Is a DMP really the right thing for us?

Livvipivvi

Hiya all,

I've been reading the threads and commented on posts a few times, but my username was a bit too personal so I have been wary of saying too much about myself if you know what I mean

Any whoo, I've set up another account with a new, not personal name, so am looking forward to my new found freedom haha!

I've been considering entering into a DMP with Stepchange. I've gone through their online assessment and its what they recommend.

Hubby works full time and as I've been a stay at home mum to our 2 children for years, I'm re-training which involves being on a placement (unpaid) and attending courses mon-fri.

Although my hubby brings the money in, I'm in charge of paying the bills. We have had late payments here and there on non secured debts but are up to date on everything. We (I) have been just about keeping our heads above water, but the unsecured debts are strangling us and we are not living. We also got married last March, which we did quite cheaply but still has hit us hard. I'm so stressed out as I feel like I'm on my own to deal with it all, while hubby is in work. I'm dreading the mail coming, while I'm living from paying one bill to the next.

In hindsight this has been building up for a while as paying debts has been swallowing up income, meaning that whenever anything has needed replacing or the kids have needed clothes I've relied on BNPL's on the catalogue. Bet your all reading this and can already guess whats coming next....Yep the BNPLs have been ending one by one over the past 5 months or so, bumping up the balance with not only the cost of the items but the interest accumulated during the payment free periods. This has meant that a bill that was £30 a month last oct his risen to this months bill of £265. There are more BNPLs due to go on over the next few months too. We were just about making ends meet when the bill was lower, but I think it's this increasing by £235 a month that has really tipped us over the edge.

Our other outgoings include:

Bank loan - bal £4965 - £219pm

Current bank od - limit £2950 and living in it, maxing out every month - interest charges £40pm

Other od with old bank £667 (long story but there is a genuine reason for this od, we didnt cut and run have been paying £15 a month to cover int but they now want to set up an arrangement to clear debt so will be at least £100 a month

Next - bal £880 - last bill £91

and the previously mentioned..

Catalogue - bal £5254 and climbing as BNPLs are added, the items ordered are included int he balance, but as they are coming off BNPL the interest is going on too - currently £263

Total unsecured debts £14716 costing £713 a month.

To live normally SC says we need £2269 a month to cover mortgage and living costs. Total guaranteed income is £2497, leaving £228 to pay unsecured debt.

When filling in the costs, I did go a little higher on things to be on the safe side and to be able to start saving a little each month for emergencies as we don't have anything at all at the mo and the whole point of this is to have money to pay for breakdowns etc at home and not have to borrow to do anything. Hubby has also been working a lot of overtime to be able to meet minimum payments, living in work most weeks, 7 days a week. I haven't included the money from this either, because 1. its not guaranteed that there will always be overtime, it all depends on if anyone else takes holidays/is sick etc and he has to share the overtime with other people who want it, which he's not at the mo and it's gonna start causing bad feeling at work. 2. its just not sustainable, he's working 12 hour shifts often only having 1 day off in 12 if he's lucky and its not easy work, i'm worried he's gonna make himself ill.

So after all that lol, question is....Should I start the DMP with SC and let all our debts go belly up or is it worth me just defaulting on the catalogue?

my reason behind this thinking is that things like Next and the second account od are only short term problems really as the od will be a 6 month plan and although the Next bill is high, it reduces a lot every month, last month the bill was £99.odd this month its £91, so we are getting somewhere aren't we?

I dont know am I just being unrealistic and looking for excuses to keep juggling the balls that I have been dealing with on my own for so long? Just delaying the inevitable. I'm just so worried about this and whether i'm doing the right thing. I feel like I've failed

I feel like I should explain that a lot of the debts accumulated when hubby had to take a pay cut and reduce hours at work for just over a year during the recession, it was either that or loose his job. This started the cycle and I think we've been digging deeper ever since really, with the cost of living going up and up and the minimum tier Child Tax Credits that we were receiving stopping because we are above the income threshold. They are also taking £23 a month off us due to overpayments.

Also one more thing worrying me is that I'm training to work with children, which I need an enhanced disclosure for. Will defaults show on them when I'm checked? How bad can it get when having a DMP? How often do these kind of debts end up with a CCJ? Because I'm sure that they will show up on my disclosure?

I'm going to stop typing now, because I'm stressing myself out more (I'm having chest tightenings so am gonna go take some kalms now) and as you can see, I'm one of those that could go on and on lol.

Many thanks in advance to anyone who replies

Trajal

Hi there, whoever you are!

Can I strongly suggest putting an SOA up so that we can see the overall picture in the numbers alone?

I don't think too many will be able to make a judgement or give advice until we can get the overall picture.

Good luck, get an SOA together and you will receive lots of advice!

