Is DMP the right way to go?

debtboredom

Hi everyone,

I've finally had my LBM and decided enough is enough. I'm embarrassed to even talk about my debt but I know it will help if I get it out in the open. I genuinely want to sort this out. I've said it to myself before but this definitely the one.

I earn just over £28k a year before tax.

My current debts stand at around £24k:
- £9900 CC (almost £4000 of this is at 0% until 2014)
- £3750 CC
- £3900 left to pay on a loan
- £5000 left to pay on a loan
- £1400 overdraft (£700 is 'unplanned')

So, I could pretty much afford to make minimum payments until I managed to go £700 over my overdraft this month. (Thought I had more money available than I did. My bank then let everything go through.)

If I go on a DMP, June's pay which is paid at the end of the month will still into my current account. Even if I pull the money out instantly to put somewhere else, it will be £700 short of what I'd normally have.

I spoke to CCCS who recommended a DPM but tbh they weren't a massive amount of help when I asked about the specifics of my situation. I have an appointment booked with PayPlan on Monday to see if they can assist.

I would have around £750 to put towards a DPM if I did it but not straight away because of my current overdraft situation. Should I just cancel DDs and miss all my payments in June and wait for July to move the money over as if I go on a DMP I'll likely default anyway?

I'm struggling to get my head around what to do. Can anyone give me some advice please? Sorry for rambling! Thanks very much for reading .

freshstart11

Can you do a SOA so we can have a better look?

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

debtboredom

Thanks for your reply freshstart.... Here you go...

Just to explain, I share a flat with a friend. I pay the rent and a couple of bills, he pays the other bills and we split it 50/50. He ends up paying me the difference (£250).

Statement of Affairs and Personal Balance Sheet

Monthly Income Details
Monthly income after tax................ 1693
Partners monthly income after tax....... 0
Benefits................................ 0
Other income............................ 250
Total monthly income.................... 1943

Monthly Expense Details
Mortgage................................ 0
Secured/HP loan repayments.............. 0
Rent.................................... 595
Management charge (leasehold property).. 0
Council tax............................. 0
Electricity............................. 0
Gas..................................... 0
Oil..................................... 0
Water rates............................. 0
Telephone (land line)................... 12.25
Mobile phone............................ 45
TV Licence.............................. 0
Satellite/Cable TV...................... 45.75
Internet Services....................... 7.5
Groceries etc. ......................... 150
Clothing................................ 20
Petrol/diesel........................... 100
Road tax................................ 10
Car Insurance........................... 77.09
Car maintenance (including MOT)......... 10
Car parking............................. 0
Other travel............................ 0
Childcare/nursery....................... 0
Other child related expenses............ 0
Medical (prescriptions, dentist etc).... 0
Pet insurance/vet bills................. 0
Buildings insurance..................... 0
Contents insurance...................... 11.85
Life assurance ......................... 43
Other insurance......................... 0
Presents (birthday, christmas etc)...... 0
Haircuts................................ 15
Entertainment........................... 50
Holiday................................. 0
Emergency fund.......................... 0
Bank Account Fee........................ 12.95
OD Fee.................................. 5
Total monthly expenses.................. 1210.39


Assets
Cash.................................... 0
House value (Gross)..................... 0
Shares and bonds........................ 0
Car(s).................................. 1000
Other assets............................ 0
Total Assets............................ 1000

No Secured nor Hire Purchase Debts

Unsecured Debts
Description....................Debt......Monthly...APR
Credit Card 1..................3750......150.......17.9
Credit Card 2..................9800......250.......17.9
Loan 1.........................3800......201.......0
Unplanned Overdraft............700.......0.........0
Planned Overdraft..............700.......0.........0
Loan 2.........................5000......154.......0
Total unsecured debts..........23750.....755.......-


Monthly Budget Summary
Total monthly income.................... 1,943
Expenses (including HP & secured debts). 1,210.39
Available for debt repayments........... 732.61
Monthly UNsecured debt repayments....... 755
Amount short for making debt repayments. -22.39

Personal Balance Sheet Summary
Total assets (things you own)........... 1,000
Total HP & Secured debt................. -0
Total Unsecured debt.................... -23,750
Net Assets.............................. -22,750

freshstart11

debtboredom wrote: »

Thanks for your reply freshstart.... Here you go...

