before we start our DMP

Tigsmom

Hi, After several years barely making the payments to our creditors my husband and I have decided to enter into a DMP. We do have the money to make the minimum payments but virtually every appliance in our kitchen is on it's last legs, our children need new school uniform and living off smart price noodles every night is starting to take it's toll. We have landed in this situation because following redundancy (on my return to work after maternity leave) I took a part-time job. Then rising childcare cost were more than my part-time wages so I had to give up work (I now work weekends), everything else went up except my husbands wage and then our minimum payment tax credits were cancelled. We are hoping that if we can persuade our creditors to freeze the interest that we will be able to manage. We have a DMP to sign but one of the stipulations was that we should move bank accounts as one of our credit cards is with the same bank. However, we have an overdraft which we are currently using to the max every month. How do we switch bank accounts without having the money to clear it?

dfwsometimesoon

the overdraft gets included in your DMP and the bank will be offered the pro rata payment the same as all ur other creditors

good luck

Mort

The overdraft will become part of your DMP.

Read this which explains why you should switch banks. When you apply for your new account ask for a basic account and if they offer you an overdraft say no.

You have not said who the DMP is with. Do not sign up with a company who charges a fee, many people here use CCCS or Payplan who will provide the same service at no cost to you. Read this article.

Good luck.

Tigsmom

It's with CCCS. They've been very helpful. I think we are just nervous about entering into a commitment, probably because at the moment we aren't in arrears. It's only a matter of time until we are though and our quality of life is getting us down.

Regarding the overdraft, I may be naive but it doesn't seem like a debt at the moment because we clear it when our wages go in. If it's added to our debts then won't we be paying interest on it then?

sickasachip13

Hi,

Echoing the others on the bank account situation. I guess you have two options - clear it before your dmp starts or accept that it becomes one of the debts on your dmp. My OD was too large to clear and it became one of my debts, it was annoying but hey ho.

On the % side of things, many creditors do stop % on the debts when you enter into a dmp. That's what we all hope for. We started with 19 creditors and all but 2 stopped %, and those 2 only charge nominal %

Best of luck and keep asking questions :-)

SAAC

Tigsmom

Thank you everyone for being so nice.

It's lack of financial education that got us into this mess. Both of our parents weren't too good with money. I think they should teach schoolkids how to manage money properly. I was only average at maths, I've improved since and now work as a cashier but it's been a long lesson!

We have 6 debts (if you include the o/d) but two of them are only £350 each. Does it fare better if we try to clear these first? My credit card have offered me a 0% transfer. Is it worth transfering my husbands cards (currently 29.9%) ? If I ring my credit card and ask for them to reduce my existing payments to 0% for 6 months instead do I have a chance? (It's a bit cheeky but I'm clutching at straws). Is it worth trying to postpone the DMP as long as possible or is it better to enter into it asap? What are the consequences?

duckie193

Hi Tigsmom, you seem to be in a similar situation to me & I was also worried about the changing bank accounts. 3 out of 5 of my debts are with the bank so think I will definately be advised this too.

Can I ask someone - how easy is it to get another bank account & surely the fact that we have to get them for this reason no other bank would want to give us one ?

sickasachip13

Hi,

We went to Santander, basic current account, they accepted us no problem. I know other people have had luck with the co-op.

Tigs, on your q. re: the balance transfer - even if it's 0% card it will still be a debt that will need to be included in the dmp.

SAAC

Tigsmom

Hm. Good point. I guess I thought it might be better if we could pay some off first but we could only manage the small ones at a push. The larger ones would still have to go to DMP. Would 3 debts look better on the DMP than 6? Or should we just get on with it?

BevieB

Tigsmom, we were in a similar position nearly a year ago. We then entered our DMP with CCCS and I can honestly say it was the best thing we have ever done and wish we had started it earlier as we had spent the previous year robbing Peter to pay Paul and was not in arrears and worried about our credit history.
We had an od of £1800 prior to the DMP and we cancelled all DDs and took all the available cash from our account on our payday which left -£1800od and paid it into out new bank account with the Nationwide. The od then became part of our DMP.
Be brave and start your DMP

eyeopener2

I had and OD with Santander and a loan and a credit card! So I wouldn't worry about changing banks. Just another debt.

I wouldn't worry to much about the small debts, they will atke care of themselves over time. The key thing is getting that 29% interest stopped or at least reduced. You have to structure your payments so that you are paying way below minimum on that one. Otherwise if you pay over or close to minimum you will not get the interest reduced.

It doesn't matter how your DMP looks, its what you can reasonably afford to pay back on a budget where you don't starve, and can you pay it back in a reasonable amount of time. I had 10 debts and £24k at the start, it wouldn't have mattered if it was 10 debts or 15 debts or 6 debts.

Just get your budget sorted, find out how much you will pay each month and then settle down to your new life. You will be fine.


Good luck.

E2