dmp questions... long, sorry

Gforce_2

Hello there

I'm trying to help a friend to sort out his finances & could do with some help with how dmp's work, I've read so much stuff about both dmp's & iva's I've got them a bit mixed up.

Sorry if these questions have already been answered, if anyone can point me in the right direction that would be great.:D

If someone has a dmp is it possible to get car finance whilst it's still running?

If someone wanted to get a mortgage would this be possible on whilst on a dmp?

If either of these are possible how would it work?

At the begining of the dmp how long usually does it take before creditors stop continually calling for payment? (my friend is worried about being called at home & work)

Do you have to talk to creditors or can you just put the phone down?

What happens if a creditor refuses to accept a payment offer?

Is it likely that a creditor will freeze interest?

my friend had debt with Egg, HSBC & Lloyds TSB c/c and a northern rock loan, does anyone know whether these companies usually accept dmp's without too much hassle?

Do you need to advise CCCS of your annual salary rise? Would they increase the payment amount?

How often is the payment amount reviewed?

Is it ok to have a debit card with a dmp?

I think my friend has a bank account with one of the companies he has a credit card with, will he need to open a new account?

If CCCS allow you £500 for living expenses and you only need £400 is it ok to save/keep the rest, or would you be expected to pay it towards your debt?

Do you have to keep records of what you spend or prove you need a certain amount?

And finally.... anyone with a dmp, with hindsight is it better to struggle on & try and pay the debt off on your own or is a dmp worth the initial hassle and ruined credit rating?

My thanks to anyone who managed to get to the bottom of the page!
I look forward to hearing from you soon :T

Gforce

Janey51

Hi Gforce. Too early in the morning to answer what I can but well done for helping a friend:D
For quick answers you could have a look at National Debtline advice leaflets. You can ask them to send these out or view online.
I'm sure someone else will be along with lots of advice at a more sensible hour!

joolz43

Ok, I will try to answer, based on my experience of about 3-4 months of a DMP with the CCCS

Gforce wrote:

Hello there

I'm trying to help a friend to sort out his finances & could do with some help with how dmp's work, I've read so much stuff about both dmp's & iva's I've got them a bit mixed up. I believe that a DMP is where you get the opportunity to pay off your debt in a managed way over a specific period of time. Most of my creditors have now frozen interest. IVAs are a form of insolvency (I think, and others know much more than me) where part of the debt is 'written off', but not sure if you can do things like automatically keep your house etc.

Sorry if these questions have already been answered, if anyone can point me in the right direction that would be great.:D

If someone has a dmp is it possible to get car finance whilst it's still running? The CCCS said it might be possible to get more finance from existing provider. e.g I have a renault, which comes to the end of the period of finance next year. I am not sure this is really so, and any way not sure I want more credit!

If someone wanted to get a mortgage would this be possible on whilst on a dmp? I am not sure, but wouldn't be surprised if you can. You are likely to pay a higher rate of interest and be turned down by soome of the more regular providers. Again, I would like to pay off some debt first.

If either of these are possible how would it work?

At the begining of the dmp how long usually does it take before creditors stop continually calling for payment? (my friend is worried about being called at home & work) It has been about 4 months for me. The more unpleasant, frequent calls have stopped and the ones I get are less of a threat. Only MBNA ever rang me at work, I never replied to them as I didn't want to confirm it was the correct number. They also rang my mobile and as it is a work one I don't know how they got it. You can tell creditors to write not phone.

Do you have to talk to creditors or can you just put the phone down? I think if you put the phone down they ring back. I think it is best to face up to this, and to be firm but polite. Never to waver from your story ie you are on a DMP with the CCCS and the payment will be made by them. Never offer more money no matter how hard they press.

What happens if a creditor refuses to accept a payment offer? Nothing, just carry on paying them. MBNA refused to accept but finally after 3 months did accept.

Is it likely that a creditor will freeze interest?They are not obliged to, but I think eventually they realise that they will get their money quicker by freezing. Most of mine have done so.

my friend had debt with Egg, HSBC & Lloyds TSB c/c and a northern rock loan, does anyone know whether these companies usually accept dmp's without too much hassle? HSBC is my biggest creditor, they have't accepted, but don't ring at present either. Don't know about the others mentioned

Do you need to advise CCCS of your annual salary rise? Would they increase the payment amount? There is an annual review by the CCCS, I would expect to tell them I have had a rise and can pay more. This then leads to the debt being paid off quicker

How often is the payment amount reviewed?As above, but if you come into money or you have a rise you want to contribute then you can review at any time.

Is it ok to have a debit card with a dmp? Er NO, the idea is that you end up debt free. I am lucky as my hubby still has a credit card we can use sensibly e.g on holiday, but we are much better at paying this off now than we ever were.

I think my friend has a bank account with one of the companies he has a credit card with, will he need to open a new account? Yes, I would advise to open it before doing anything else. Some people have basic accounts with just a cash card and DDs but luckily we had a joint account with another bank that I could use.

If CCCS allow you £500 for living expenses and you only need £400 is it ok to save/keep the rest, or would you be expected to pay it towards your debt? Well if CCCS think you need £500 you probably do. Don't forget it accounts for all expenses including clothes, hair, dentist, optician, car expenses etc.