Livvipivvi

No of adults in household - 2
No of children - 2

Total monthly income including child ben - £2497

Outgoings

Mortgage £698
water rates £38
council tax £94 its 10 payments of £112 but SC took yearly payment and divided by 12
gas and elec £100 This is a bit low too and i'm waiting for the increase which i'm guessing will be to about £135 a month
home insurance buildings and contents £29
TV, landline and Broadband £60
Tv Licence £13
Mobile phones x2 £28 for both
repairs and maintenance £13
Household appliance rental £7 - its one of these insurances on our washing machine that we own, but our machine is over 5 years old and sounding dodgy and we've called them out twice already so I am reluctant to cancel this at the mo, because my machine is on it's way out for sure and replacing it ourselves is gonna cost more than what the policy has left to pay.
Fines/CCJs/Decrees - £23 its the previously mentioned Tax Credits overpayments that we are paying back. Didn't know where else to put this payment
Life insurance and pension payments £84

Transport
Spares and servicing £15
Car Tax £12
Insurance £50
Fuel and parking £125 Hubby back and fore work

Food, toiletries and cleaning £500 heres where ive gone over a bit to be able to put money aside each month
School meals £100
Pet food, insurance etc £15
School trips/activities £11 my eldest comp is really expensive, they go on trips all the time. This doesn't near cover it, but it was the most SC recommend so I put £12 and going over a bit on other things will help to cover it a bit.
Medicine/prescriptions/dental and opticians £42
Hairdressing £15
Union fees £22 Hubby work union
Clothing and footwear £76
Newspapers,magazines, sports, hobbies, entertainment and kids pocket money £50
Sundries Birthdays, Christmas etc and Emergencies £49

Unsecured debts

Bank loan - bal £4965 - £219pm
Current bank od - limit £2950 and living in it, maxing out every month - interest charges £40pm
Other od with old bank £667 (long story but there is a genuine reason for this od, we didnt cut and run have been paying £15 a month to cover int but they now want to set up an arrangement to clear debt so will be at least £100 a month
Next - bal £880 - last bill £91
Catalogue - bal £5254 and climbing as BNPLs are added, the items ordered are included int he balance, but as they are coming off BNPL the interest is going on too - currently £263

Total expenditure £2269

Surplus £228

Total unsecured outgoings currently £713

£228 (surplus) - £713 (unsecured payments) = -£485

As mentioed in my opening post, these payments have been maintained by lots of overtime and not forgetting that £85 of it is for the second od that is only getting a £15 payment to cover the interest at the mo, but the bank wants to set up a plan to clear it @£100 a month

I hope I've not missed anything

Trajal

You've missed out your unsecured debts! :-D

Livvipivvi

Trajal wrote: »

You've missed out your unsecured debts! :-D

lol sorry I didnt think, because they are all on my first post
I will edit it to include them now

ladybez

Hi Liv. You have taken the first big step by posting on here.
Just a few comments but I'm sure others will be along soon!
School Meals: any chance of Children taking packed lunches instead?
Medicines etc look high at £42.00 per month, what does this cover?

Regarding an enhanced CRB debt, ccj's etc will not show up on one of these, it will only show criminal not civil matters, so please try not to worry about this aspect.

Can you also list all your debts together with the apr's please?
Good luck.x

Livvipivvi

ladybez wrote: »

Hi Liv. You have taken the first big step by posting on here.
Just a few comments but I'm sure others will be along soon!
School Meals: any chance of Children taking packed lunches instead?
Medicines etc look high at £42.00 per month, what does this cover?

Regarding an enhanced CRB debt, ccj's etc will not show up on one of these, it will only show criminal not civil matters, so please try not to worry about this aspect.

Can you also list all your debts together with the apr's please?
Good luck.x

Hi ladybez,

Thank you for replying,

The advice about the CRB is so helpful and VERY settling to my nerves. I've been really worried about that as I've been training for over a year to help me get a job and for it to all be potentially worthless due to our financial problems was a big dark cloud :j

Yes I know what you mean about the school dinners. My youngest is in primary school so her dinners are £10 a week. Its my eldest who's in the comp thats costing so much, she's in the first year and is putting pressure on me to give her the same money as her friends get, so that she's the same as them. My youngest could take a packed lunch, she's happy either way I think and if needs must my eldest would have to compromise too. What do packed lunches cost these days? would it be £15 a week maybe? Sorry no idea lol.

£42 is for dental costs @ £20 a month, hubby has a bad back and spends about £10 on deep heat sprays etc and £12 for general over counter meds and towards eye tests and glasses as we don't qualify for any help and both hubby and eldest wear glasses (although we only spend about £20 a year on hers to boost the free childrens NHS glasses to a pair a bit nicer)

I'll get all the paperwork out and let you know the apr's asap

Trajal

You're actually not in that bad shape to be honest. A DMP will certainly help you with the administration of everything, which looks a little chaotic to me but to my eyes everything could be accomplished here by talking to a few of those to whom you owe money and a combination of snowballing debt/cutting spending in some key areas.

