How does a DMP affect your life?

Molly41

Hi.
My son has been advised to participate in a DMP by Step Change.
Please could you advise how it will affect him on a day-to-day basis and also longterm?

I would appreciate your experiences as well?

My son is 22 and would like to go to Uni. He has 10,000 worth of debt. He works full time for the minimum wage but has horrendous travel costs which we help him with.

Many thanks in advance.

Growurown

I've been on a DMP for nearly two years and have to say in my case it has been a life saver. It takes a bit of work to set it up, but once in place it takes up very little of my time. Your son's travelling costs will be taken into account when setting up his budget so he should have a realistic amount of money to live on.

Day to day - as long as you don't miss any payments then there should be no problem. Long term his credit rating will be rubbish.

Pantera_Fan

What is your son planning on studying at uni / what sort of career does he want? If he is looking to go into any sort of financial services a DMP may limit his options of employment.

moohound

It will mean defaults on his credit file which last for 6 years, so if he wanted a mortgage in that time, mainstream lenders would turn him down in that time, but they would turn him down with large debts anyway so no real loss there.

I don't think a DMP will have long term implication on a future career, it is an informal arrangement unlike an IVA or Bankruptcy. The defaults will drop off eventually and the debt will be repaid, it won't haunt him forever.

Initially he will get lots of letters and calls and even a few threats of legal action from creditors, but for most people it will settle down and he will just plod on getting the total down month to month.

He will not be able to apply for more credit until it is all paid, as this could be seen as fraud. This can affect things like mobile phone contracts.

Rented accommodation might do a credit search if he applies to be a tenant.

He might have to move bank accounts, if he has debts with his own bank. there is lots of information on basic bank accounts on this site.

Day to day, like most of us here he will have to learn to budget, live without credit and use cash.

Will he be able to keep up payments while studying?

Pantera_Fan

moohound wrote: »

I don't think a DMP will have long term implication on a future career, it is an informal arrangement unlike an IVA or Bankruptcy. The defaults will drop off eventually and the debt will be repaid, it won't haunt him forever.

If he is looking to go into financial services it is unlikely he will pass the credit checks as part of the pre employment process if he goes on a DMP and has a credit file riddled with defaults.

True it wont haunt him forever but if this is his chosen career path it may hinder until the defaults are removed.

stu2500

I've worked for two financial institutions and have a default on my credit file (its the only adverse item I have on there) from nearly 6 years ago. I wonder what their policies are to adverse credit

Deep_In_Debt

I'm on a dmp and have been for the last 5 years. I also work in financial services and have done since 1998 and it's not affected my employment prospects. My credit file is littered with defaults, arrangments to pay etc. My present company were only interested in IVA's and BR and weren't worried about a dmp since I'm not in an advisory role or handling money.

My ex OH also works in financial services and went BR and still kept his job, again in an non advisory role.

I guess it depends on the firm and their policies and the role.

Pantera_Fan

I have obviously worked for some very harsh credit scoring companies then!!

Ok point taken but still something to consider.

Karen777

Hello.
Will a dmp affect my chances of getting car insurance or home insurance?
Kaz.

Growurown

Karen777 wrote: »

Hello.
Will a dmp affect my chances of getting car insurance or home insurance?
Kaz.

It could do if you want to pay for your insurance monthly. If you are able to pay for a year up front you should be OK.

Molly41

Many thanks.
On a separate note - Step change has advised a very long DMP for a friend of mine - 17 years and 6 months. Is this realistic and would this be accepted by the creditors?

In all reality it is likely that the debt would be paid off sooner via (God forbid) inheritance but not from employment as friend cannot work again.

Thanks