Debt management plans - experiences?

Sagittarius

Hi all

Firstly, I am new to this forum and this is my first post - I hope it's not too long and boring, but I have a few questions.

I'll try and make it as brief as possible. I’m in a fair bit of debt and I’ve been looking into some of the options available to me recently.

I originally wanted a consolidation loan, so that I could at least keep one of my credit cards, reduce the limit down to £500 or so and put something very small on there each month and then pay it off in full with the hope that would gradually build my rating back up. However I have spoken to what seems like endless amounts of companies and they have all said I won’t qualify for one so it seems like a rapidly fading option.

So the main thing that’s been recommended to me is a DMP. I was just wondering if I could ask a few questions to those of you who may be on a plan like this if you wouldn’t mind? They are:

1. What’s better, a free one or a paid one? I was originally just going to opt for a free one (seemingly the no brainer) but then a few companies have told me that there is no fixed time on a free one as those companies are paid by creditors and you will basically end up on the plan for your whole life…is this true or just their way of trying to get me to pay?

2. I know it affects your credit rating, mine is in the gutter already so no difference there – but I have been assured that being on a DMP shouldn’t affect things like tenancy agreements, mobile phone contracts etc. Is this true?

3. Did you have to change your bank account when you set yours up?

Sorry for all the questions – would just really like to hear real life experiences rather than someone barking at me down the phone, they all seem to have a hidden agenda.

Also - as a final note - I have gone to my bank as well, and they suggested putting a sum of money in my account (which I haven't got, so would have to borrow from a family member/friend) just to 'float' and cover my overdraft so that basically over the next couple of months I stay completely in the black. Then they said this would improve my approval rating for a consolidation loan from them and increase my chances of acceptance. I'm wondering whether to try this option before going down the DMP road? What would your advice be?

Apologies again for this being so long and drawn out...I just really don't know what the best option would be.

Thank you in advance.

worried_jim

Free one every time. Call Payplan now on 0800 280 2816

http://www.payplan.com/

and ask them for some free advice. They helped me turn my life around in 2008- I can't praise them enough.

Tixy

1. Free one - definitely

There is no fixed term on any DMP, you pay until your debts are cleared. If you are paying out a chunk to a DMP company every month less goes to your creditors and so you'll take longer to clear the debt.

2. On a DMP you will get defaults etc on your file. That will affect all new credit and will affect things like obtaining new phone contracts. Defaults won't affect things like tenancy agreements as a tenancy credit check is only of public data (like bankruptcies & CCJs etc).
It is possible that you could get CCJs whilst on a DMP, unlikely but possible. If you did then that would affect a tenancy agreement.

3. You'll have to change your bank account if 1) you have an overdraft you can't repay (as it will need to go in the DMP) or 2) if any of your debts are with the same bank (as they'll simply raid your bank account via offsetting).
If those are the case you need a new basic bank account with another bank not connected to any of your creditors (must be an account with no overdraft).

final note - sounds unlikely, if your credit file is already shot and you are struggling to repay your debts, then your chance of a consolidation loan sounds very minimal. Sounds just like they are trying to get the od repaid.

List of free providers IMPORTANT - Where to seek professional impartial advice about your debts.

Sagittarius

Thanks worried jim. That's one of the places I have come across and am planning on calling them when I get in from work.

Did you have any problems with things like tenancy agreements/phone contracts when you were on your plan?

Sagittarius

Thank you Tixy. That's one of the things that is bothering me the most - changing bank accounts and the possibility of other things being affected.

However I think it might be my only option.

worried_jim

Sagittarius wrote: »

Thanks worried jim. That's one of the places I have come across and am planning on calling them when I get in from work.

Did you have any problems with things like tenancy agreements/phone contracts when you were on your plan?

I wouldn't know-sorry. I own and I don't need to use mobiles. Good luck getting everything sorted-please call them as soon as you get home, I guarantee it will be one of the best things you do all year!

BlushingRose

Sagittarius wrote: »

1. What’s better, a free one or a paid one? I was originally just going to opt for a free one (seemingly the no brainer) but then a few companies have told me that there is no fixed time on a free one as those companies are paid by creditors and you will basically end up on the plan for your whole life…is this true or just their way of trying to get me to pay?

Go for a free one. Why pay a company money when that money could be going towards paying off your debt?
Also, the length of your DMP depends upon the size of your debt and how much you can pay off - so it could be 1 year, could be 100 years, it all depends.

Sagittarius wrote: »

2. I know it affects your credit rating, mine is in the gutter already so no difference there – but I have been assured that being on a DMP shouldn’t affect things like tenancy agreements, mobile phone contracts etc. Is this true?

Won't make any difference to tenancy agreements or phone contracts, if you already have one. You're not supposed to take out new credit agreements however.

Sagittarius wrote: »

3. Did you have to change your bank account when you set yours up?

Yes. Don;t bank where you have debts

Sagittarius wrote: »

Also - as a final note - I have gone to my bank as well, and they suggested putting a sum of money in my account (which I haven't got, so would have to borrow from a family member/friend) just to 'float' and cover my overdraft so that basically over the next couple of months I stay completely in the black. Then they said this would improve my approval rating for a consolidation loan from them and increase my chances of acceptance. I'm wondering whether to try this option before going down the DMP road? What would your advice be?

Don't consolidate.

Sagittarius

OK thanks again worried jim, and Blushing Rose.

Would it help if I gave a bit more of the specifics? Debts are:

£4,600 - Halifax Mastercard
£5,400 - Barclaycard
£1,800 - Overdraft

Affordable monthly payment for me would be around £250 and ideally I would look to finish this in 5-6 years.

At what point would I change bank account, right now before applying? Any idea of how to go about it/best banks to switch to? Sorry I'm just finding it all a bit confusing and daunting. I can't believe I've got myself into so much mess.

Sagittarius

Sorry just re-read your post again Blushing Rose - the point about new credit agreements - would this include a tenancy agreement? For example if I need to move home during my DMP?

eyeopener2

Tenancy isn't really a credit agreement as such though. Ok, if you had a CCJ as Tixy said then that may affect it but not on a DMP.

I know Payplan has been recommended but if you want to see how the land lies then CCCS have a Debt Remedy tool thats lets you play with your budget to see how long it would take to pay off the debt. Worth a play even if you go with PayPlan.

Sagittarius

OK thank you eyeopener2. I'm pretty sure I won't be looking for further credit over 5 years time but it's things like tenancy agreements I was more concerned about, I know they are slightly different though as you said.

I will definitely have a look at the CCCS website too, thank you.