DMP & Mutual Support Thread - Part 8

Tigsmom

Time_to_face_the_music wrote: »

It's a nice psychological boost to have one debt paid off but it always makes more financial sense to pay off the one with the highest interest

It doesn't pay it off though does it? Not if they add most of it back on again in more interest. If I had £400 in my pocket I could either clear my smallest debt and increase the payments to my other creditors or pay it to HSBC and watch around £300 of it just disappear in interest payments and late fees.

Time_to_face_the_music

Tigsmom wrote: »

It doesn't pay it off though does it? Not if they add most of it back on again in more interest. If I had £400 in my pocket I could either clear my smallest debt and increase the payments to my other creditors or pay it to HSBC and watch around £300 of it just disappear in interest payments and late fees.

Yes it does pay off but it takes time, the more you pay off the less interest is applied each month. If you keep the balance the same, the interest will never be lowered.

For example, when we started our DMP in February, our NatWest OD was at £4900 and interest was approximately £85 per month. Now it is at just under £2000 and last month's interest was approximately £36 and should go down again this month.

Have you heard of snowballing (no rude comments from HH please!)? You pay minimum payments on your interest free or low interest debts and throw everything you can at your highest interest debt. When that has gone, you do the same with the next highest interest and so on.

Check this out:

http://www.whatsthecost.com/snowball.aspx

I am probably not explaining this very well but it really does work and is the "cheapest" way of clearing debt

Tigsmom

Time_to_face_the_music wrote: »

Yes it does pay off but it takes time, the more you pay off the less interest is applied each month. If you keep the balance the same, the interest will never be lowered.

For example, when we started our DMP in February, our NatWest OD was at £4900 and interest was approximately £85 per month. Now it is at just under £2000 and last month's interest was approximately £36 and should go down again this month.

Have you heard of snowballing (no rude comments from HH please!)? You pay minimum payments on your interest free or low interest debts and throw everything you can at your highest interest debt. When that has gone, you do the same with the next highest interest and so on.

Check this out:

http://www.whatsthecost.com/snowball.aspx

I am probably not explaining this very well but it really does work and is the "cheapest" way of clearing debt

Yes I have heard of snowballing and it sounds great in theory but at the moment our dmp pays less than the minimum payment each month. So HSBC are adding more interest and late charges every month that means we are paying hardly anything off. It makes more sense to me to clear the smaller debts first so that I will then have enough each month to meet the minimum payment and they might stop playing silly b*****s and take off charges so I can actually pay some of the balance.

Time_to_face_the_music

Tigsmom wrote: »

Yes I have heard of snowballing and it sounds great in theory but at the moment our dmp pays less than the minimum payment each month. So HSBC are adding more interest and late charges every month that means we are paying hardly anything off. It makes more sense to me to clear the smaller debts first so that I will then have enough each month to meet the minimum payment and they might stop playing silly b*****s and take off charges so I can actually pay some of the balance.

Some of our creditors have never stopped interest and we have reached minimum payments or are approaching this on some of debts and the creditors are threatening to reapply interest. So meeting the minimum payment can be as bad as not doing it. Sometimes you just can't win :mad:

Tigsmom

I guess it depends how you define winning! If I go solo dmp HSBC will get peanuts from me because DH is currently subsidising the payment so it's understandable that he's annoyed that his money isn't making any impact as all of his creditors have either frozen or drastically reduced interest. The money that HSBC would have got would clear his debts a lot quicker then we could use the whole of his dmp money to reduce HSBC at a quicker rate. I kind of see this as a way of winning as they are not getting a chance to waste all of our payment on interest/charges which currently feels a bit like a kick in the teeth. I know it probably wouldn't make much difference to the amount we pay overall but I would feel a whole lot better. I kind of feel that in the current economic climate when someone is honest enough to own up to struggling yet offering to still pay what they can that these international companies should be trying to help us do that. Being nasty to us will do nothing for their business as we are hardly likely to recommend them to anyone are we?

Time_to_face_the_music

Tigsmom wrote: »

I guess it depends how you define winning! If I go solo dmp HSBC will get peanuts from me because DH is currently subsidising the payment so it's understandable that he's annoyed that his money isn't making any impact as all of his creditors have either frozen or drastically reduced interest. The money that HSBC would have got would clear his debts a lot quicker then we could use the whole of his dmp money to reduce HSBC at a quicker rate. I kind of see this as a way of winning as they are not getting a chance to waste all of our payment on interest/charges which currently feels a bit like a kick in the teeth. I know it probably wouldn't make much difference to the amount we pay overall but I would feel a whole lot better. I kind of feel that in the current economic climate when someone is honest enough to own up to struggling yet offering to still pay what they can that these international companies should be trying to help us do that. Being nasty to us will do nothing for their business as we are hardly likely to recommend them to anyone are we?

I totally agree. We want to pay back every penny we owe but I consider the banks/other creditors have had enough interest from us over the years and we will do anything we can to reduce it now.

I would give serious consideration to changing your DMP to OH and his debts only and you handling HSBC separately. If they want to play silly beggars, let them have a few months of token £1 payments and see if that makes them change their mind.

Have you made an official complaint to HSBC and followed this up with the FOS? If not, do it now. You have nothing to lose and possibly a whole lot to gain.

FOS
Monday to Friday – 8am to 8pm
Saturday – 9am to 1pm
0800 023 4567

Don't let it get you down Tigsmom.

TTFTM x

Tigsmom

I didn't actually use the word 'complaint' but I did write to them asking again for them to stop increasing my debt, pointing out that I am on minimum p/t wage and that DH is kindly giving me the difference but not happy that it's all going on interest. They just wrote back claiming they've never heard from CCCS and are going to carry on as they are.:mad:

I've emailed CCCS about it and saying maybe solo dmp is the way. Just waiting to hear from them.

2spicy

Time_to_face_the_music wrote: »

Have you heard of snowballing (no rude comments from HH please!)?

Im Disgusted !!!... put Snowballing into Google with safesearch disabled... I think im gonna have nightmares tonight !:eek:

Time_to_face_the_music

How long ago did you write to them? I would follow it up with another letter, something like:

You

Date

Them

Dear Sir/Madam

Re account number:xxxxxxxxx

Thank you for your letter of DD/MM/YYYY concerning the above account.

We sorry that you feel unable to suspend interest charges on the above account. All of our other creditors have agreed to suspend interest charges still accruing. They have accepted that to continue to charge interest would not assist us in our present financial difficulties, and can only serve to increase our total debt.

As you are aware, we have already paid considerable sums in interest to this account. If interest charges continue the monthly instalments we are paying will not even cover that interest. Also, the cooperation of our other creditors who have agreed to freeze interest already could be put at risk.

We would therefore be grateful if you would reconsider your decision not to freeze the interest. This would mean that the monthly payments we make would actually reduce the balance owing to your company.

We look forward to hearing from you as soon as possible. We have also contacted the Financial Ombudsman to ask for their assistance in the handling of this complaint.

Yours faithfully

You

Time_to_face_the_music

2spicy wrote: »

Im Disgusted !!!... put Snowballing into Google with safesearch disabled... I think im gonna have nightmares tonight !:eek:

It's a good job my twin isn't here to defend her good name :silenced: