit card - £2k

however, the halifax debts inculded some cash advance transaction, therefore i'm paying like 27% interest(for £1000++ of the total £2k i owed) each month which i'm really struggling as i need to pay off other debts as well.

as far as i'm aware every repayments through DMP are divided into percentage depending on the amount owed to each creditors and forward to them accordingly.

which mean HSBC is definitely getting more share of the cake then subsequently halifax and barclays. are they gonna slam penalty chaarges if they did not receive enough money for the minimum payment? if they do received enough for paying the minimum but the interest of 27% still stands, it means that i only actually paying the interest not the initial debt.

i'm sooooooo confused about what to do

by the way, i can actually afford to pay £400p/m but i thought to save the extra £200 each month i've money to spend on bills, etc just in case i'm out of work.

Tixy

Hi syk

Have you gone through your budget with Payplan? I'm suprised they are letting you have £200 'meat' on your budget to save up.

You are right that in a DMP each creditor gets a pro-rata share based on the balance.

So HSBC will get £100, halifax £50 and barlcay £50. How do these amounts compare to your minimum payments for all 3?

Payplan will ask your creditors to freeze interest (some may, some may not, some may eventually).

Without knowing your full situation I think if you can afford £400 you would want to be paying most of that amount back - the more you pay back the sooner you will be clear of debts - if you do lose your job or have an emergency you would revise your DMP payments (either temporarily or permanently). Its okay to keep a small emergency fund but not one that is the same amount as your monthly payments.

If your minimum payments on all are less than £400 then I would not go on a DMP, yes the interest will be high but better than totally wrecking your credit rating for years to come (and payplan cannot guarantee interest will be frozen by any creditor)

syk

tixy

thank you for your reply..

i'm currently paying

hsbc - £170 fixed p/m for total of 24months = £4080
halifax - last statement minimum require was £40++
barclay - last statement minimum require was around £30-40 if i'm not mistaken

yeah.. idieally i wouldn't want to go for DMP, but bcos they deal with all the creditors so can save me unnecessary hassle..

Tixy

Well it seems like you will be paying both halifax & barclay more than the minimum - so I expect that neither will freeze interest - having said that they probably won't default you either.
HSBC will probably default you, and still may not freeze interest. This default will be on your report for 6years and impact on your ability to get credit.

I just don't see that you are in need of DMP - you are aware you have to agree not to take out anymore credit for the entire DMP aren't you? And whilst your 2 small creditors probably won't default you if one decided to mark your account as arrangement to pay then that would also impact on your credit rating. Even a new phone contact willl be hard to get once you have that default.

I personally am very suprised Payplan will even accept you for a DMP if you can really afford more than the £250 minimum amounts.

Is it that much hassle to pay 3 direct debits each month (for the loan and both minimum payments) and then 1 or 2 manual online payments to pay any extra you can afford off the cards each month?

syk

tixy

thanks for your kind advice

i dont feel i needed a DMP as well, but i'm looking a year ahead where i will be doing my last year in college where i doubt i would have spare time to work. that's the reason im thinking of DMP so they could negotiate a fixed £200 p/m which i should be able to afford as i'm now saving as i mentioned in earlier post for emergency..

miss_missy

syk wrote: »

tixy

thanks for your kind advice

i dont feel i needed a DMP as well, but i'm looking a year ahead where i will be doing my last year in college where i doubt i would have spare time to work. that's the reason im thinking of DMP so they could negotiate a fixed £200 p/m which i should be able to afford as i'm now saving as i mentioned in earlier post for emergency..

hi
i have to say im with tixy i think you would be far better paying off yourself and if you listed an soa many people on here could help you work out if you could afford even more to pay off the credit cards

i understand what your saying above but have you thought about your life after college and if you mess you credit file now youll have years of possibly struggling with getting credit once out of college

first thought is do you have any availble credit so you could possibly shuffle some money around? also have you tried to get any new 0% or LOB% cards recently? if not might be worth trying so that you could try and get rid of that halifax high interest

these are just some thoughts to try and help