Debt Management Programme - Should I... Advice

stuartbrookes

Hi all,

I'm really in need of some advice. Between my partner and I, we have approximately £43k of debt to 7 creditors (unsecured loans, credit/store cards, overdrafts), we're servicing close £1k/month on these and although £25k will be cleared in 4 years, the rest is all ongoing through credit/store cards and overdrafts that I know won't be reduced.

My gf wants to look at a Debt Mgmt Programme with Gregory Pennington, who are one of the members of DEMSA and an original member of DEMSA.

After a very helpful call, in which they spoke to me about pro's & cons, they offered a deal of paying £570/month for 7.5 years, with the ability to overpay whenever we want at no cost. This saves me £430/month, of which half would go back to over-paying the above fee and the rest would give us some much needed breathing space.

I have no intention to utilise any other credit facility and we're 3 years into a 10 year fixed term mortgage, so I don't envisage changing mortgage and the plan is for the 'debt mgmt programme' to be fully paid off before our mortgage term expires, thereby showing that we've satisfied our default on the credit ratings.

I really need some advice. Part of me thinks we should labour through, but I don't see an end in sight if I do and I think its the stigma of these type of things. I earn £60k/annum, but an expensive divorce and the housing market has really clobbered me. Is the stigma something I should ignore?

Should I seriously be considering this?

Any advice, opinion or personal experience of debt mgmt programmes would be gratefully received.

Thanks
Stuart

Tixy

Nooooo!
Not with gregory pennington.

If you are considering a DMP it should only be with a charity that won't charge you any fees to run the DMP and who will act in your best interests.
IMPORTANT - Where to seek professional impartial advice about your debts.

Contact one of the charities and talk through your options with them. If they advise you to go for a DMP they will talk you through the implications and you can then decide if its the way forward for you.

saltnvinegar

Hi Stuart

Personally I wouldn't touch them with a barge pole.

Did they explain that of that £570 a month they will take a fee of approx 17%? Did they explain all the pro's and cons of entering into a DMP?

Did GP explain that going on a DMP is not a guarantee that creditors will freeze interest (they are under no legal obligation to do so and some don't)

Did GP explain that even on a DMP creditors are still entitled to carry out collection activities (though most don't)

Did GP explain that creditors do not have to accept a DMP?

Did GP explain that creditors may still apply to the court for a CCJ even when on a DMP?

Did GP go through a thorough I/E sheet and come up with a realistic budget

Did GP explain that while on the DMP you should not apply or take out further credit?

Did GP explain that creditors will almost certainly default you in respect to your loans and that your credit file would be trashed for 6 years.

Did GP explain that if creditors do the above then they may still apply for a CCJ after, for example, 5 years of the default meaning your credit file could be trashed for up to 11 years?

Not trying to frighten him you here, but you should have been made aware of the risks of DMP's (and I am doing a self administered DMP so have personal experience!)

I would recommend you speak to two other organizations first, who will do exactly the same as GP but will do it for FREE!

The first is the debt charity CCCS, the second is Payplan. You can get more info on them here:

https://forums.moneysavingexpert.com/discussion/2077631

Just do the maths also. 7.5 years is 90 months.

£570 x 90 months is £51,300.

If your creditors all agree to freeze interest then where is that £8k going?! To GP of course!!

This money could be used to pay off your debts much much more quickly by being paid to your creditors.

Also you should be asking GP whether your creditors would be paid immediately you start the plan or whether they would withold the first couple of months payments to cover their fees.

Personally I would go down the free DMP route. Give CCCS or Payplan a call and see what they have to say. After all you would shop around for car insurance wouldn't you so this shouldn't be any different!

Best

SnV

stuartbrookes

Hi,

Thanks for both responses... In defence of GP, they did actually explain a lot of that (not all, but 90% of it), however after discovering this forum and finding out about CCCS, I've already called them and am booked in to see one of their counsellors tomorrow.

I'm a little worried about the CCJ element and whether a credit might 'opt out' of an agreement at a later point in time, as if I'm honest, I could probably struggle by but it really is a struggle. Literally, I'm counting every single £ and living right to the wire at the moment. God knows where Christmas presents are going to come from, well I do, it'd be my credit card at this moment in time.

Hence the idea of a DMP is appealing in that sense, it gives me immediate breathing space whilst also giving me a light at the end of the tunnel... I don't care about the credit rating as much, as I don't want anymore if I take this up and I see myself not moving for at least 7 years anyway as that is the length of my fixed term.

Fortheloveofmoney

Do you need to go down the DMP route? Fine if you do but consider other options first.

I had £30k worth of debt that I paid back in just over 2 years and I didn't go down the DMP route. I just paid back the debt with the highest APR first until it was all paid and then moved on to the next. This is called snowballing. I did pay the minimums on the other debts though to make sure my credit rating wasn't trashed.

Good Luck x

stuartbrookes

Oh, I need to... I'm paying the bare minimums on absolutely everything at the moment, so I can't cut back on any of them to overpay another.

saltnvinegar

stuartbrookes wrote: »

however after discovering this forum and finding out about CCCS, I've already called them and am booked in to see one of their counsellors tomorrow.

Great News. If DMP is the right route for you go with the CCCS. You will pay off your debt much more quickly as a chunk of your repayment won't be going to a debt management company

stuartbrookes wrote: »

I'm a little worried about the CCJ element and whether a credit might 'opt out' of an agreement at a later point in time.

stuartbrookes wrote: »

God knows where Christmas presents are going to come from, well I do, it'd be my credit card at this moment in time.

