Payplan "Cover my payments"

Mojo128

Hello. My first post. I need help. My parents (both in their 60s) have a DMP with Payplan which they pay £160 per month into. Mum on state pension and 16hr a week job. My dad is on ESA and an Army pension. They pay £9 a month to payplan to "cover their payments" against "sickness, unemployment". I understand that if my mum lost her job then Payplan would pay the £160 per month????. I would have thought that if she did lose her job then the DMP would be altered to reflect their new income. Why do they have to pay this? Payplan state this is not an insurance plan. Confused...

Standingtall

Hi Mojo. I also have this protection. The point behind it is, for me anyway, that if I am unemployed the insurance would deal with my DMP (therefore my unsecured debts) whilst I could concentrate on paying my priority debts such as my mortgage. If I was still unemployed a year later than if guess I would go bankrupt or similar as I would not have any money at all to put into my DMP:(

antonic

I took out the £5/month insurance when I took out my PayPlan DMP back in Dec 2005 - I reckoned £5/mth (or £425 in total over the length of the DMP) was a worthwhile investment for a debt of £22,000.00.

Luckily I havent needed to use it (yet !).

Mojo128

Thanks for the reply. But still confused. Is the policy and insurance policy? If my mum lost her job then her income would be reduced and her DMP would be reduced to cover this based on the pro rata payments. Is this not correct? Is this not away of Payplan making money out of my mum. I don't think she needs this policy and think she should not have been sold this policy.

antonia1

Mojo128 wrote: »

Thanks for the reply. But still confused. Is the policy and insurance policy? If my mum lost her job then her income would be reduced and her DMP would be reduced to cover this based on the pro rata payments. Is this not correct? Is this not away of Payplan making money out of my mum. I don't think she needs this policy and think she should not have been sold this policy.

It sounds like an insurance policy. If your mum lost her job the amount she pays to her DMP would be reduced, so her debt-free date would be much further away, or she may have to have an IVA or go bankrupt. Having the policy means the payments would continue for a while, giving her time to find a new job. If your mum doesn't want the policy she should contact payplan and cancel it.

Mojo128

Thanks Antiona. I see what you are saying but I don't agree with it. They live in council accomadation. She only earns £50 per week. If she was to stop working they would then get Pension Credit because all the other income is below £200 per week. I understand from speaking to the CAB that she would just make a token payment to her creditors then. What worries me is that Payplan told her them they needed this protection. Also looking the paperwork that Payplan has sent her over the last 12 months points to the taking out of an IVA. I am confused and so are they. I will be speaking in more detail to the CAB about this.

JustinCredibleGillespie

Dont forget tho, that Pension Credit is means tested & your dad's army pension would be taken into account as would the state pension. They would be claiming as a couple. It really wouldnt be worth her giving up her job.

JCG

xx

Standingtall

Mojo128 wrote: »

Thanks Antiona. I see what you are saying but I don't agree with it. They live in council accomadation. She only earns £50 per week. If she was to stop working they would then get Pension Credit because all the other income is below £200 per week. I understand from speaking to the CAB that she would just make a token payment to her creditors then. What worries me is that Payplan told her them they needed this protection. Also looking the paperwork that Payplan has sent her over the last 12 months points to the taking out of an IVA. I am confused and so are they. I will be speaking in more detail to the CAB about this.

It would certainly be sensible to talk to CAB as they will provide professional advice. I believe that IVAs are aimed at people who would otherwise go bankrupt and provides them with an opportunity to keep their homes. It is possbile that if your mum lost her job the. H creditors would accept a reduced payment but then as the poster above states, they would then remain in debt for longer. I was not pressured at all by Payplan into taking out the insurance but I guess it may depend on who your advisor is. The general consensus is that Payplan do an excellent job and it costs you nothing, so please bear this in mind.

lindann_2

I think the insurance to payplan is for life cover if anything happen to them, the debts will be paid. You can work out pension credit on line, just google pension credit, it worth it, if you get guaranteed pension credit, then it will be council tax paid for maybe help with rent etc.. I think the earnings have to be below the nominal amount for a couple, you also get winter fuel allowance too and other things, best thing government provided this additional help..