Help for a novice please - DMP/General Debt

Liam123

Hi all,

Save all the emotive part, we are in a situation and I was hoping to get some information from you informed people..

Have about £35k equity in our young family home and about the same in unsecured debt, largely through poor planning and an unexpected (but loved) little one recently.

We pay approx. £600 a month and have recently been missing payments and paying late.

The Mrs has been out and about today and someone has suggested that they can get this down to £240 a month for 5 years and then done. They will take £40 a month to do this and Mrs is bring home the paperwork tonight. This sounds like a debt management plan and therefore I have the following questions:

1. I assumed that a Debt Management Plan was not that predictable and the debt remained after the 5 years...?
2. Obviously this kills your credit rating and do they measure this default from the start or finish of the 5 years?
3. Can they go after our equity?
4. Where does the monthly figure come from? Income ?

I am very grateful for any help, I know we have been silly and this idea does not feel right for me but the Mrs is stressing and thinks this is a great idea so need some ammo to convince her out of it when she gets home - or you guys convince me this is a viable solution....

Liam

Anondebtadvisor

Sounds like an IVA liam123 - if it was a DMP based on £240 it would take a min of 12.5years to repay.

An IVA would require you release equity or extend the IVA for 12 months - from 60 to 72 months.

Any arrangement you make with your creditors will affect your credit rating - DMP, IVA or Bankruptcy. Default notices stay on your credit file for 6 years.

FoggyBrain_2

Hi there. I agree that this sounds like an IVA being proposed. Might I ask who has suggested this plan to your wife ?

What I would suggest id that you get the amounts owed down on paper, along with all off your income. Then pop over to https://www.iva.com and have a chat with a couple of the companies there. It is free and without obligation. Get as much information as possible.

Also, a visit to https://www.iva.co.uk could be useful.

Best of luck and keep asking questions.

Gimpsdad

It isn't an IVA, as £40 per month as a fee wouldn't work. Nor does it sound like a DMP as, again, for that level of payment the fee is too low. I have a horrible feeling it may be more along the lines of a token payment then full and final schemes, but of course I could be wrong.

Interesting to see if the firms name can be ascertained to give us a clue.

FoggyBrain_2

I am not so sure Gimpsdad. Supervisory fees these days are usually set at around 15% of realisations, which on £240 would be £36 (of course this is ignoring nominees fees).

However, at this stage all figures are pure guesswork in any case.

milliemonster

The £40 could just be an introducer fee anyway, I would be very wary of being 'cold called' especially if they haven't even given you any information about the plan? it also seems very odd that they have just plucked this figure of repayment out of thin air as it actually takes a fair bit of time to work out what your disposable income would be which would be the IVA payment which they surely won't have gone into all the detail with her in the street???

Anyway, to answer your questions, as you have equity in your house, it would be highly likely you would be expected to try to remortgage during the term of the IVA to release up to 85% of the equity you hold and introduce this sum into the IVA pot, if you couldn't get a remortgage, then expect to have to continue paying into the IVA beyond 5 years.

For an IVA, this stays on your file for 6 years from date of acceptance, in a dmp, it will stay on your file for 6 years from when it finishes.

The monthly figure comes from looking at your income and then deducting your allowances from that, what is left becomes the IVA payment, there are guidelines on what can and can not be included in allowances and what are accepted to be reasonable sums, if they feel what you are asking for food for instance is too high, they will expect you to back it up with receipts to prove why you need so much as an example. Some things are not allocated an allowance such as birthdays/xmas/holidays so these things need to be funded out of your other allowances.

Life in an IVA is not easy, it's liveable and you can be a bit creative with your allowances to try to work it to your advantage to make life a bit easier but it can be hard.

Standingtall

Liam123 wrote: »

Hi all,

Save all the emotive part, we are in a situation and I was hoping to get some information from you informed people..

Have about £35k equity in our young family home and about the same in unsecured debt, largely through poor planning and an unexpected (but loved) little one recently.

We pay approx. £600 a month and have recently been missing payments and paying late.

The Mrs has been out and about today and someone has suggested that they can get this down to £240 a month for 5 years and then done. They will take £40 a month to do this and Mrs is bring home the paperwork tonight. This sounds like a debt management plan and therefore I have the following questions:

1. I assumed that a Debt Management Plan was not that predictable and the debt remained after the 5 years...?
2. Obviously this kills your credit rating and do they measure this default from the start or finish of the 5 years?
3. Can they go after our equity?
4. Where does the monthly figure come from? Income ?

I am very grateful for any help, I know we have been silly and this idea does not feel right for me but the Mrs is stressing and thinks this is a great idea so need some ammo to convince her out of it when she gets home - or you guys convince me this is a viable solution....

