To consider a DMP?

fairydust30

I have debts of about £25k and my husband (well I dont know exactly but I think around the same mark). Would you try for a DMP as we're really struggling (well I am, dont know about my husband) or would you keep struggling knowing that for example paying £230 each month on a barclaycard credit card only actually pays off £40 if that as £175 goes back on as interest....

I have been trying to struggle along but after reading about some people on here on a DMP I thought maybe I should look into them - know nothing much about them other than that its about 5 years to get debt free and you have to have your financials thoroughly gone through. I have two kids, am married, hub a teacher, me self employed.

What do you think?

endora

Yes, that's the problem with credit cards, in reality they are a rip-off and most of the monthly minimum payments go towards increasing the profits of financial institutions and lining the pockets of the bankers. However, there's a bit more to a DMP than what you mention above, for starters it may well take longer than 5 years to pay off £25k and there's no guarantee that all creditors will agree to freeze interest.

There's also your credit files. Going on a DMP means breaking the agreement to maintain minimum payments and that is likely to result in defaults being recorded. Those defaults will remain in place for 6 years and will affect any future credit applications.

Tixy

Hi

I'd suggest drawing up a statement of affairs to see what you have coming in and going out before debt repayments and how much you should have left to pay your debts.
Then you can decide on a way forward and whether to seek advice from a debt advice charity.
If you can afford your minimum payments (without re-using credit) then you would not usually qualify for a DMP - these are for people who cannot meet their contractual payments.

Allypops

It would depend on lots of things really including how you feel about access to credit in the future given that a DMP will result in your credit record being shot for a good, long while. There's also whether you are able to meet your monthly expenditure without resorting to additional spending on credit. (I ended up having to pay bills and groceries using credit cards so debt was spiralling = debt crisis =had to do something).

If you are able to meet minimum payments with a little left over you might benefit from looking at the snowball calculator where you throw any excess at the most expensive debt (highest APR) whilst maintaining minimum payments on the others. (I'm not sure of the link) If you feel up to baring your soul and posting a SOA some clever people here will no doubt be able to come up with ideas on how to make savings and free up extra to throw at the debt.

With regards to whether you should consider a DMP have you tried the debt test tool on the Consumer Credit Counselling Service (CCCS) website. It is a good indicator of where you are at and is all done on line meaning that you dont have to confess to an actual human at this stage!!

fairydust30

Thanks all - I do pay more than the minimums on a few smaller ones (say £20 more a month on a couple etc) and I do have the tiniest bit of money left but having two kids some months I struggle (school shoes, new uniform as kids grow etc) I do end up using the very little bit of credit left on cards to pay for essentials if my tiny leftover doesnt cover it. I think a SOA would probably be helpful however its all complicated as my husband keeps his money seperate and we both contribute an amount to the joint where the household bills/mortgage are. Then I am left to fend for myself (having half his income) for my car, mobile, my own clothes or whatever else I need like prescriptions, dentist etc etc, I usually do ALL the kids stuff - clubs, uniform, clothes, shoes, school trips, treats etc etc.
Im in a catch 22 situation - if I go over my overdraft (which I do once or twice a month) I get a £25 charge each time and then use cards to get me back down into my overdraft. Sometimes Im brave and ask hubby to borrow it but hes not easy to ask and I have to pay it back to him so its gotten to the point where I dont ask anymore.

Think best post a statment of affairs - really the only thing thats 'unnecessary' is my £34 gym membership but its THE ONLY thing I have thats for me, I dont go out, I dont spend money on clothes, makeup or anything so Im trying to hang onto that for my sanity - I work from home and do all the school runs and look after the home so If I dont see something other than these four walls itll drive me crazy! Will post later - best get back to work..

Tixy

Once you have done your personal SoA is there a chance you could sit down with husband and discuss the way you are splitting household costs? E.g. if you earn less perhaps you can agree that you contribute a bit less than him to the joint account? Or if the children are also husband's kids could you discuss all the kids costs come out of the joint account and you both up your contribution (so that in effect he ends up paying half).

It might be worth pointing out that you are really struggling financially and that if you end up missing payments on your debts it will also affect him (as you are likely to be financially associated on your credit files if you have a joint account - and certainly will be if you have a joint mortgage).