Advise wanted on debt management plan with creditors??

moneyangel22

Hello,

We have got ourselves into a bit of a mess regarding our finances and our outgoings now exceed our income.
I am thinking about entering a debt management plan to reduce my payments to my creditors but would like to know what the procedure is and how it will affect me (apart from obviously damaging my credit rating etc.) My Husband and I have several loans/credit cards/overdrafts and although we can just about afford the minimum repayments it leaves us no money for food etc. We have a toddler and another baby due soon and I really need to be able to buy baby essentials etc without worrying!
I do not want this to affect my Husbands credit etc so only want to do this with debts in my sole name. Can you please advise me?
Also I do not want this to affect our house which we own and live in as a family. I would need to be sure we would not be forced to sell our house to repay debts etc as this is not an option. I have another property which I am trying to sell but cannot afford the mortgage on anymore which has led me to think about this. This is the only debt I am in arrears with at the moment.

Many thanks

Angel

Tixy

Hi

On a DMP you and a third party (preferably one of the charities) work out your detailed income & expenditure before debts and then look at how much you have left for debt repayments. That amount is then divided up between your creditors pro-rata based on the balances.
You then move your banking to a new bank account that you don't owe any money to and the charity write to all your creditors with your DMP proposal and ask them to freeze interest & charges. Then you pay the charity a fixed figure each month, which they split and pay on to your creditors.

Your creditors may agree to freeze interest but they don't have to. They may agree to your DMP or they may not.

They will almost certainly issue default notices which will go on your credit file. A DMP is not legally binding and it is possible that a creditor would decide to still try to take you to court to obtain a CCJ. If they did this you would ask to pay in installments and a judge would look at what you can afford and issue the judgement for that amount. Its usually very similar to the amount you were paying under the DMP anyway. As long as you keep up with those payments for the CCJ then nothing more would happen.
Its not that common to be taken to court when on a DMP but it is possible.

You can do a DMP with just your debts, if husband can meet his repayments then he can carry on paying all his debts in full. Do you have any joint debts? if so then these couldn't go into the DMP and husband would have to pay all of these as well as debts in just his name.

However if you have any joint debts, or a joint mortgage then you will be financially associated on your credit files. And you going on a DMP and getting defaults etc will affect husband's ability to get credit (it won't actually show anything on his credit file but would be taken into account if he applies for credit).

I'm not sure from your post whether you have a mortgage on the property you live in or if its owned outright. If there is no joint mortgage the other option might be to close any joint bank accounts or husband to try to any joint loans refinanced in just his name so that you can file a notice of disassociation and then his credit would not be affected by your DMP.

You cannot be forced to sell a joint house for debts in your sole name. Even if the house was just in your name the chance of being forced to sell is teeny tiny minisculey small. Possible in theory but not much more than that. And with having kids in that house it would be even fractionally smaller than that. Basically it wouldn't happen.

Have you spoken to one of the debt charities about your situation yet?

moneyangel22

Hi Tixy,

Thank you for the useful info!
I have contacted CCCS and am awaiting a reply.
Yes we have joint debts too and a joint mortgage! I dont want to affect his credit so we will keep anything with his name on up to date, unless we can get his name removed from things like overdrafts.
How much does a Financial Association affect someones credit??

Many thanks

Angel

moneyangel22

Can we get his name taken off the bank accounts so they are just in my name? they are all in the overdraft so would need to be included in my DMP.
How do they deal with the household priority bills when looking at my income and expenditure because I have a small income from child benefits and a rental property but if we split the household bills 50/50 they are greater than my income leaving nothing to pay creditors. The rest of it is obviously paid by my Husband but how do I go about leaving him out of it?

Many thanks

Angel

Tixy

A finanical association will have a big impact on him if he tries to get any credit and you have defaults etc on your file.

The banks will almost certainly not agree to take him off the accounts, having 2 people on the accounts increasing the chances that they will get their money back. And if he is in the stronger financial position then they won't want you to take on the whole debt and default on them. If just you enter a DMP he'll need to carry on repaying any joint overdrafts.

A charity will look at your finances in detail but one thing they often do is if you earn 30% of the household income and he earns 70% then you would allocate 30% of household costs to you and the remainder to him (if that makes sense).
You really need to speak to a charity to see if a DMP will be feasible in your situation and if you can leave your husband out of it..