On DMP - received PPI refund

Weemac

Hi I have a dilemma that I could do with some help with.

We have been on a DMP for nearly 6 years now with no problems which will be paid off in 2022 with a remaining balance of just over £58,000. We have just received a cheque from RBS for a PPI reclaim on previous loans with them for £10268.50. We have a loan with RBS on our DMP and I thought they would just take our refund and pay it directly into this loan to reduce the amount due but they have sent us a cheque instead but their letter states -

Please note that there still remains an outstanding balance on loan account xxxxxxxxx and you should continue to make your previously agreed monthly payments.

We could so easily spend this refund money as we are needing a new car plus things need doing in the house but I also feel that we should pay off some of our debts on the DMP. I have worked out a full and final settlement for all the debts but would only be paying 18% of what we owe to each debtor and I dont know if they would accept this.

So my dilemma is -
spend the cheque on things we think we could do with and keep paying DMP as before or
offer full and final settlement figures and see if debtors will agree (really not sure as figure so low)

The thing is I know which option we should take (try and pay off DMP now) but i would love to spend the money on us as it has been so long since we have had any spare money.

Any advice would be greatly appreciated

~Beanie~

I think you know which option you should take. I don't know how your DMP provider would feel if they found out that you had spent £10,000 whilst still owing over £58,000. Or your creditors for that matter.

Maybe you should speak to your DMP provider and see what they suggest, maybe they would allow you to replace your car and pay the rest into your plan.

catandy

will the amount clear your dmp or even a sizeable chunk of it? I bet not so why not use say half for essential spends that you need some extra cash for and maybe try and do some full and final offers on some of the smaller balances with the remainder left over. yep by the absolute rules of a dmp it means your favouring one creditor over another (someone gets paid off early) but it means the others benefit by a bigger slice of your payment each month.

doubt you will get a full and final on 18% but I guess it depends on how good at negotiating you are

2022 is a long way away and you need to live a bit, in total that's 15 years worth of dmp level living which is not fun (I'm heading towards the end of the first of mine with many more to go). well done on the ppi claim and good luck whatever you decide to do.

xe0n

I am no expert with DMP, I will be soon as it looks like we are going to end up in one however as above has said. Contact your helper and see what they say.

Explain your current car is going to cost more in maintenance than just biting the bullet for a newer one, obviously this makes sense if you dont go and blow the whole 10k!, you can pick a good second hand car up with warranty for c.£6000 so thats 4k to pay into the DMP.

Just food for thought...