Financial Management Plan

anonymous35

Hi All (first time post & it feels like a big step being honest about this)

OK, we've taken stock of our finances and it doesn’t look great. We've slowly allowed a few credit cards and store cards to mount up over the years, we now find ourselves in to the tune of £16,500 

We're not behind with any payments and we can just manage to keep up with our payments, but we're only paying the minimum payments each month which basically means we're digging our way out of the hole very slowly and if things take a turn for the worse we'd be in big trouble.

The bank won't lend us anything, because they can see in our account that we can only just manage what we're paying now.

So we spoke to a debt consolidation firm, they have recommended we go on to a Financial Management Plan. They take over the debt, we pay them a set amount each month and they decide how they pay the debts off.

Basically we've been told if we pay £400 per month (our current payments to debts is over £600), we would be debt free in 50 months, 4years 2 months. Sounds great!

Has anyone had any experience of these plans? Good or Bad?

The main worries we have is what state our credit rating would be in afterwards? How long would it take to repair? Would we be able to re-new mobile phone contracts oe other simple things? Would we get hounded by the banks / credit cards because we've handed the debts over? Would banks end up black listing us because of our actions?

Thanks for reading; any help would be really appreciated.

Wannabefree1

Hi

Well done on taking the plunge and facing up to stuff. We've done this in the last week ourselves so I'm new around here too.

Basically you're taking about a DMP. No other option for us but to tred this path as last month was the first month we could no longer keep up with the payments.

As it's been called a financial management plan are they charging you for this service?? If so I'd strongly advise you look into a free service like CCCS, Payplan etc. You shouldn't have to pay for this service.

Equally, are you sure that you've done all you can in terms of cutting back to see whether you can pay off the debts without going down this route seeing as your credit record is untarnished at the moment. I'm sure if you post a SOA on here people will be willing to share ideas on what you could do.

Hope I've been of some help.

Deep_In_Debt

I suspect the company you spoke to recommended a dmp to make money out of you and not advise in your interests.

If you go with a non-fee charging company such as Payplan or CCCS, you'll be debt free a lot sooner as all your money will be going to pay your debts and not lining their pockets.

Meant to add also, if you are meeting your minimum repayments and have been up until now, then a dmp may not be for you as creditors may not accept it. Usually if you've defaulted a few times and missed a few payments, then creditors will see that you are struggling and are more like accept the dmp.

anonymous35

Thanks for replies,

First yes we've done we possibly can to cut back and there is nothing much more we can do to bring anything else in.

Sorry to sound thick, but I'm not sure I fully understand what a DMP is? Do you have to get accepted in to a type a scheme to be allowed to freeze your interest rates? If so who makes that decision to allow you to do this?

Standingtall

Hi Annonymous, if you go on a DMP (debt management plan) the it certainly will wreck your credit rating for a minimum of 6 years and potentially much longer. I had no choice however, and it is the best thing I have done in many ways as it STOPs me getting further credit.

As stated above if you do go through with it then please go with Payplan or CCCS. Another pointer is to only pay token £1 payments for a couple of months in order to build up an emergency fund.

I won't bore you by carrying on as I am surer you will read the many threads about DMPs in this forum. However do post your SOA as suggestd above - it is a useful exercise for yourself as well as to gain help and advice.

Good luck and keep reading in orderr to make an informed decision.