Just to explain, I share a flat with a friend. I pay the rent and a couple of bills, he pays the other bills and we split it 50/50. He ends up paying me the difference (£250).

Statement of Affairs and Personal Balance Sheet

Monthly Income Details
Monthly income after tax................ 1693
Partners monthly income after tax....... 0
Benefits................................ 0
Other income............................ 250
Total monthly income.................... 1943

Monthly Expense Details
Mortgage................................ 0
Secured/HP loan repayments.............. 0
Rent.................................... 595
Management charge (leasehold property).. 0
Council tax............................. 0
Electricity............................. 0
Gas..................................... 0
Oil..................................... 0
Water rates............................. 0
Telephone (land line)................... 12.25
Mobile phone............................ 45 - contract? can you reduce?
TV Licence.............................. 0
Satellite/Cable TV...................... 45.7 can this be reduced or freeview?
Internet Services....................... 7.5
Groceries etc. ......................... 150 for 1 of you? If so can DEF be reduced
Clothing................................ 20
Petrol/diesel........................... 100 is the car needed
Road tax................................ 10
Car Insurance........................... 77.09 is the car needed
Car maintenance (including MOT)......... 10
Car parking............................. 0
Other travel............................ 0
Childcare/nursery....................... 0
Other child related expenses............ 0
Medical (prescriptions, dentist etc).... 0
Pet insurance/vet bills................. 0
Buildings insurance..................... 0
Contents insurance...................... 11.85
Life assurance ......................... 43 why so high if only renting, is it your job?
Other insurance......................... 0
Presents (birthday, christmas etc)...... 0
Haircuts................................ 15 maybe go without or find a skilled friend?
Entertainment........................... 50
Holiday................................. 0
Emergency fund.......................... 0
Bank Account Fee........................ 12.95
OD Fee.................................. 5
Total monthly expenses.................. 1210.39


Assets
Cash.................................... 0
House value (Gross)..................... 0
Shares and bonds........................ 0
Car(s).................................. 1000
Other assets............................ 0
Total Assets............................ 1000

No Secured nor Hire Purchase Debts

Unsecured Debts
Description....................Debt......Monthly...APR
Credit Card 1..................3750......150.......17.9
Credit Card 2..................9800......250.......17.9
Loan 1.........................3800......201.......0
Unplanned Overdraft............700.......0.........0 it may just be too early for me but can you explain the planned/unplanned a little more? wondering if you could cut back a bit?
Planned Overdraft..............700.......0.........0
Loan 2.........................5000......154.......0
Total unsecured debts..........23750.....755.......-


Monthly Budget Summary
Total monthly income.................... 1,943
Expenses (including HP & secured debts). 1,210.39
Available for debt repayments........... 732.61
Monthly UNsecured debt repayments....... 755
Amount short for making debt repayments. -22.39

Personal Balance Sheet Summary
Total assets (things you own)........... 1,000
Total HP & Secured debt................. -0
Total Unsecured debt.................... -23,750
Net Assets.............................. -22,750

heya a few notes above if you could clarify? Sorry if I am dozy, bit poorly this morning and tired

debtboredom

Thanks freshstart

The groceries is so high 'cos I tend to pay for food at work. I really need to start making my stuff and taking it in. I'm going to start next week. I have a week off this week so will be eating at home anyway.

You've made me realise that £100 is too much for petrol. I do travel a lot so need to keep the car but could definitely cut down on the shorter journeys I do.

My life assurance is there to stop the debt being put on my parents if something happened. Didn't really know a lot about it but was kind of talked into it at one point. Should I cancel it? (I'm 23)

I do get my hair cut by a hairdresser friend when possible but keep money aside in case it can't happen.

I guess the thing that scares me the most about going on a DMP is that I really won't have any money left over for much, whereas if I carry on as I am, I still can use the credit each month again that I've paid off.

I have a £700 overdraft that I basically live in. This month I have gone £700 over my overdraft. I'm stuck because when my wages go in, I'm only going to have £1000 to spare to pay everything, which isn't enough. Not been in this position before and it's made me realise I just need to get everything sorted!

