Debt Man Co not paid creditors - What to do?

julie2710

Hope someone can help as one of my friends has got a bit of a problem and I told I would ask the good people of MSE for some advice as I'm not sure of the best way to go.

Basically she has been on a DMP for a little while now. She unfortunately did this without advice and went through Debt Deliverance. She has debts of £31,972 in the DMP - she pays her mortgage herself but the house is in negative equity. He salary is just over £40K.

She has been paying £400 to the DMP of which £40 is fees! So she knows she may need to move this However to exacerbate the situation Debt Deliverance took her £400 in February but haven't paid the creditors. She was so annoyed she instantly cancelled the direct debit to Debt Deliverance so they won't be able to collect in March.

She is considering the following - contacting her creditors directly and asking if she can maintain the current agreement on a direct level rather than through the DMP company? She can use the £40 to snowball on repayments and reduce the repayment period.

Going onto a new DMP? She has contacted National Debt Helpline but they have suggested that she will need to pay £790 per month. She doesn't feel that this is an amount she could manage and is concerned about getting into an agreement that she won't be able to maintain.

She has considered bankruptcy but has been adviced against this as would probably lose her home despite the current negative equity and has been told that due to her salary she would probably have to pay the receivers a monthly amount as well.

I have suggested she ring round her creditors tomorrow and explain the situation regarding the non payment from the DMP company and make tentative enquiries as to whether they would accept a similar agreement on a direct basis but any thoughts and advice would be greatly appreciated.

lvm

Before your friend does anything else she needs to cotact Debt Deliverance to find out what the problem has been with February's payment.

She should then put it in writing that she is cancelling her DMP with them (some require notice of around 30 days).

She needs to find out if all her creditors have frozen interest - if so, she should split the £40 payment pro-rata between all debts. They shouldn't have a problem accepting this.

As for National Debtline, did they give a reason for suggesting £790 a month? It could be that from the details your friend gave of her outgoings then this is what she can afford to pay. Does your friend still have a problem with overspending? With a net income of around £2.5k, £790 looks a bit more realistic than £400. Obviously this depends on mortgage payments, living circumstances etc.

P.s wouldn't advise phoning her creditors - best keeping all correspondence in writing.

dlb

I too started my dmp journey with a fee paying company Bainst & Ernst...big mistake, although they never missed paying my creditors..not sure what to advise regarding the missed payment but i can tell you i swapped to Payplan a none fee paying company and the change over was easy, for the month they were swapping things over i paid my creditors directly with the amount they had been reciving from the old company i didnt even tell them i was changing just that i was phoning up to make this month payment...by the time next payment was due payplan had taken over and contacted the creditors and made that months payment via payplan.
I so wished i had done this earlier as would now be debt free but due to the fees i paid the first firm i have a yr left.