DMP and other ?

Lone_Traveller

Hi World
We here I am another DFW; hopefully I'm taking the right steps.
Light Bulb Moment 4/12/06


I’ve been in different degrees of debt for years due to rising bills and child maintenance payments, changing jobs etc. Moving house 10 times in 8 years due to my job hasn't helped. Last and most of all bad mistakes in money management.

I’ve made the mistake of borrowing more over longer periods to get myself out of the situation working all the figures, what looks good and a way out on paper at the time doesn’t seem to work out in reality.

Small debts get consolidated into larger debts and the long spiral starts!

I find it hard talking to family about it, as I’ve borrowed money from my father in the past and feel I’ve let him down now. My wife is fully aware of the situation.
It’s hard to keep my mind on my job and feel people are looking down on me even though none of my work mates know.

My biggest fear is losing my house and going Bankrupt and losing my job.

Well I know now the buck stops here no more borrowing.

I conducted CCCS a week ago and got a phone interview in 3 days.

I’ve worked out a SOA (see below).

My Q are.

How does a Debt Management Plan work exactly?

Is an IVA a better option?

On average does CCCS manage to negotiate with all creditor's on agreeing reduced amounts or are some non negotiable with what I’ve listed below?

Can you see light at the end of the tunnel with a Debt Management Plan? Does CCCS apply a Snowball formula, is this discussable with them?

If my income rises during a Debt Management Plan am I obliged to raise the money going to Creditor's?

Once out of Debt how long will it take to clean up your credit score?

I’m married have no dependent children living with me however I am pay Child Maintenance for 1 Child aged 15. I work away from home 8 months out of the year split 4 months away and 2 at home.

I currently are not in arrears with any debts due to using my savings to pay outstanding debts and to live on , however Im down to my last £300 this month. with arrears coming up fast once the savings are gone

My Current SOA

Income £1333.05 Paid to me monthly
Pension £439.36 Paid to me monthly
Total £1772.41

Outgoings (all figures quoted are monthly)
Priority Debts
NR Mortgage £646.50 APR 6.34% Total owed £95020.51 House Value £105000
CSA £200.92
Council Tax £119.21 currently not paying as paid in full to April
TV License £10.99
Electric £30 currently changing suppliers for cheaper price (USWITCH)
Gas £38 (as with electric)
Telephone £30
Sub Total £1075.13
Non priority Debts
Broadband £17.99
Gas Service Plan £7.88
Contents & Building Insurance £21.64
Food and Housekeeping £260
Car Insurance £18.33
MOT £18
Car Tax £14.58
Petrol £45
Hair (Me and Wife) £22
Vodafone 2 x mobiles Plus Datacard £100 (I know these need to go got 10 months left on Mobile contract and 2 on the datacard.
Prescriptions £6.50
Dog £13
Travel Costs myself whilst away £20
Sundries/Toiletries whilst working away £15
Sub Total £579.92

Debts
Northern Rock Loan £196.50 APR 6.34% total owed £28877.88 (no secured taken out same time as mortgage if I change mortgage APR rises to 11.59 %.)

Nationwide Loan Unsecured £319.46 APR 6.7% total owed £19452.21
Abbey National Loan Unsecured £195.22 APR 6.6% total owed £6259.23
Abbey Platinum Visa Credit Card £75 APR 24.9% total owed £3133.54
Lloyds TSB Credit Card £38 APR 14.8% total owed 31925.33
Wife
Kays Catalogue £40 total owed £343
ACE Catalogue £10 owed £150
Sub Total £874.18 Total amount owed £59991.19: mad:

Total outgoings and debts monthly payments £2529.23

DECIFIT £756.82

HELP!!!!: confused:

vicki_1981

Well done for taking the first step. I'll answer a couple of questions but I'm no expert my first DMP payment is due in January.

The CCCS helped immensly - made me realise what we owed exactly, helped work out a very reasonable budget (we were really underspending on food but we knew that already - CCCS told me to spend more on food!) and really put our minds at rest.

On mention to debt companies that we were going through a DMP most of them were very understanding and they turned from monsters into quite pleasant human beings. We had 11 debts in total and a few haven't been so nice, which is to be expected.

You set a suitable amount that you can afford to give to the DMP, which is reviewed each year unless you request it sooner.

We did the affordable amount based on a basic wage, not including overtime. As overtime accounts for a large proportion of our income, we are bound to earn more than the CCCS used to work out the DMP. The CCCS told us we can go ahead and pay off the smaller debts first if we are able (one is just £150 which isn't much compared to our others). This is fine as long as the CCCS are informed. So, we may be able to start slowly paying off our cards by saving here and there - eventually reducing the estimated DMP length.

At no point did the CCCS tell us that we must raise the amount we pay to them. However, we are striving to pay them as much as we can so we can finally see the back of those nasty loans and credit cards. If I get a payrise in the year for example, I will most probably raise the amount we pay into the DMP, rather than use it for the budget.

Our budget is good it suits us, so extra money goes into the DMP. The sooner the debts are cleared the better.

On another note - I notice you placed food under non-priority. This was our mistake. I was told to class food the same as a priority debt. We were surviving on £10 a week sometimes for food which isn't anywhere near the recommended amount. The CCCS will go over that with you.

Regarding the credit record, I believe details of your credit remains in place for 6 years, though correct me if I'm wrong.

Has that answered some of your questions? Like I said I am far from being an expert I haven't even made my first payment yet but I do my research so think I answered correctly.

Anyone feel free to tell me I'm wrong if necessary I'd thank you for it!

Good luck by the way.

Lone_Traveller

Thanks Vicki
For your swift reply that has helped me a lot. Good luck with your own DMP Journey.
Lone Traveller

madduck

Just to add a couple of points. On any future salary increases, there is an obligation on you to let CCCS know about any changes in circumstances - that could be an increase in salary or on the otherhand an increase in expenses. You will also probably find that some of your creditors will ask for updates on your income and expenditure. Some ask for it every 6 months, others every 12 months (CCCS tend to arrange a yearly review anyway) - other creditors don't seem to get in touch at all for some reason (happy days!!!).

In terms of snowballing - hopefully your creditors will freeze interest once you've started on your DMP but they aren't obliged to. If they don't - write to them and see if they will consider it. Once you've got a sum calculated with CCCS for the available funds for your DMP, they will work out a formula to split it between creditors. There seems to be a minimum payment per month of about £5 per creditor - no matter how small the debt. Looking at the sums paid to my creditors it doesn't seem to be a totally proportionate split ie the firm I owe the most to doesn't receive the highest proportion of my monthly payment.

My experience with a DMP was that it was tough for the first couple of months. Some creditors were really great (I was actually referred to CCCS by one of them). They accepted the proposed payment, calls and letters stopped. Others kept calling and looking for more money. Had to be strong and reiterate that I didn't have any more and that was all I could pay. Felt that I was a broken down record saying the same thing all the time. Kept paying them through CCCS and eventually it settled down.

You'll find that many creditors will default you when you stop making the contractual payment levels and some will pass onto Debt Collection Agencies (who CCCS say are actually easier to deal with).

Overall, once your DMP is in place things settle down. You will get occassional requests for updates, occassional pressure to increase payments, etc. But no where near as bad as before you start on it.

CLAPTON

does your wife work?

Lone_Traveller

She is currently actively looking for work as weve only been in the area a short while.