I need advice please

Dustcart

HI,
can any one fill me in? I was looking for rates on loans on the net to consolidate debts, I filled a form on Lowest-Loan- Rate- .co.uk web site exspecting to get a list of possible loans i could apply for but i was redirected to a page where it said that some would phone me soon to discuss opitions availble to me.

Well today I have had a call from 'Advanced Money Management' ,who are based in Manchester, offering me a repayment plan. I have never heard of this before, what they offer is very tempting but it seems they pay off my credit card and my loan then i will owe them the money, although over a longer period with considerbale reduced monthy payments.
Now my question is ( as Im a little green behind my ears) how would this affect me getting credit in the future? Would it damage my credit rating? I have never ever missed any payments on loans and credit card, and have a good rating at the moment. I did ask the guy who i spoke to, but I felt I was wasnt getting the whole picture, please can any one enlighten me? :A

mum2one

it will damage your credit rating for 6 years, basically what they are offering you (from how interpurted your post), is a DMP (debt management plan), companies like this will take a fee out of your monthl payment, for example if your new repayment is £300 per month, then there maybe £200 per month going to your debts as the remainder would be the fee for the service.

I would suggest contacting payplan or cccs there both free agencies, who do exactly the same service, both are recommended on here, there charity run debt agencies.

I would be wary of these companies, as you won't get a loan with a sensible apr, you could be looking as much as 50% apr on a loan.

The cccs website is a godsend, as you can search info, and you can also ring them for advice, - free of charge and your not contracted to them.

www.cccs.co.uk

Dustcart

thanks for your reply and info you gave me, I htough it sounded too good to be true, if I use a repayment plan with th ecompnay you recommended will that effect my credit score, as I have said i have never been arears and have godd scoring at present, i just really need to reduce monthy out goings so im more comfortable

chalkie99

The result, unfortunately, will just be getting yourself into more debt than you already have.

As an alternative, pop over to the Debt Free Wannabe section of the forum and have a read of how to post an SOA (Statement of Affairs) and see if anyone there can suggest ways of cutting your expenditure.

neil277

Dustcart wrote: »

thanks for your reply and info you gave me, I htough it sounded too good to be true, if I use a repayment plan with th ecompnay you recommended will that effect my credit score, as I have said i have never been arears and have godd scoring at present, i just really need to reduce monthy out goings so im more comfortable

Hi
If in debt your credit score is shot, IVA, BR, DMP if you are working try to pay it off asap, the quicker it is paid off the better you will feel and start to build your credit score again.

Ronnie2

You can get some help through www. loanstreet. org . I hope it will help you out.

Hax

neil277 wrote: »

If in debt your credit score is shot

That is not at all true. A history of well managed debt improves a person's credit score.

If you had no debt at all and no credit agreements then you would have nothing reported to the CRAs and in that case, you would have a very poor credit score indeed!

Hax

Dustcart - as others have said, it sounds like the company are essentially offering you a DMP. They will NOT pay your debts off upfront - and this WILL damage your credit record.

A DMP is where you work out a sensible budget that you can stick to both for living and paying back your debts. You work out what your total income is and what your priority outgoings (rent/mortgage, council tax, bills (NOT Sky!) and food, etc) are and then whatever money you have left over each month it divided pro-rata amongst your creditors.

You then present this plan to your creditors and ask them if they will accept the proposals you put forward.

If you are genuinely struggling financially (and companies will normally only deem you to be struggling when you start falling behind on your payments) then your creditors may accept the repayment proposal and will often stop interest on the account too.

HOWEVER: This route normally entails your accounts being passed on to debt collectors (often internal ones) and your accounts being marked as defaulted with the CRAs.

If you are genuinely struggling, falling behind on payments and cannot see a way out then a DMP most definitely sounds like a good "solution" for you. But, do NOT use a company such as the one you have suggested - I can highly recommend the CCCS having used them myself some years ago - they don't charge a fee and will help manage the DMP and the communications with your creditors. Payplan is another organisation that offers a similar service and does not charge a fee.

Using a company that charges a fee means that your DMP is less likely to be accepted by your creditors as they will not be happy that this company is getting a relatively large slice of the money - around 20% to 25% is typical. Also, with this company taking their slice, it means that your DMP will take longer to clear.

Apples2

Also bear in mind that typically, these fee paying companies will take the first two months payments for themselves. Your creditors will not receive a single penny of your money until the third month, then, as Hax mentioned, they will take a fair chunk for themselves and only pass on the scraps toward your debts.

Your credit rating will be shot to pieces.

No company is legally obligated to accept the proposal, it is only goodwill so you could end up paying loads of money but have nothing but a shot credit file and even more debt to repay.

Dustcart

thanks for all the reply's, as i have never ever missed any payments and my credit score is good at moment i wont take out this plan, it really is not for me, and it wasnt what I was looking for. I have learnt to beware of certain web sites that are something different to what they appear to be offering . Im am now enlightend, thanks folks ....