Debt Management Plans

citrusjoose

Hello everyone,

Although an observer of the forum for many years, this is my first post and I have a couple of questions, that I could do with a spot of advice with.

Little background - been living outwith my means for three years now(mainly because of starting my own business but also my own stupidity) and have managed to build up a substantial debt which I can no longer afford to manage.

Head out of the sand moment and drastic action required.

1. I have been accepted by both payplan and csss and wondered if anyone had any views on which company would be the better choice.

2. Although payplan have said that my ability to re-arrange my mortgage once my DMP is up and running should not be effected. is this in reality the case?

My mortgage deal has expired and am on a floating rate which at the moment is great but if interest rates start to rise, I really will need to get it organised.

Thanks for your help.

Tixy

Hi and welcome to posting

Just to check - I assume you mean CCCS when you say csss? Make sure it is the Consumer Credit Counselling Service - which is the charity one, not some one with a similar name who will charge you fees.

Once in a DMP and paying less than the contracted minimums your creditors are likely to default you (if you don't already have defaults), this will affect what mortgage deals you can get. It probably won't be impossible to re-mortgage / get a fixed rate but you would be pretty unlikely to get the best deals around.

As to whether to use Payplan or CCCS, both are used by posters on here, although CCCS are officially recommended by MSE whereas Payplan are not. Its really personal choice in many ways. Just so you are aware CCCS are a charity whereas Payplan don't charge for DMPs but make their money from others services. Some people have said (particularly in the last 6months or so) that Payplan do try to sell you other services, which may not be the best deals on the market. Some have no problem saying no (or yes) but other people have felt a bit pressurised to take up services.

Their can be slight differences in the amount you will be asked to pay between the 2, usually just based on allowances for certain items of expenditure. If you are on some benefits (such as incapacity) they are treated differently by the 2 and I think people often favour the way Payplan assess these. But whichever you choose make sure you are happy with the amount you are paying and the budget you have for each item.

Good luck with your DMP.

citrusjoose

Thanks tixy,

yes it is CCCS. Confusing them with a band.

I'd really like to avoid going into a DMP but I think I have to face the facts that I'm only getting myself deeper and deeper into the muck the longer I try and avoid it.

any other view points on Payplan and CCCS would be much appreciated.

saltnvinegar

Hi Citrusjoose

Before you think about a DMP why not post your SOA (statement of affairs) on the board here as there may be ways of increasing income/reducing expenditure that free up some money to repay your debts without going down this route, though if you've gone through an I/E with CCCS or Payplan they are usually pretty accurate and realistic.

I'm not sure what you mean by your ability to re-arrange your mortgage shouldn't be affected?

If you do enter a DMP be aware that your creditors will almost certainly place defaults on your credit file which is likely to have an impact on trying to remortgage with a provider different to your current one.

Well done on taking that first step, its a brave thing you've done.

SnV

dancingfairy

I'm just wondering whether since it is playing on your mind with the mortgage etc whether it is worth looking around now and fixing (o.k at a slightly higher rate than you are paying now) simply for piece of mind? Nobody really knows what interest rates will do so it's a personal choice - I'm not sure how this would be viewed going into a dmp though.
I would also agree with posting your SOA up if you are unsure about a dmp - sometimes a little tweaking is all that is required.
df

citrusjoose

Hello everyone

Thank you for spending your time giving me advice. It really is much appreciated.

I am concerned about re-mortgaging as at some point the rising interest rates will cripple me, but at the moment, if I re-mortgage now, will up my monthly payment by hundreds of pounds which i cant afford.

I will post my SOA below and if anyone has any advice I would much appreciate it. My dream solution would be to borrow again (i know, i know) to pay of my credit cards and then get through to August next year when an existing loan will finish clearing up funds to get stuck into my overdraft. I really would love to avoid going down the DMP route, but might have to face reality that it is my only way out of this mess.

Creditors

Credit cards (Virgin £5500, Mbna £1700, Capital One £1300, RBS £450)
Total £8950
Monthly Payments (Virgin £100, Mbna £50, Capital One £70, RBS £10)
Total £230

Loan - Santander £2000 £189 pcm finishes 08/2011

Total Creditors Monthly

Income £1400 pcm

Outgoings

Mortgage £240.00
Council Tax £180.00
Buildings/Contents Insurance £22.50
Life Insurance £17.50
Electric/Gas £40.00
Telephone/tv/broadband £26.50
Mobile Phone £35.00
Road Tax £7.50
Petrol £20.00
Public Transport £50.00
Housekeeping £240.00
Medical/Dental £10.00
Haircut £18.00
Clothing £50.00
Hire Purchase (Car) £210.00
Tv Licence £6.06

Total £1,173.06

Thanks again for all your advice and hopefully there might be a miracle worker out there

alona1

Personally, I'm with Payplan, they are very flexible and have allowed me to change my payments with ease over the last few years when in difficult situations or when I have earnt more. When I spoke to the CCCS they gave me quite a strict budget without movement and I wouldnt have been able to live like that. However on saying this, there are people here with CCCS DMPs who have had no problems what so ever. Its personal opinion, but my preference is Payplan.

