On a DMP but paying more than minimum to credit cards

brumgav

Hi,

This is something I asked about before but didn't get a definitive answer.

To give you the background;

In 2009 my partner and I went into a joint DMP, at the time the payments offered to credit card companies didn't cover the minimum, but they wrote to say that they accepted the payment in recognition that I/we were on debt management plans.

Now its been nearly 3 years since we started the plans and significant progress has been made with the debts, so much so that each time i receive my credit card statement, it is now showing that the minimum payment is £36, but I currently pay £119 to the creditor through the DMP.

Whilst this is great, and will have the debt cleared faster, it does mean that the distribution of our money isn't so good, with some of my partners creditors receiving less than what was contracted, meaning that an arrears is building fast.

What I would like to do now is come off the DMP but when I spoke to one of the credit card companies they said that I would have to keep paying the £119 as that was the agreed payment even though the monthly statement asks for only £36.....thats a difference of £83 which would be better paid to another creditor.

So, can anyone tell me if the credit card company can enforce this? I have defaulted on the account and they did send a letter accepting the reduced minimum payment (albeit it was almost 3 years ago) but it never mentioned that I would have to maintain that amount until the debt was cleared!!

Hope someone can help.

Gavin

eyeopener2

Hi

How long have you left on your DMP?

I think your worrying unnecessarily here. The arrears are there but if the balance is coming down, that is the main thing.

I have a similar situation. I pay over what the credit cards deem minimums on a couple of debts but under on a couple as well. However the culmination of this means that my debt free day will still be the same.

Just keep paying what your paying and try not to over complicate things by thinking too much.

If your balances are less than they were three years ago and you can see the end, then your doing the right thing.

E2

Time_to_face_the_music

Hi Gavin :hello:

For a lot of people, the whole point is to get away from making only minimum payments on debts, which just serves to increase the debt month after month.

I would be very happy to see my payments well above the minimum level, knowing that one debt would be paid off quickly, then that payment would be transferred to your other creditors but I don't understand what you mean by

brumgav wrote: »

Whilst this is great, and will have the debt cleared faster, it does mean that the distribution of our money isn't so good, with some of my partners creditors receiving less than what was contracted, meaning that an arrears is building fast.

as when the DMP is set up, all your payments to debts are fairly distributed so how can your partner's creditors be receiving less than what was contracted?

Who is your DMP with?

brumgav

Time_to_face_the_music wrote: »

Hi Gavin :hello:

For a lot of people, the whole point is to get away from making only minimum payments on debts, which just serves to increase the debt month after month.

I would be very happy to see my payments well above the minimum level, knowing that one debt would be paid off quickly, then that payment would be transferred to your other creditors but I don't understand what you mean by



as when the DMP is set up, all your payments to debts are fairly distributed so how can your partner's creditors be receiving less than what was contracted?

Who is your DMP with?

Hi,

The DMP is with CCCS....what I mean about contracted is that two of my partners loans the original agreement was £433 for one loan and £288 for the other, but they only receive £370 and £230 respectively.

The reason i am asking is because I am considering coming off the DMP so that I can contribute more to my partners debts (if I was only paying minimum to credit cards for example).

I understand that paying more will clear the debts quicker....my main priority at the moment would be to get to a position where I can obtain credit again....as our mortgage is variable rate and who knows when or how much that could go up by....out thought is the sooner we can repair our credit rating the sooner we can get on with our lives....happy to have a couple of credit cards etc on the go but will never get into the debt like we have before.

Gav

Time_to_face_the_music

Do you have defaults, and if so, when were they applied?

If you do have defaults, I can't see that the approach you are proposing will make any difference to your credit rating. They are there for 6 years whether you pay your debts off slowly or quickly.

To be honest Gav, I am probably not the best person to advise on this. Your statements that you are considering dropping some debts to minimum payments and you are wanting to get to a position where you can obtain more credit ring all kinds of alarm bells for me. So I think I am best keeping quiet :silenced:

brumgav

Thanks for the replies.

We have defaults which were applied in the last few years, mostly they were applied about 2 years ago for most creditors.

We have no intentions of applying for more credit, just to get the mortgage onto a fixed rate so we know where we stand...its a worry that the mortgage could increase at any time, which would then mean the creditors get even less...which would then mean the debts take longer to pay off.

Currently the debt free date is Dec 2014.

What confuses me sometimes is that if the arrears on the some of the creditors was cleared (only 2 in arrears) then we would probably be able to afford the minimum or contracted payments to all the creditors....I just cant see how in 1 years time it will be reasonable to still be on a debt management plan when we could probably afford the payments the creditors actually wanted?

[Deleted User]

Are any of your current debts coming to an end any time soon? When this happens the amount that you pay the remaining creditors will automatically increase. Are you concerned that this is not happening quickly enough?

If in your DMP interest has been reduced or frozen on any of your debts, by ending your DMP will this not mean that they revert back to the original APR's? lenders current variable rate?

I am a little confused over what you are meaning/asking - are some of your debts increasing every month because you are not covering the interest charged with the payment made?

Perhaps you need to seek advice from whoever is managing your DMP. Coming out of a DMP does suit some people (not everyone) but consider very carefully and cautiously if it will suit you.