Thanks for your help!

freshstart11

no problem at all.

I have a self managed DMP which I have found really good and has helped me a lot.

In regards to the overdraft - the first thing I would say is that you can learn to live without one. Open a new bank account (different bank) and get wages paid in to there - then set up a standing order to start clearing down the overdraft. Personally I would do this which ever way you go as it will free up a lot of money.

The food is a little on the high side, me and fiance is £100 a month for two of us but like you said you know how you can drop that down a little

I personally think life assurance is a good thing for anyone to have, you do need it a lot higher if owning but as I have no kids and I rent, I have a low amount covered, with room to increase. This would cover any costs and allow my fiance to not become homeless without me as I am the main earner. I dont feel your debt is high enough to warrent that amount per month - I pay a lot less. I got mine through asda instant life cover - this was just to make sure as I said if something did happen it helps people out. The link is below check it ut may save you a little bit

http://www.asdafinance.com/life-insurance/instant-life-cover/overview/

With my dmp I have made sure money is left for me, over pay slightly on my arrangements by £20 to start snowballing.

I also have £15 to love film, I have treats - you do not need to make it so you have no room to move xx

debtboredom

Thank you so much for your help and support .

How are you finding doing a self managed DMP? Have your creditors stopped interest?

I'm worried that because I can almost pay the minimum payments on everything that at some point I will reach min payment and they will then want me to pay as normal?

freshstart11

I love it (in a strange way) Found with all the DCA comapnies someone happy to email me balances etc on demand and discuss my account , when I offered them all 1-3 quid more a month they congratulated me on taking it seriously and that it was refreshing these days to see people making increases even if small.

I check my bank account each day, thinking about going in to craft making again to sell, selling on ebay, got my envelope app on my phone

All stopped interest on my accounts, except my loan which i needed for moving - being mother is a guarantor on it I make sure that is left as is, cant be messing her up.

I have not once regretted doing it myself, but i did need to work out spreadsheets ( basic though) to show everything

eyeopener2

Stop the Life Insurance now. You don't need it and you never did.

If the worst happens the debt dies with you, it doesn't go to you parents.

You have no dependants so you don't need it.

A couple of words about your debts though and the proposed DMP. You will have to be looking at reducing the mobile phone and the Satellite subs, especially witha very very big crdit card debt of over £9000.

How close to minimums will you be paying with the proposed DMP? That can have a big bearing on if interest is frozen or not.

Can you look at trimming your budget to keep away from the DMP? If you could trim your budget a lot then you could stay away from the DMP. You will have no credit for at least 6 years. You will have very little, if any spare money.

Learning to budget is the first and major lesson on a DMP and maybe you could learn to budget outside of a DMP? it is lifes big lesson that nobody teaches you, learning to budget and it has taken me 30 years to learn!!

E2

DVardysShadow

eyeopener2 wrote: »

Stop the Life Insurance now. You don't need it and you never did.

If the worst happens the debt dies with you, it doesn't go to you parents.

You have no dependants so you don't need it.

I agree to a point. But there is a big difference between Life Assurance and Life Insurance. Life Insurance [also referred to as Term Insurance?] pays out if you fall off your perch but nothing once you finish the plan. Life Assurance is the same but has a savings plan attached.

If it is Life Assurance, whoever sold it told a big fat porky and should be done for mis selling. If you have the advice in writing, you may have enough to make a claim for mis selling - but if you don't have the evidence, there is probably not much you can do.

If you feel you would like to leave no debt if you fall off your perch, Life Insurance is much cheaper and more appropriate than Life Assurance.

katsu

Just to agree - your parents can not be held liable for your debts unless they signed paperwork to act as guarantors. Therefore I'd cancel the life insurance straight away. The only cost they would have if you die is a funeral - get debt free then save some money towards a funeral if that worries you.

Also, you said you are working. Does your employer provide a benefit that they might call life assurance or death in service? This would pay out N x your salary (probably around 4x) to whomever you nominated. If so that would clear your debts and pay for a funeral and leave money left over. Check if you have this and if so there is really, really, no reason for you to be paying over £40 per month for extra cover.

HTH.