Dont understand payplan!

Bobby81

They have offered me a DMP for 4 years at 568 thats 100 pound less than what we are paying now, even though after are bills are paid and including food we only have about 200 left to live on. How does that work??? The other other company quoted us 314 pound a month, ok over 93 months BUT i know after about 1 year maybe lesswe wont need teh DMP anymore??

CLAPTON

the way its supposed to work is like this:

you (and Payplan) work out how much you need to live on i.e. a budget /SoA..this includes everything you need to live on. (by everything i mean everything ..not just bills and food but everything including normal monthly spending, quarterly, occasional (say clothes) annual (car costs) etc ...which is why i've made a couple of attempts to suggest you to write out a proper SoA that includes everything.

then you take this sum away from your income and the rest is to pay your creditors. there is no other money available 'to live on' ..its all included in your budget/SoA). Your creditors see your SoA and do not expect to see luxories as after all they are being asked to stop interest and charges because you can't afford to pay more.

if you want to post what detailed figures payplan proposed for you i'm sure people may be able to comment upon whether they are reasonable.

if you decide to go ahead with the DMP, you stop paying the normal amounts of money to your creditors. they will then default your accounts and your credit record will then be awful. some may agree to stop interest and charges immediately and some may not...if you've been using a credit card recently then they may be reluctant to agree to freeze interest immediately but may relent later... but no guarentees here.
At this stage you may get lots of phone calls and letters threathening to take you to court etc.
In due course most/all will freeze interest and charges ; some may review after 6 months and ask for more, some may sell the debts to Debt Collection Agengies.