Stuart - This worries me. You cannot increase you're spending. Christmas does not need to be about presents. Spend time with your family and enjoy it. Tell everyone you were going to buy presents for its not going to happen. If you're on a DMP then Christmas really is a low key affair in terms of spending but is so much more rewarding in other ways.

Not trying to lecture you here but entering a DMP requires a serious lifestyle change. I've been there myself and it took almost 8 months before I got the hang of it, but you do need to let go of certain spending habits and ideas.

The good news is you've come to the right place as DFW's can help and support you go through this process.

Best

SnV

stuartbrookes

SnV - The credit card / Christmas present comment was a tongue in cheek one, my dry sarcastic sense of humour fails to come over via message boards.

I'm 'embarrassed' about doing this if I'm honest, but I can see some benefits. I really think I could get myself sorted and get this £45k gone in under 5 years, if not 4, if I do this right and focus, which I would as I'll be embarrassed into it.

However, that comment you made about people coming back for CCJ's is concerning to me, as I don't want that.

Our list of creditors is as follows;
Tesco - £18k unsecured loan (joint)
Egg - £8.5k unsecured loan (mine)
MBNA - £7.25k credit card (mine)
Barclays - £5k overdraft (mine)
HSBC - £1.5k overdraft (mine)
Barclays - £1k overdraft (partners)
Barclays - £1.5k overdraft (partners again)
Next - £500 storecard (partners)
DFS - £1k sofa payments (partners)
Total £44.25k

That lot costs us in the region of £950, and the CC & ODs are purely interest, so never being reduced. If they could freeze interest, I could pay £750/month, that would be cleared off inside 5 years. I'd be £180/month better off up front and I'd have be overpaying that with bonus' from work and any other spare cash I got.

So in that sense. I could hit 35 and not have any debt bar my mortgage. In that sense, it is really appealing. My concern is the comeback if someone refuses the DMP or changes their mind later on and goes for a CCJ.

In my current stance, I don't see how we'll be able to afford a family or get married, so as someone who has done a DMP, what is your honest opinion?

saltnvinegar

stuartbrookes wrote: »

SnV - The credit card / Christmas present comment was a tongue in cheek one, my dry sarcastic sense of humour fails to come over via message boards.

LOL - Yes a lot depends on how you read things 'in your head'

stuartbrookes wrote: »

I'm 'embarrassed' about doing this if I'm honest, but I can see some benefits. I really think I could get myself sorted and get this £45k gone in under 5 years, if not 4, if I do this right and focus, which I would as I'll be embarrassed into it.

Don't be embarrassed, there is nothing to be embarrassed about. You've fallen foul of one of the traps of life, nothing more! The important thing is you're not burying your head in the sand and are trying to sort things out.

stuartbrookes wrote: »

However, that comment you made about people coming back for CCJ's is concerning to me, as I don't want that.

Its something that may (read highly unlikely) happen. You need to be aware that its a risk of embarking on a DMP but is highly unlikely.

Your creditors will use both your embarrassment and fear of a CCJ as leverage over you to try to get you to pay more than you can afford when they start harrassing you (which they will initially).

However if you show a willingness to pay off your debt, and make payments in line with what you can afford, if, your creditors decided to go for a CCJ they are going to look unreasonable, not you.

stuartbrookes wrote: »

In my current stance, I don't see how we'll be able to afford a family or get married, so as someone who has done a DMP, what is your honest opinion?

Simple answer? You will!

You will learn how to live life to the full, while spending the least!

Personally I have found starting a DMP a liberating and life changing decision. I no longer stay awake at night wondering how the hell I am going to pay the bills, feed my family.

If you have the time have a look at my LBM (light bulb moment) thread which pretty much sums up everything I have gone through over the last 18 months.

https://forums.moneysavingexpert.com/discussion/2673537

I know that my situation is more than likely to improve over time, as yours will.

As you rightly said, bonuses, overtime etc can all be used to make overpayments to reduce your debts.

See what the CCCS have to say to you tomorrow. They are incredibly helpful and non-judgemental and I would take their advice over a fee paying company any day of the week as they do not have a ulterior motive in signing you up!

Best

SnV

stuartbrookes

Snv - Thank you for that post, it is really re-assuring. I hide a lot of the pressure and stress from my gf, she hasn't really got a clue how much I worry about this, it keeps me awake, it stresses me out to even go shopping. Even little things like breaking a light fitting stress me out as its yet more money I have to find from somewhere.

As it is, I work hard and track my pennies religiously, so I've not missed any payments on the above and have rarely ever gone over my o/d limit to be hit with charges, but I know I can't keep this up for ever.

If things go well with CCCS, and I guess the more I can 'pay monthly' then the more likely my creditors are to say 'yes', then all being well I can start to get things on track.

Thank you for words and also that LBM thread, its nice to read that doing this isn't going to be the end of my life. We've got a nice house, a nice family and maybe doing this will make things even better.

saltnvinegar

stuartbrookes wrote: »

Snv - Thank you for that post, it is really re-assuring. I hide a lot of the pressure and stress from my gf, she hasn't really got a clue how much I worry about this, it keeps me awake, it stresses me out to even go shopping. Even little things like breaking a light fitting stress me out as its yet more money I have to find from somewhere.

No problem! You'll find the following two threads really useful and inspiring too:

DMP Mutual Support Thread

The Long Haul Supporters Thread

stuartbrookes wrote: »

If things go well with CCCS, and I guess the more I can 'pay monthly' then the more likely my creditors are to say 'yes', then all being well I can start to get things on track.

Thats absolutely right. If you went with a debt management company your creditors will know that almost 20% of your payments are going in fees!

With the CCCS it will have far more credibility. Your creditors will still initially hassle you but things will settle down after a couple of months.

Best

SnV