I need help - Debt Management Plan

mikon

I have just spoken to the National Debt Helpline who seemed very helpful. They recommended an Debt Management Plan over 10yrs however part of my mortgage is paid off in 2 yrs so the additional income from that can be used to reduce the term down to 7yrs

As a homeowner the IVA may not be suitable as an equity clause may be built into the order and the start up fees can be upto £6,000. Also the IVA is not suitable because part of my mortgage is paid off in 2 yrs and the creditors may apply the equity clause and I will have to remortgage and may not be able to get another mortgage.

The DMP seems a better option although it will be over a longer term I am concerned about the impact it will have on my credit rating and daily life.

Question 1. Will I be able to get credit to buy such things as household essentials ie fridge freezer etc?

Question 2. Will I be able to get a Debit card?

Question 2a Will I have people knocking at my door demanding money or threatening phone calls?

Question 2b. What is the likely hood of the creditors accepting my DMP?

Question 3. After I have paid the debt which may be 10 yrs will my credit record be affected for a further 6yrs?

Question 4. I need a car for work. How can I purchase a car if I have a bad credit record?

Question 5. Some of my debts although the smaller ones will be paid off in 2 yrs will they spread the payments out over a longer period?

Question 6. Will the DMP administration team deal with all the letters of threating court action or will I still receive these letters?

I have not missed any payments to any of my creditors but am struggling to keep everything together. How is a DMP going to affect my day to day activities such as online purchases etc. I know these seem trivial but I just need to get my head around what impact the DMP will have. I have a wife and 2 children and I do not want to lose my home. I am worried sick and need advice.

Please can anyone help me or advise me any advice is appreciated i was worried before but now i am worried and confused.

Thanks

RAS

First question

Do you understand that an IVA is an Insolvency arrangment that will be recorded permanently on the Insolvency regsiter and that if you are asked in any application if you have been made BR or entered any other Insolvency arrangement, you have to answer yes, for the rest of your life?

mikon

Ras

Thanks for replying. I did not know this. I think the best option is the Debt Management Plan do you have any advice on that.

Thank you once again for taking the time to reply.

Regards

RAS

Few notes below.

mikon wrote: »

Question 1. Will I be able to get credit to buy such things as household essentials ie fridge freezer etc?

No - you will have to give NDl or CCS an undertaking not to take out any more credit for the duration of the DMP. However, you can join up with www.freegle.co.uk, which may enable you to get free short-term replacments and if you are faced with major unscheduled expenses, the DMP rpovider will negoitiate a reduced payment or no payment that month.

Question 2. Will I be able to get a Debit card?

yes - it is not credit

Question 2a Will I have people knocking at my door demanding money or threatening phone calls?

They can try but the former is not allowed and the latter can be reduced by sending a few letters out (templates on here)

Question 2b. What is the likely hood of the creditors accepting my DMP?

Some will, some will not initially.

Question 3. After I have paid the debt which may be 10 yrs will my credit record be affected for a further 6yrs?

Question 4. I need a car for work. How can I purchase a car if I have a bad credit record?

You nedd to learn to save and buy something cheap.

Question 5. Some of my debts although the smaller ones will be paid off in 2 yrs will they spread the payments out over a longer period?

Smaller debts will be paid pro rata, so they will be aid out over a longer period.

Question 6. Will the DMP administration team deal with all the letters of threating court action or will I still receive these letters?

You will still receive the letters and it is vital that you do not foward the letters to the DMP provider but deal with them yourself. DMp providers can anly advise you to admt the debt. There are llots of ways to challenge the creditors and stop CCjs etc. Come here for help.

How is a DMP going to affect my day to day activities such as online purchases etc.

use a debit card - i do. You may need a pre-paid credit card for a few things.

I know these seem trivial but I just need to get my head around what impact the DMP will have. I have a wife and 2 children and I do not want to lose my home.

That is not going to happen, although you will be targeted by the creditors because you have a lost of equity.

As said before many of these threats can be dealt with successfully.

mikon

RAS Thank you for your help you have laid some of my fears to rest. I guess you become disciplined and appreciate things more rather than just spending for spending sake. My worry is when the letters come I thought the DMP administrators appointed by the National Debt Helpline dealt with all the letters etc.

Thank you for the quick reply you have eased my worries.

DarkConvict

A DMP is really just an informal arrangement to pay your creditors on a prorata basis on surplus income vs. size of each debt.

