DMP Clarification please

numpty2012

Hi

This is my first post after opening my eyes to what is front of me!

My wife and I currently have unsecured debt of around £75K. My wife is self employed and is about to see her income reduced by 50% (£750) per month.

This will take us from having £300 spare each month to having a£450 deficit which scares me.

I spoke to our mortgage lender NRAM yesterday to see if we could move to an interest only for a while to give us a cushion until my wife finds new clients but they would not in view of the level of unsecured debt they would rather I go on a DMP to reduce my unsecured debt and therefore maintain my priority debts.

We have no arrears or late payments with anyone.

I spoke to Payplan who NRAM suggested an they put forward an DMP or an IVA.

I have spent hours scrutinising figures and websites and am still unsure where to go so I would appreciate any response to the following questions.

1. If I enter a DMP and our income increases can I come out of it or is there no advantage to this? i.e am I better off increasing payments in the plan
2. I am likely to get an annual bonus which may be c £5k. Will an DMP insist I pay this in or will that only be the case if I declare it? I'm assuming a DMP is reviewed annually like an IVA?
3. Our creditors are NRAM (£20k) Tesco (£24k) Barclaycard (£18k) Lloyds (£10k) and Santander (£4k) in peoples experience are they likely to freeze interest or are they hard to crack
4. Am I best using a DMP company and if so are payplan recommended or should I speak to more companies?
5. They say a DMP will take at least 6.5 years to pay but I assume if I put in any extra I can it will reduce this or will creditors absorb this as some form of compensation against unpaid interest
6. If the creditors agree to a DMP will they still issue defaults?

I have looked at balance transfers but courtesy of an inside job at Santander I was an ID theft victim in December which has nicely screwed up my credit file with CIFAS tags etc although Santander paid the fraud money off. i have cut our budget to a realistic one and have moved all I can to better deals so I'm running out of options

Apologies for the questions but I'm scared and ashamed if I'm honest and I know like many on here this site is a great source of help from real people in real situations.

Thanks in advance for anyone who can help

Regards

Numpty

taffy056

Why not place up an SOA so we and you can see where your money is going first, people can then offer some advice, just format the results for MSE

http://www.makesenseofcards.com/soacalc.html

DS4215

numpty2012 wrote: »

.

1. If I enter a DMP and our income increases can I come out of it or is there no advantage to this? i.e am I better off increasing payments in the plan
2. I am likely to get an annual bonus which may be c £5k. Will an DMP insist I pay this in or will that only be the case if I declare it? I'm assuming a DMP is reviewed annually like an IVA?
3. Our creditors are NRAM (£20k) Tesco (£24k) Barclaycard (£18k) Lloyds (£10k) and Santander (£4k) in peoples experience are they likely to freeze interest or are they hard to crack
4. Am I best using a DMP company and if so are payplan recommended or should I speak to more companies?
5. They say a DMP will take at least 6.5 years to pay but I assume if I put in any extra I can it will reduce this or will creditors absorb this as some form of compensation against unpaid interest
6. If the creditors agree to a DMP will they still issue defaults?

1). If your income changes you can amend the amount you pay accordingly. However if it increases above the minimum payment level you might find that the creditors start charging interest again.
2). DMPs are normally reviewed on a regular basis. You bonus should really be split equally between the creditors but you could look at using it to offer a full and final settlement against one (or more) of the debts depending on how large it is.
3). Santander have continued to charge me interest and a couple of months after recently increasing my payment to them by £10 pcm they have increased the amount of interest they charge by £12.50pcm.
4). Payplan or CCCS are recommended by many on here - they don't charge *you* for the DMP. Other companies will take a cut of your money to do the same job. You can do it yourself too, but the creditors might be less likely to accept it if you DIY it.
5). They do not have to stop interest charges. Many do straight away, although others will start charging again after some time has passed. Loans in particular will front-load the entire interest you would pay onto the outstanding amount so you end up paying most of what they would have got anyway (just slower). Increasing your payments will bring the end date closer.
6). Chances are you will get a default when you miss payments. You might also get CCJs - especially for the larger debts. In effect this is only a problem if you move or it might affect your job.

numpty2012

Thanks for your input. It seems santanders unreasonable approach is common from what I have read

eyeopener2

Hi

A few points from me to really just back up what has been said already.

Barclaycard will be completley unhelpful once you pass 1% of the outstanding balance as a payment. Anything under this and the interest is frozen, over the 1% and back it comes.

Your bonus I would save and if you can clear the Santander with it, do it. Yes you should (in theory) split it between your creditors equally but don't bother. Just whack it off a debt. The when the next bonus comes round see if you can offer a reduced settlement (full and final) to one of the other debts. lloyds for example may take a 50% but these things are very hard to call, worth a punt though.

Good luck and if you need any advice just ask

E2