Whatever happened to legally protected DMP’s?

ianmak

Poo,

I agree with you on many levels. I overspent over many years, but I wouldn't say it was on mod-cons, more on just surviving. Though I didn't live frugally like you have, and it's taken 18 months on a DMP to learn how to budget. A hard way of learning I know, but I'm determined to get myself out of it, and help others who are in danger of getting into my situation.

I would be happy to continue to pay my debt back at a reasonable interest rate, because as you say, although I do blame my creditors partly (raising credit levels etc), I'm largely to blame too, and at the moment, they're doing me a favour to some extent?

As for legal protection, fine. But I knew the risks when starting the DMP, and knew it wasn't a get out clause, and that there would be some rough times ahead.

Poosmate

Ianmak thank you so much for understanding what I meant. I was hoping it wouldn't come across as a DMP user bashing. I do fully understand that they are necessary for many people I just get frustrated at the system.

If only the banks would reduce their interest rates to a more reasonable level so many more people would be able to cope and not need to go on DMPs.

But I guess if you look at it from the bank's point of view, they've had to pay out so much on charges payouts and cancelling debts through the CCA thing, not to mention their own !!!! up in investing in the subprime mortgages market, they have to recoup their losses somehow.

Thanks again

Poo

blind-as-a-bat_2

Thank you poo, that was a very well put post, and i agree, to some degree, but disagree slightly, and i stress slightly, everyone must, if on a long haul DMP, have room for an odd treat, 2018 is a long time away, it is unrealistic not to allow yourself a little, no matter how determined you are.

But that’s another matter; the interest issue is the main point, as if you could get some protection to freeze it, would that not reduce your DF date drastically?

So your living like a nun/monk to do the 'right thing', yet they make it worse for you.

Fair enough, you agreed to pay interest, but is there not a point common sense should not say ok, that’s not going to work, just pay back what is outstanding.

More so if you have already paid a load of interest.

After all, the alternative is BR, which means they may get nothing, unless they do better in tax write of than they do allowing you time to repay, in which case they do not actually care your trying to do the morally correct thing, because its not financially viable for them.

That’s where I start doubting the moral argument, as so many creditors give the impression they would rather you pay up now, or go bust, the only reason I can see for that is financial.

The only exception is DCA’s, as they bought the debt for 5-25p in the pound, yet demand the full amount, so have leeway before it becomes unprofitable

fermi

Just realised that there is not a link anywhere here to the actual proposals in question.

So here we go:

Debt management schemes - consultation paper (PDF 0.28mb 56 pages)

I think people would be well advised to have a look through that, especially "Option 3" which deals with potential schemes that offer statutory legal protection and regulation in their operation.

I think it should be noted that those schemes are not just a easy alternative to current DMPs, but instead would be a regulated provision that would put requirements on the debtor entering into one, as well as any creditors.

It wouldn't be something that everyone on a current DMP could just "casually" switch to.

Poosmate

Thanks BAAB. I do live very frugally in some areas of my life i.e. I don't feel the need to buy a new sofa every couple of years because the colour has gone out of fashion or something. I guess that comes from being half orphaned at age 13 and mom having to bring up 4 kids between the ages of 5 and 14. There was no money left over for new settees and stuff so we had to learn quick that the whatever material possessions we had had to last and nothing got replaced unless it broke or really was unfit for purpose.

Having said that, if I really lived like a nun, yes I could reduce my DFD by possibly 12 months or so. I note that one of the main things other suggest to cut back on when offering opinions on others SOA's is Sky/Cable tv. For me the package I have is one of my luxuries but having cable is a necessity as I can't get a proper signal where I live so if I give up cable tv I give up tv altogether. It's also my entertainment as I don't go out anywhere (well my local pub closed down anyway and there isn't another within safe walking distance).

Yes I do get miffed paying so much interest but it's what I signed up for when I took out the Credit Card. I guess it's just me.

Regards

Poo

coolcait

Hiya poosmate

I think you make some very valid points, and you make them very well. I do agree with many of the things you say on a personal level (ie, they are things that I ask of myself).