The DMP seems a better option although it will be over a longer term I am concerned about the impact it will have on my credit rating and daily life.

Question 1. Will I be able to get credit to buy such things as household essentials ie fridge freezer etc?

Firstly, if you do a DMP you are making below minimum payments so you get defaults and late payment markers, this would mean creditors are unlikely to give you credit. Further to this if you go via a provider like CCCS they will ask you get no more credit whilst doing the DMP, if you do they may stop handling your case for you.

Question 2. Will I be able to get a Debit card?

Yes, even if you go bankcrupt, CO-OP CashMinder and Barclays CashCard has debit card facilities.

Question 2a Will I have people knocking at my door demanding money or threatening phone calls?

Yes, they should not threaten nor visit without an appointment but they do. You have to put your backup and write to them using the law to force removal of your telephone number and remove rights to visit your house, then you communicate in letters.

Question 2b. What is the likely hood of the creditors accepting my DMP?

They sometimes accept straight away, or after months, or never. All you can do is send payments in accordance to what you can afford. Some will try for a CCJ but if your on a DMP they fail fail as you are paying what you can afford already

Question 3. After I have paid the debt which may be 10 yrs will my credit record be affected for a further 6yrs?

It may have some affect, whilst defaults last 6 years you may have late payment markers, searches etc whilst may cause problems but as debts go down, you pay the min payments or more so you don have late payment markers and they can only place defaults once so you should be ok. But after 10 years do you really want to get credit again

Question 4. I need a car for work. How can I purchase a car if I have a bad credit record?

You pay for it in cash, not in credit. If you need a car to get to work, but can't get a car. You have to choice public transport or a new job. However if you have a car already they (bailiffs if it goes to court for a CCJ) cannot take it away if it is NEEDED for work.

Question 5. Some of my debts although the smaller ones will be paid off in 2 yrs will they spread the payments out over a longer period?

You payments are split over the size of your debts, so there abouts all debts will be paid off at the same time. Whilst a debt of £200 is paid at £20 a month, if £200 is so small you might end up paying £2 a month instead, so it takes longer to pay that 1 debt off but overall your debt free date is the same. If you can make all your min payments still, look for a snowballing calculator!

Question 6. Will the DMP administration team deal with all the letters of threating court action or will I still receive these letters?

No, they will tell you its a scare tactic. If they do send a court summons (CCJ), they will say to accept it / send them the paperwork, this is a very bad idea. Admitting the debt is a very bad idea, you have to defend it yourself, i can't remember if its 10past6 or fatbelly that posted about this exact issue!

cookie220985

Q1: its higly likely you wont be able to get credit on a DMP, im on a dmp and was told its pointless trying coz the repetitve refusals will make the credit report worse than already is.

Q2a. not sure about debit card, you need a debit card enabled account 1st.

Q2b they dont have to accept, but over time they will realise they have no choice but to accept when they see no payments coming in from else where.

Q3 whatever you encounter till its paid off will always stay on your report for 6years, but when its paid off, thats another settlement on your report.

Q4. You may have to get a cheap run about for now, bought from pocket, can you not walk halfway?

Q5 usually in a DMP all creditors are spreaded equally, in priority order.

Q6 any threats you recieve and letters, read, take note and re-direct to the DMP admin, they will stop all court action, and the letters do stop eventually.

the DMP should stop all charges and interests and make living expenses more affordable.

RAS

mikon wrote: »

My worry is when the letters come I thought the DMP administrators appointed by the National Debt Helpline dealt with all the letters etc.

they are quite happy to do this, but it has major and unfortunate implications because they can only admit the debt. That scuppers your chances of challenging the debt or make it difficult to prevent charging orders later.

Read this thread http://forums.moneysavingexpert.com/showthread.html?t=2045387

mikon

Hi everyone and thanks for the replies so far.

One further question I have which has come out of the responses is :-

I have a car well people carrier which is currently under finance and is one of the debts which will be on the DMP. Will they apply to the courts to repossess the car. Will this only happen if the car is on Hire Purchase and what is the difference between HP and Finance. I need the car.

Can anyone answer this as it is important to me.

Thank you once again for the quick replies.

RAS

You cannot put a car on hire purchase into a DMP as it does not belong to you, it belongs to the HP company.

You need to look at the paperwork and find out if the finance is secured on the car or not and then talk to your DMP provider.

mikon

I think it is bought on finance so will form part of the DMP. Will it be repossed if I have purchased via finance? Or will the DMP arrange this as part of the DMP?