Good luck x

Tixy

Hi

I think there may be a few items missing from your costs and so its a bit difficult to see whether you can manage and how much you need to cut back. But will look through your expenses to see if anything jumps out.
Do you live alone? are these costs just for you?

citrusjoose wrote: »

Creditors

Credit cards (Virgin £5500, Mbna £1700, Capital One £1300, RBS £450)
Total £8950
Monthly Payments (Virgin £100, Mbna £50, Capital One £70, RBS £10) Are these minimum payments?
Total £230

Loan - Santander £2000 £189 pcm finishes 08/2011

Total Creditors Monthly

Income £1400 pcm Is this employment or self employment? If employed is there any chance of doing any overtime? or getting a second job at all in the evenings/weekends? if self-employed is this your income after business expenses and deductions for tax etc?

Outgoings

Mortgage £240.00
Council Tax £180.00 if you live alone, do you claim the 25% discount? have you done the 5min check to see if you are in the correct band? whilst it doesn't actually save any money many councils will allow you to pay over 12months rather than 10 which evens out the cost a bit.
Buildings/Contents Insurance £22.50 Do you shop around at renewal time? Next time also look to see if you can earn cashback on your renewal from one of the cashback sites (quidco etc).
Life Insurance £17.50 Do you have dependants? if not do you need this? or is it critical illness as well?
Electric/Gas £40.00 Not high but worth checking the comparison sites once a year to see if you can get cheaper
Telephone/tv/broadband £26.50
Mobile Phone £35.00 Do you use all the inclusive mins etc? again always worth shopping around when your contract ends, or if you don't use everything ask to drop a tariff even when in contract
Road Tax £7.50
Petrol £20.00
Public Transport £50.00
Housekeeping £240.00 What does this cover? For food, cleaning products & toiletries a realistic figure might be £100 per month, many manage on £70-80 for one person living alone.
Medical/Dental £10.00
Haircut £18.00 Could you go slightly longer between cuts? or have a more junior cutter?
Clothing £50.00 This seems high considering your debts. I would try to cut to absolute essentials only for 6months at least.
Hire Purchase (Car) £210.00
Tv Licence £6.06 this looks low, do you share with anyone?
Other possible items
Water rates?
Car Servicing, MOT, tyres?
Car insurance
Entertainment
Presents

Total £1,173.06

Thanks again for all your advice and hopefully there might be a miracle worker out there

One other thing that occurs to me (and I don't suppose its a suggestion you would like!) but if you are only spending £20 per month on petrol you are not doing very many miles - is a car essential? could you manage without? or could you hand back the car on HP (if you are far enough in) and then just buy a cheap runaround to at least save the cost of the HP.

Do you have any other items you could sell to raise any money to lower your higher interest debts?

Have you looked at a snowball calculator at all? If not I would have a go at doing one. It will show you how long it would take you to get debt free based on these figures and show you the order to pay your debts to pay the least amount of interest. You can either use the one at www.whatsthecost.com or if you complete the statement of affairs on the makesenseofcards site then you can automatically transfer the figures into the snowball on that site.

Hope some of these thoughts might help a little.

Good luck

citrusjoose

Hey Tixy,

Thank you so much for spending so much time looking at this.

I am married with 1 (soon to be two) kids. The majority of the items on the list are halved as my wife and i 50/50 everything. She is also in debt but had her LBM a while back and is well on track to sorting things. The downside is she has no spare income to help out.

I am going to have an even more thorough look at these costs and investigate some of your suggestions and will re-post once I have done that.

Just didnt want to not thank you.

citrus

ald65

we have found payplan great. I'm not sure of the differences, however it would appear from reading previous posts that the they calculate creditor payments slightly differently and I think that cccs check payslips and payplan dont.

good luck whoever you go to

RAS

Hi

I suggest you put up a full SOA for your joint expenditure, as without it, we really cannot tell if you can make savings anywhere.

Aolso, you need to list the APRs and limits on your cards. If you have say £500 on a very expensive card (25%) and £200 capacity on a cheap card (6.9%), switching the money to the cheap card will save you a lot of money.