Do you have to keep records of what you spend or prove you need a certain amount? No, it is worked out on the amount a judge would allow if you were taken to court for non payment of a debt. They have a set allowance for things depending on how many people you are responsible for. Of course if you spend less than allowed you can keep it for something else.

And finally.... anyone with a dmp, with hindsight is it better to struggle on & try and pay the debt off on your own or is a dmp worth the initial hassle and ruined credit rating? Your credit rating is gone long before you start a DMP, I wish I had done this long before I did. A year ago, I had £20,000 less debt, I was not prepared to borrow more and risk possibly my house. I feel much happier and better in myself, and I have to say I have more money available to spend in truth, as I am not paying more and more interest and credit payments. I am not adding to my debt. One day I will be debt free!

My thanks to anyone who managed to get to the bottom of the page!
I look forward to hearing from you soon :T

Gforce

CLAPTON

just a few points about DMPs

firstly a DMP is not a legal agreement and so either side is contractually bound. so the creditors dont HAVE to stop charging interest and can indeed stop and later change their mind, however in practice most do. similarly your friend isn't contractually bound either.

secondly all the creditors will default the debts so your credit rating is shot to pieces.

so getting e.g. car finance is unlikely as most potential creditors will run a mile however an existing supplier may be prepared to continue if you haven't defaulted their loan.

mortgages are slightly different, it is possible to get a mortgage...you would have to have a reasonable deposit and you would almost certainly be charged a higher interest rate that normal. obviously you would have to show you could afford the monthly payments too ...see
http://www.whoslending.co.uk/

it's essential to open a new bank account to receive your income. If you owe your bank money they can raid your account to pay the debts you owe them.

Gforce_2

thanks for all the replys so far

Jolinar

I just wanted to add that it IS ok to have a debit card, debit cards pertain to current accounts which you are allowed to operate normally as anyone else would. You're not allowed to take out anymore NEW credit, so all credit cards will need to be cut up.

All debts will need to be declared as well as part of the DMP.

If you need a car loan, mortgage etc it must be discussed with CCCS first. They told me that they can recommend more sympathetic lenders.

My credit rating is still good after beng on a DMP for over a year, I didn't miss any payments and called CCCS when I realised I was in trouble so your credit rating isn't necessarily rubbish in the beginning it's when you pay off the balances that the problems hit as this is when you get defaulted by most creditors. Defaults last for 6 years on your credit file, so say your DMP is 5 years, and your defaults are 6 years you're looking at 11 years of bad credit rating possibly. That said it isn't a problem for me as I don't intend having credit ever again! It's fantastic being in control of your finances and I can't believe it took me this long to get it lol.

CCCS budgets are designed so you don't have spare cash to spend as you please, any cash for annual bills I put aside into a separate accounts, for instance you're not given any "spends" or rainy day money and will have to be very disiplined with the money you do have. If your friend as a small amount of savings I recommend that they keep this aside for disasters etc ( I was told I could do this by CCCS). Also a DMP is flexible, say something disastrous happens it is possible to negotiate lower DMP payments.

HTH

LittleL_4

My first payment to the CCCs is on the 1st October and I also have a question, sorry....

I work for a nursing agency and I also have a small business so my income is variable. What would happen say, for example my business really took off and I manage to work longer hours (I have CFS) therefore have a healthier income in a couple of months. And, what if I had savings of about £4000 when CCCs do their annual review? Will they take this from me and distribute it amongst my creditors or will be I be allowed to keep it as savings.

Thanks in advance
little L
xx

Jolinar

LittleL, they'd only know about the savings if you told them, so it's up to you really, the more you give them the sooner you're out of debt. It would make sense to throw most of the savings at the debt - CCCS would handle this for you. I had savings of £500 at the time my DMP was set up and told CCCS about it they allowed me to keep this, I'm not sure about anything more.

You can request a budget review at anytime not just annually, just call the customer service number and they'll do the review there and then if you have the info to hand.

Good luck with the DMP

LittleL_4

Thanks Jolinar, that's good to know.... I feel better already and more in control even though the phonecalls are constant at the mo...

Cheers!
Little L
x

Donedoingdebt

Jolinar wrote:

My credit rating is still good after beng on a DMP for over a year, I didn't miss any payments and called CCCS when I realised I was in trouble so your credit rating isn't necessarily rubbish in the beginning it's when you pay off the balances that the problems hit as this is when you get defaulted by most creditors. Defaults last for 6 years on your credit file, so say your DMP is 5 years, and your defaults are 6 years you're looking at 11 years of bad credit rating possibly. That said it isn't a problem for me as I don't intend having credit ever again! It's fantastic being in control of your finances and I can't believe it took me this long to get it lol.


HTH

Sorry, this is not quite correct. Your creditors will normally default your account within a month or 2 of you not paying the minimum monthly payment. So using the above example, if your DMP is 5 years then you will have just over a year left with a default on your credit file after you've finished your DMP. In my case, the defaults were from June to December 2000. So, my defaults are now starting to drop off my credit file even though my DMPs last until 2009.

joolz43

Not all creditors default your account though. Also if you never actually got into arrears before the DMP started.

Seeing as you have a poor credit rating from missing payments, being late or going over a CC limit then the chances are you already have it before the DMP