The old bank OD people can go jump, in my view. It is completely unacceptable of them to expect you to pay £100 a month to repay this.

I would begin by getting in touch with someone in their senior complaints escalation service (they all have something like this) and asking for a breakdown of what is fees, interest, etc.

Explain that they can't get blood out of a stone, ask them to freeze the interest and your payments will then chip away at the capital. I assume that this facility is no longer available to you anyway, so it shouldn't have any effect on your day to day spending.

There are some areas where I think you should cut your spending while you deal with the debts. Groceries are one, clothing another. Estimated savings to be made: £200

I appreciate that you have kids but packed lunches, home cooking and batch cooking can be done for considerably cheaper than you are listing. You would be amazed at how much you can potentially save here if you start dropping brands and planning ahead with your meals (and the costs attached thereto).

TV Landline and Broadband seems unusually high - I pay about that at the moment and I have the XL virgin tv pack with high bandwidth broadband etc. If that's what you are on then you need to cut it back - get freeview for a bit, there are plenty of cheapo broadband and phone deals out there too which should be able to save you. Estimated savings to be made - £35

Join the MSE Energy club thing (one of the options at the top) and fill in details to be absolutely sure that you are on the cheapest deal possible for your gas and electricity.

Now you mention that you have BNPL on your catalogues. I've done this and it sure stung, mainly because the interest became payable which caused the monthly fee to rise so high. It was a while ago but I got in touch with Shop Direct and they kindly agreed to freeze interest and have me pay at a steady rate. It stopped me from being able to use the catalogue until it was clear, but it proved to be the best thing I could have done. I managed to negotiate a relatively painless six months of low payments with them which bought me time to be able to throw all available money at the other debts. Once those were done I had much more available to me for Shop Direct and overpaid the catalogue to nothing within a year. I strongly recommend getting in touch with your catalogue company and talking them through the situation. Offer them say £100 a month for six months and ask to have it reviewed after that.

This will let you use your other available money to pay down some of the other stuff, including your current account overdraft and get rid of Next Catalogue completely.

Yes, you could go into a DMP but I honestly don't think you need to - a quick chat with a couple of these companies and some sensible offers of repayment should see you right.

But you'll need to cut some of your services down and start being a bit better with how you spend your money.

Livvipivvi

The complicated one first -
Catalogue APR 19.9% - Total Balance including items still on BNPL £5254.
Balance that I'm paying off £3691.74. Basic interest added last month was £35.96, not including £268.35 BNPL interest applied.
The minimum monthly payment is slightly higher than the take 3 interest free payment. I'm not good enough to work out whats what, but I rang them to ask about it and they told me that because I am paying over the take 3 payment when paying the min, that I wont pay any interest on items that qualify for the take 3 plan, but not everything on my account qualifies and that is why there is some interest being added every month. My statements don't tell my what is and is not being charged interest though, so I've not got a clue what is going on.

Main account OD limit is £2950 - Nominal EAR 1st £100 0.00% Over £100 is 18.28% or annual rate is 19.90% after the first £100. The balance increases as the month goes on as hubby is paid weekly and we save for the end of month bills, then is usually maxed out when everything is paid. Interest is usually between £37 and £40 a month

Bank loan with same bank as main account - balance is £4964.24. Not sure what the APR is at mo, I can get it off the agreement, I will have to dig it out. If it helps Our balance before our last payment was £5112.96, we paid £218.21 and we were charged £69.49 interest. The interest is calculated and applied monthly so it works more like a repayment mortgage than any loan we have had before.

Other bank account APR To follow

Next APR 25.99% balance £880

zenshi

Your hubby's bad back and meds? Have you considered a chiropractor? I will cost a bit for the treatment but its definitely worth a shot! And in the long run would be financially viable

I was diagnosed with frozen shoulder and doc said roughly two years on painkillers and steroid shots before its right. I visited the chiropractor and it was completely normal afte only a month. You'd be surprised what ailment can be treated

Trajal

Livvipivvi wrote: »

Bank loan with same bank as main account - balance is £4964.24.

Just spotted this.

If you do decide to go onto a DMP you need to move your current account elsewhere quickly. See the important thread about setting off here - http://www.moneysavingexpert.com/banking/setting-off

Frankly, I didn't get into any debt at all with my main bank, I moved accounts specifically to avoid this, even when I wasn't in a difficult financial position (and likewise now, I'm in a good place, but I would never borrow anything from my main bank).