Liam

Hi Liam:). Please come over to the debt free wannabe forum where you will find lots of advice on how to tackle these debts and who will help you in doing so. Also, please contact either CCCS or Payplan for free and impartial advice. Do not, under any circumstances, go with a fee charging company as the Internet and these forums are littered with horror stories about them.

On a DMP the equity in your house is generally are and defaults will occur when and if your various creditors decide to give you them. These will, as stated above, stay on your file for 6 years. You will pay back the full debt at a mangeable amount although there may be opportunities to negotiate with your creditors for full and final settlements.

An IVA is generally only considered suitable for those with low equity in their homes, I believe. It stays on your record as a form of bankruptcy and would possibly prevent you working in certain roles.

Interest, charges and CCJs are prevented in an IVA but not in a DMP. However most, but not all, DMPs seem to also prevent and stop these occurring.

As i suggested earlier, I hope you read this and pop over the DFW board as there is a wealth of information on these issues. Good lcuk:T

FoggyBrain_2

".......Please come over to the debt free wannabe forum where you will find lots of advice on how to tackle these debts and who will help you in doing so. Also, please contact either CCCS or Payplan for free and impartial advice. Do not, under any circumstances, go with a fee charging company as the Internet and these forums are littered with horror stories about them."


Once again, the same misinformation regarding the "charity firms". Yes, there ARE disreputable firms out there, but cab usually, with a bit of research, be weeded out. However, CCCS and Payplan BOTH charge fees for IVA's in much the same way as other firms !!!

And, yes, I could also regale you with horror stories from fee paying firms ---- INCLUDING some doozies from Payplan.

As far as IVA's are concerned CCCSVA and Payplan are on a par with most other reputable firms. However, they ARE "free at the point of sale" for DMP's and are excellent in this field. That said, a DMP is, in reality, only a short term fix and both CCCS and Payplan regularly convert clients in DMP's onto IVA's when they deem the circumstances are suitable (often wasting years of clients time).

Standingtall

FoggyBrain wrote: »

".......Please come over to the debt free wannabe forum where you will find lots of advice on how to tackle these debts and who will help you in doing so. Also, please contact either CCCS or Payplan for free and impartial advice. Do not, under any circumstances, go with a fee charging company as the Internet and these forums are littered with horror stories about them."


Once again, the same misinformation regarding the "charity firms". Yes, there ARE disreputable firms out there, but cab usually, with a bit of research, be weeded out. However, CCCS and Payplan BOTH charge fees for IVA's in much the same way as other firms !!!

And, yes, I could also regale you with horror stories from fee paying firms ---- INCLUDING some doozies from Payplan.

As far as IVA's are concerned CCCSVA and Payplan are on a par with most other reputable firms. However, they ARE "free at the point of sale" for DMP's and are excellent in this field. That said, a DMP is, in reality, only a short term fix and both CCCS and Payplan regularly convert clients in DMP's onto IVA's when they deem the circumstances are suitable (often wasting years of clients time).

I am sure you are right Foggybrian and that are reputable fee paying companies on the market, but nonetheless much of what I say is also correct so you could be a little more polite in your response. I never said Payplan is a charity on my last post . I am also aware that all IVAs are charged for.

Nonetheless, the OP - Liam - will require some impartial advice if he is to make an informed and suitable choice in how to deal with his debts. He will also receive advice on budgeting etc through DFW threads.

Thank you for making your point however as I had missed out the fee element of IVAs which is important.

FoggyBrain_2

Standingtall -- I apologise if my response came across as impolite. I am just getting somewhat tired of Payplan and CCCS being constantly promoted as "Free" ( not by yourself, I might add, but by many other posters here ).

However, as impolite as it may seem, I still take exception to your sentence, "Do not, under any circumstances, go with a fee charging company as the Internet and these forums are littered with horror stories about them.". It is a rather sweeping statement, which, by the definition "fee charging" excludes every firm in the market!

That all said, much of your advice was useful. However, at this stage we are still trying to ascertain what solution has actually been proposed and by whom.

As for impartial advice I often ( to the annoyance of at least one other poster) recommend people to have a look at https://www.iva.com, which has a list of firms, with reviews (including Payplan, but unfortunately CCCS isn't there), from which they can make their own enquiries. It is always best to chat to a cross section of firms, as this is a financially close 5 or 6 year relationship and no matter to be taken lightly, and, as you rightly say, there are firms out there to be avoided.

A lot of these discussions are best over a glass of wine, pint of beer, or even a cup of tea and lose the feeling of just trying to help in the cold setting of a forum.

Standingtall

Foggy Brain - if we ever meet you most certainly buy me a glass of wine