DMP questions...

tlc123_2

Hi all

I haven't been on here for ages, but I'm thinking of signing up for a DMP. We can make our minimum payments, but have nothing left after wev'e paid them, and we have no life. Also, we have a leaking flat roof on our extension that needs fixing and the buildings insurance won't cover it. So basically, need to find £5k to do that.

So I'm thinking a DMP may be the way forward to repay the debts and allow us to have a life, but wonder what to do about the £5k?

Thing is, we have a mortgage and the fixed term comes up in Jan 2012 - if we're on a DMP does that mean we can't keep our mortgage? If so, it may not be possible for us as we want to keep our mortgage. I've read lots about DMP but can't seem to establish what it does to your credit rating.
Thanks in advance

tlc

bottleofred

Hi tlc,

A dmp will affect your credit rating as you will end up with defaults etc on your credit file when the minimum payments have not been paid on the account. It certainly doesn't mean you can not keep your current mortgage, but will probably mean you'll be stuck with the existing mortgage and probably not able to get a good interest rate. Defaults stay on your credit file for a total of 6 years from the time they are applied. I was in the same position as you as all my pay was going on debt repayments and I eventually went down the dmp route. I can say with absolute certainty, that life does go on without credit cards and loans etc.

Good luck in whatever you decide

Red

Deep_In_Debt

If you are looking to do a dmp, make sure you go to one of the not for profit firms - CCCS are generally recommended. Payplan also offer fee free dmps. Also, if you are currently making all your current repayments it may be difficult to get creditors to accept a dmp - generally it's easier if you have missed payments or made reduced payments for a while that they accept. Creditors will probably think that you can still afford to make payments.

Your credit rating will be trashed for the duration of your dmp and for 6 years after your last payment unfortunately, because you will have broken the terms of your original agreement with the creditors by making reduced payments. You are likely to receive a few defaults too.

However, you should be able to keep your existing mortgage but interest rates will probably be higher due to adverse credit rating. Can you go interest only for a while which may free up some cash?

I'm on a dmp and still have my mortgage.

Good luck.

tlc123_2

thanks for the advice. Yep CCCS is the one I've looked at. I've missed some credit card repayments but always meet my loan payments. Its just that it literally leaves me with nothing at the end, I have no one to blame but myself, but it'd be nice to feel that there's a light at the end of the tunnel!

The mortgage is currently on intrest only, but only for 6 months - we bought in 2007 with 100% and high interest rates, so it ony saves £120 a month!

bottleofred

Hi tlc123,

Although it will affect your ability to get credit, my experience of the dmp overall was a positive one. Don't get me wrong, I had phone calls galore from creditors at the start threatening all sorts of things up to but just short of death and the reality was they did very little (other than defaults etc). After a while though, things settle down and I was relieved not to have to worry about trying to meet all the repayments for the month. I didn't have much money left, but I'd enough to last the month until payday. I went with the cccs and they were brilliant!

Good luck whatever you decide

Red