Are DMP offered by Payplan and CCCs etc really free?

lonely_2

I have read this debate with much amusement. Firstly, from GSF responses, I do not think he works for an IVA/fee-charging DMP company. Neither do I think he has an agenda. The abuse and accusations he received were completely unwarranted, especially as he was only asking what most people on a DMP with Payplan/CCCS should ask - what's in it for the organisations themselves and the creditors that support them. If anyone is put off by a DMP just because of this thread, then they are probably not ready to enter into one anyway - you should be doing a DMP only with your eyes wide open, it is not a step to be taken lightly.

I myself am on a DMP with Payplan and have only good things to report - for the most part. However, a couple of weeks ago when I asked for their advice about whether I should reclaim my bank charges, they said that they cannot get involved and I need to make this decision by myself. Judging from people's experiences on this site alone, no DMP seems to have been revoked on the basis that someone claimed their charges back. Another time they were very reticent to challenge RMA on a loophole that applied to my particular DMP, and in the end they agreed to what RMA was asking for even though there was room for negotiation. This to me suggests that they do not want to bite the hand that feeds them. There is a strong relationship between the creditors and the free orgs - only a week ago I got a leaflet from Morgan Stanley recommending that I talk to Payplan or CCCS (both were advertised), so whoever denied this earlier is wrong.

Secondly, I do not believe that a DMP is right for everyone. DMPs should not last for more than 5 or 6 years taking into account all possibilities (including ongoing interest). Why would you want to be on a DMP for 30 years when you could pay off what you could afford within 5 years through an IVA? I do think that there is an outdated stigma attached to IVAs and GSF is right, if a DMP is likely to carry on for an unreasonable amount of time, why should people be too embarrassed to declare themselves insolvent. In either a DMP or an IVA your credit file is affected for 6 years, so one is not better than the other in this respect. Too many people have a warped sense of morality in that they feel the need to pay everything that they owe - but what about the banks? Do they feel that same sense of morality when they are giving you credit that you cannot afford at 29%APR interest rates??

Thirdly, I agree with others that there should be no reason to go to a fee-charging company when other companies offer the same service for free - UNLESS the service is better. Perhaps for a small charge, your payments are being processed quicker (keeping creditors happier), the negotiations are better, the service is more personal, they are not being subsidised by the creditors and therefore have YOUR best interests at heart - I don't know. But I have yet to be convinced of this and from what I can see this isn't the case, so I decided to go with Payplan.

However, I feel GSF is completely justified in asking the question. Seems to me that some people just got the wrong end of the stick.

lonely_2

GingerSF, can I ask you question? You referred earlier to some of the bad experiences you've heard of in your line of work...my biggest worry is that the creditors won't stop interest. Is it quite common that the interest will carry on or more often than not does it stop? Also, do you mind me asking, what is your line of work?

gingersilverfox

Lonely
I have recently started working with an internet company which deals in holidays (mid life crisis thing). Prior to that I had 16 years in local government and private in the debt advice sector.

Many people who use DMP's are not really ready for debt management in that they have a form of addiction to spending. Debt management for these people is almost like saying to an alcoholic drink less. The beauty of this website is that it helps them see that they are not alone and that by curtailing their spending they can make in-roads into their debt mountain.

In respect to stopping interest this wholly depends on your creditors and cannot be guaranteed. Although there is new legislation coming into Scotland under the Debt Arrangement Scheme which is likely to have some form of debt forgiveness. I believe that the English authorities are looking at introducing a similar scheme.

I believe the debt management industry is trying to ready itself for what is likely to be the next misselling claims. Once the lawyers have milked the misselling of endowments cow they will probably turn their attention to debt management. Especially those companies who have advised insolvent clients to take out DMP for extended periods of time who, perhaps would have been be best served with an IVA.

