Confusion on DMP's and what is really means

gboodie

Hi,

I am in Debt Crisis according to Martin. I currently have about £61,000 in debt made up mostly of credit cards (10 of them ).

It is obvious that my outgoings are now more than my income and I am using my credit cards to pay bills, food shopping etc. Thus far I have managed to pay all my credit cards minimum payments plus a but more, but come christmas it has gotten out of hand and I need to resolve it.

So I've been looking at DMP's, and have approached DFH and given them £200 for thier services which in return I will pay them £700 over 10 yrs and they make about £15K from me, but I'm not sure anymore and I haven't returned the consent form.

I have spoken to the national debt line and they are pushing me towards payplan or CCCS. I have heard stuff like - charges may be levied against my property, they will take as much money as possible from me, credit card chares will be ignored, they act for the creditors interest, will leave me with very little money left etc.

Who would be better payplan or CCCS with my level of debt? I don't want an IVA or to go down the backruptcy route if it can be avoided.

This is being to stress me out and I'm just thinking of all the negative stuff, so please can I have some help asap before I chuck it all in and go with DFH.

So please help me get myself out of this mess.

Many thanks
Garfield

Tixy

Yes definitely you would be better off with a charity. It will save you £15k and get you debt free several years earlier. And most people find they get a better service from somewhere free like CCCS than the commercial companies.

CCCS will give you options and suggestions regarding a DMP and an IVA but if you choose a DMP that would be fine - they certainly wouldn't force you into an IVA.

CCCS (or other charity) will act in your interest. Whether you go with them or a fee charging company it is still possible that 1) creditors won't agree to freeze interest, 2) your creditors could still take you to court and 3) you could therefore still possibly get a charging order. But none of these things are more likely with a charity than with DFH.
They will work out a realistic budget with you - they will leave you enough to live on, but not extravagant amounts for luxuries and 3 holidays a year etc.

The budget they agree with you will be based on your situation and industry guidelines - if your creditors see you are paying back as much as you can afford they are far more likely to agree to freeze interest, and far more likely not to take further action.

Good luck

gboodie

Hi Tixy,

What is the difference between CCCS and payplan? if any and are there any benefits to be gained by chosing one over the other?

Tixy

CCCS is a charity. Payplan is a commercial company but they run DMPs for free (they make their money selling IVAs and things like insurance).

In general people who post on here and use CCCS are very happy with them/their service etc.
With Payplan I would say most people are happy though there are probably slighlty more complaints on here about them than about CCCS.

They operate fairly similarly in terms of going through your financess, setting up a budget etc and contacting your creditors and how you pay them monthly.

Both are partly funded by the credit industry (CCCS gets donations from the banks, financial institutions etc) and Paypln is part funded by them - I mention this as DFH might well when you tell them you are not going ahead - but that does not mean they are not acting in your interests - they are and will give you impartial advice.

Edit - another thing to consider - with a fee charging company like DFH - whilst ever you are in debt and in a DMP they earn money from you each month, so its actually in their interest for you to stay in debt longer, which is why they might suggest a lower monthly repayment than say CCCS. The longer it takes you to pay back the more money they make - its why we say its impossible for them to give you impartial advice.

gboodie

OK, I'll try with CCCS as they seem to be the better of the two and payplan seem bent on selling you an IVA which is route I will fight to go down strongly.

Thanks for you advice.

Issuma

Hi gboodie and welcome.
All the good people on this forum will tell you the same, don't use a fee paying company, you want to make sure that all the money you are paying is coming off your debt and not a proportion of it going to a company. Your other option is to manage your DMP yourself (which is what I chose to do), my debt level was similar to yours and I have to say I was surprised that all my creditors were ok with me, we have 8 in total 6 have totally stopped the interest and one has greatly reduced it and I'm still working on the other one !! They will default you which will ruin your credit rating for the next 6 years but you will soon learn how to get through life without credit..............yes it's scary at first but it's very rewarding to know that everything you buy is paid for in cash and personally I never want to go back to my old ways and have credit again.
I'm sure there will be more knowledgeable people than me along soon to give you more advice soon.
Try not to get too stressed out you will get lots of help and support on here if you stick around.

Maybe_Tomorrow

Thanks Issuma for a post that puts things into perspective. I'm hoping to avoid the DMP route entirely, but it's nice to know that managing a DMP yourself is possible, and that even a low credit score is not the end of the world.

MT

Standingtall

Hi there:). Welcome to the forum.

I am with Payplan and have been very happy with the service they have provided me. I actually wa hoping for an IVA but they advised that I was not suitable as I had to much equity in my home - I say this to demonstrate that they are not in the habit of pushing IVAs on people. I believe the poster above ( was it Tixy ) was inferring that charging for IVAs was one of their income streams, not that they pushed people into them.

I went with Payplan simply because I was referred to them via my Employee Assistance Scheme. I can understand why people opt for CCCS though, as they are the higher profile and more frequently used of the two. However, if you have any issues with CCCS such as if they are very busy, have a long waiting list, etc, please do not hesitate to contact Payplan. They are very good indeed.

gboodie

Issuma, thanks for your insight!

I would love to do this myself, but wouldn't know where to start. Any pointers to a fellow self-helper to avoid the DMP route? I mean like how do you go about approaching the credit card companies to say "Please can you stop charging interest on my card and we can come to some arrangement to repay your debt" ...

Tixy

If you want to go the self managed route then there are a lot of template letters on national debtline that can guve you a good starting point (so I think the first one you'd probably need is called something like 'offering pro-rata payments to your creditors'.

Or some people contact one of the charities first and get advice on a DMP but then actually choose to run their own, Certainly CCCS and CAB can give you template letters you can use for a DMP and some advice on where to start.

There are also support threads on here where you can ask questions to people who are in DMPs / doing self managed which can be really helpful as well.

Issuma

Gboodie
Once you contact your creditors to expalin your circumstances and come to some arrangement for paying off your debt you are entering into a DMP with them whether by self managing or through a company the only way not to do this is to carry on making your payments as normal and maybe posting up your SAO and let the good people on here see if you can save some money in other areas which may free up some extra cash for you to throw at your debts.

I had got to the stage where my outgoings out weighed my income and for every month that passed it was only getting worse and even though I held off as long as I could I knew this was the only thing that was going to help me.

Basically you need to work out how much debt you have in total, there is a calculation on the National Debtline site that shows you how to work out pro rata payments, I then copied one of their template letters explaining my circumstances and why I felt I needed to do this, offered my pro rata payment and said when I was going to start making this payment, I then completed an Income and Expenditure form showing all my income and outgoings which I then sent these off to all my creditors and waited for the you know what to hit the fan but surprisingly most of them accepted my offer straight away there were a couple that didn't so I kept writing to them (in the mean time I sent the pro rata payments which non of them refused) and after a couple of months they backed down, some of them stopped the interest straight away others didn't stop until the account was passed to a DCA.

My advice to anyone wanting to self manage is to do your research first, be firm but polite when contacting creditors, treat all of them fairly and once you have your arrangement in place really stick to it make sure your payments are on time and pay what you have agreed if you start messing around that's when they'll start being awkward with you, be prepared for the letters and the phone calls but remember this will only be for a limited time it does calm down.

I appreciate this doesn't work for everyone but being the 'control freak' that I am I wanted to do this myself, I keep in regular contact with my creditors if they write to me I always reply to them but now it just tends to be for a review to see if anythings changed.

Good Luck with whatever you decide to do you will get lots of help on here you just have to decide what route will work best for you in your circumstance.:)