General Debt Questions, DMPs etc

davidjwest

I had around 40k of debt after I split from my wife just over 2 years ago, most of it marital debt but in my name so technically all mine!

Initially I could manage as most of it was 0% credit cards, but combined with paying rent on a place of my own, still paying the mortgage and maintenance I began to struggle.

The straw that broke the camels back as it were, was one of my creditors going from 0% interest to 33.9% that meant interest alone was around £300 pm on just one card - I couldn't afford to continue payments at that rate for very long and so I looked into a DMP.

I didn't default any payments until I got a DMC involved, they put me onto a DMP and as advised by them I missed one or two payments in June/July 2009.

I got rid of the DMP as I realised soon after they hadn't told me the entire truth and I was paying them 17% a month in fees, so I successfully negotiated with all 4 creditors in December 2009 who froze interest and accepted reduced payments.

I am still struggling but just about managing to pay these reduced payments and haven't missed any since the DMC advised me to.

Questions:

1. I will soon have paid off my joint overdraft and this will make me around £50 a month better off. Should I increase the repayments using this money or save it towards making a full and final offer at some stage? My concern is I have 0 savings and as my divorce isn't finalised I could do with some cash behind me to pay the solicitors fees.

2. If I make full and final offers and they are accepted how is my credit rating affected? I know my credit rating will be abysmal now but how long does it take to recover? Is it better to make f&F payments or continue the current plan until it's paid off that way? or should I wait until I can afford to repay as normal and pay interest again?

My debt now stands at around £25k so I am making some headway and assuming the creditors agree to continue freezing interest I will have it paid off in about 4 years, 3 if I get a decent bonus every year (didn't get one this year).

Thanks for any advice!

BILLIE

Well done on getting your debt down and dealing with it on your own. From experience two of my CC companies agreed to freeze interest and therefore what I was paying came off the balance. But this is reviewed annually. One other CC reduced the interest but insisted on £200 per month, not what I wanted but it sort of helped. However, that card has recently been in contact and wants to increase the instalments as OH is now working. What these companies don't realise that OH being out of work for over 2 years is going to take longer than a couple of pay packets to get back on track. Be careful your arrangements may well be due for review so I would say if you can save some then do so. Good luck. Billie x

davidjwest

Thanks BILLIE, yes, I've had a few reviews actually, funny how different creditors deal with these things.

One of the creditors has been very good and kept repayments low but one of them has actually doubled the repayments since I started. I am just about keeping up with them by taking on extra work and making some money on the side with my websites etc.

The thing that annoyed me was the DMC telling me if I just kept paying them their £300 a month it would all be cleared within 7 years, they didn't mention that creditors could increase payments, rather misleading.

Thanks.