That said, as you have acknowledged, there are times when a person's debt spirals out of control due to life-changing circumstances - loss of employment, illness etc. If they could have the help of a legally protected DMP to get them back on their feet, there probably wouldn't be too much disagreement with that proposal.

If it can be argued that there is a need for a legally protected DMP in some cases, and legislation is implemented to address that need, then the "legally protected DMP" should be available to all. How could the administrators make a decision on who was eligible and who wasn't if their decision had to be based on subjective judgements rather than financial facts?

I know that there is a real risk that the "legally enforceable DMP" might become a 'market' - in the same way that some other debt management/debt relief measures have spawned a 'market. My list would include things like Trust Deeds/IVAs - genuinely appropriate for some, and there are genuine providers - but also a money spinner for for some less scrupulous organisations. The CCA 'market', as mentioned by you would also be on my list of money spinners for some unscrupulous organisations.

And, in the same open and honest vein as your own post, I hope, there is no denying that there are some individuals (in RL, if not here) who use IVAs/Trust Deeds, bankruptcy, CCA requests etc as a means of avoiding their personal responsibility.

All that said, I would rather see legislation to protect DMPs, helping those who genuinely need that protection, even if that does carry with it the risk that some 'chancers' would take advantage of it.

I also believe that a legally protected DMP works to the benefit of creditors too. By the time someone goes into a DMP, they are likely to have racked up interest, and maybe charges. In DAS, for example, those would be included, but no further interest would be payable from the date the DAS starts. I'd be less supportive of a solution which wiped of intrest etc retrospectively.

So the lenders are getting back what they're owed (bottom line) plus a bit more on top of that. Also in DAS, and it seems like a reasonable safeguard to me, the creditor can keep counting and recording the interest/charges as they accrue, but can't add them to the amount agreed at the outset. If the DAS/DMP is paid off as agreed, then that interest/those charges are written off. If the person doesn't pay as agreed, and the DAS is 'revoked' then creditor can add the interest/charges back on.

When I look at the Scottish statistics on the levels of dividends paid out in Trust deeds and bankruptcies (admittedly, I haven't looked at them for a while! :rotfl:) I certainly feel that DAS is also a better option for creditors, as they're more likely to get their money back.

They might have to wait a bit longer to get it, but you also have to take into account that not all Trust Deeds or bankruptcies are done and dusted as quickly as you might think, in terms of how long the creditors have to wait for their money.

So, on balance, even though I agree with a great deal of what you say, I still see legally protected DMPs as a good option. And, as with every other option, it would be up to the individual to decide if it's the right thing for them.

Thank you for a very thought provoking post - it certainly made me think about how to explain my own views on the issue.

Poosmate

Thanks Cool and right back at you!

I do think something needs to be done and the "Legally Protected" route seems to be the way to go.

To be perfectly honest, it's not something I've studied as yourself, Blind As A Bat and Fermi have, I just base my thoughts on what I've read and picked up on through reading the threads on this board. And I just "feel" like there seems to be a shift by the banks to be more reluctant to freeze the interest. I'm not exactly sure where this "feeling" comes from as it seems that some banks will accept straight away for some and the same bank refuses for others. What I can't fathom is if it's the start of a trend or if it's always been so hit n miss.

I don't know, maybe it would be interesting to collate some information on this. Off the top of my head, the information required to carry out such a study would be:

Date DMP started,
DMP Provider,
Creditors involved,
Creditors who refuse,
Reason for debt becoming unmanageable.

I'm sure there would be more but it's too late and I have work in the morning and my head is cabbaged!

Indeed the whole thread is thought provoking.

Good night all and sleep well

Poo

Miss_Poohs

Living with someone who has a very sizeable DAS to maintain - believe me its no easy task, but yes he is paying back his debt and a little bit more too.

Admittedly it would have been over and done with if he'd just gone bankrupt, but he really did want to pay back what he owed and protect our home into the bargain too.

I thank my lucky stars for DAS alot - and yes I'll back a plan that would see a similar set up for the rest of the UK.

Miss P