A lot has been made of IVA’s and a lot of nonsense has been spoken of IVA’s. The only misselling of IVA’s are the ones where someone should have filled for bankruptcy rather than sign an IVA. I suppose I am a bit pro IVA’s/bankruptcy in that an old boss of mine decided he couldn’t live with the “shame” of another bankruptcy. Although I was not close to him I really felt for his poor family and the turmoil he must of being going through. I have helped people with awful debt problems who have said I am worth more dead than alive? Unfortunately this reflects our attitudes towards debt and risk taking. Bankruptcy and IVA’s basically mean that you lose control of your assets not your life. It is the financial institutions who like to perpetuate the attitude of failure in respect of bankruptcy with no concession of guilt on their part. In respect of a previous example of Sensible77 with £77k of credit card debts with only £2k of household income, why did the fi’s lend him more money, ie feeding his addiction? The answer is that they make billions of pounds in profits with this business model, why should they change. Which is why I raised the initial OP.

lonely_2

Thank you for replying. It's so nice to speak to someone who isn't anti IVA. I looked at both options when I was trying to work out what to do. I had £50K worth of debt and could afford to pay back £1K a month towards it. Which made the duration of either an IVA or DMP pretty much the same in my case - around 5 years. I also had to think about my husband and my flat, I have some equity in this and my husband doesn't know about the debt (yes, the shame thing, and yes it was to do with my addiction to spending!) - these were two factors which convinced me that the best way forward was a DMP. But the interest on my DMP keeps mounting and if I wait until the end of the year, and it still hasn't stopped, it will have cost me as much as I would have been looking to pay on IVA fees - it's ridiculous. So now I'm wondering should I change or give the DMP a chance. I feel like hypocrite because I am always saying to others on this board to be patient, but when you keep seeing hundreds of pounds of your own money going down the drain, it's hard to be positive.

Quick question, with your experiences of IVAs, did you ever see a case where the equity in a property was left untouched because the debtor was able to make repayment in full within five years?

gingersilverfox

Lonely
An IVA is basically a compromise by the creditor on what they would have expected to get from you. The compromise being that if you are insolvent then they obviously can't get the full amount they were expecting from you. However, if you are solvent and from your posts this looks to be the case, then an IVA will not be applicable.

Just keep plugging away. You are obviously following the budgetary advice in the other threads. Try putting pressure on your DM company to see if they can get the interest frozen or fixed. Even threaten to move to another company. If this is not working look at using the equity in your house and compare how much it would cost you to repay back that amount with what you are paying in DMP in the same time frame. Use the loan calculators given in this site.

Good luck

southernscouser

So where's the shame in repaying all of what you borrowed?

It was said earlier in this thread that we all end up paying for 'free' debt management plans. Well I'd argue that we pay a hell of a lot more for people who chose IVA's and bankruptcy. :rolleyes:

Bunnyinthelights

Interesting,
I wouldn't do an IVA as my debt was personal (ie. not incurred by my OH) and I didn't want the equity in my house to pay for my mis-handling of money! I HAD a LBM and will never have credit again as it is like a mind numbing drug to me...

My DMP will last 14 years (as it stands) but I anticipate it to be less.

Bunny

gingersilverfox

Hi SS
Bankruptcy is not really a choice unless of course you petition for your own bankruptcy. I am all in favour of everyone paying up what they owe. However, if you find it too stressful and can’t cope why not use the solutions which are at your disposal to solve your problem. Financial institutions are well aware of the fact that many people have little financial expertise. This is apparent in every person who finds it very easy to amount a mountain of debt but finds it easier to obtain more debt than to get themselves out of it. Drug pushers adopt a similar tactic: get them hooked and when they are hooked make it difficult for them to get off. I could guarantee that if everyone who was insolvent either went bankrupt or signed an IVA the financial institutions would start to do affordability tests on everyone who wanted a loan. But that’s not going to happen. Yes it’s honorable to pay off all your debts but don’t sacrifice your life over it or frown on those who can’t cope. (Just so you don’t go off on one again and start another we hate GSF thread, I’m not for a moment suggesting you frown on those who can’t cope)

Peace and love

southernscouser

But don't you think that we as consumers pay more because of people who enter into IVA's and bankruptcy?

I would never slate anyone for going bankrupt. I know what it's like to be swamped in debt and it was all my doing. I can't guess what it's like for the unfortunate ones who suffer through no fault of their own.

But it's becoming far too easy to be bankrupt. And ultimately the consumer pays for it.

With free DMP's the consumer doesn't pay for it.

gingersilverfox

southernscouser wrote: »

But it's becoming far too easy to be bankrupt. And ultimately the consumer pays for it.

With free DMP's the consumer doesn't pay for it.

Ohhh don't start that again. Free DMP's the consumer doesn't pay??? Who pays for it?????