To DMP, or not to DMP, that is (one of) the questions??!

DebtMagnet

Hi all
I posted a full SOA a good while back and it was generally accepted that most costs were screwed down pretty tight and the best option would be an IVA or DMP.

There were a few little savings to make so I went away to look at them and in the meantime managed to get a promotion in work so for a little while things didn't seem so bad and I took my eye off the ball in terms of our debt issues. However it’s gradually dawned on me that we have been consistently borrowing from family for the past several months as a way of getting us to the end of the month and as such this is unsustainable. I honestly don’t think we have anyone else we can ask this month and as it stands, if we pay our remaining debts this month we simply won’t have a penny for food or petrol etc. And so here we are, back to where we were many months before (mainly because the small salary increase I got is now dwarfed by the increase in costs of everything else!)

Anyway we know we need to do something to stop this and so I have been back doing my research and I have read quite a few thousand posts in the most recent couple of ‘DMP & Mutual Support’ threads. But to be honest I still don’t really have the answers to my own questions and concerns and as time is racing on without me doing anything, I thought it best to simply post and ask rather than waste month after month reading and procrastinating!

I seem to come to a decision one day, then sleep on it and wake up doubting my decision and starting over again day after day. My main queries that will hopefully help me decide what to do are below:

1. Can a DMP be in just one name even if you are financially linked in a marriage with joint debts? (I feel I should explain the reason for me asking is that my wife has the lions share of our unsecured debt in her sole name and it is that debt which is causing us the problems and has the highest interest rates etc.)
2. What is the benefit of including a loan in a DMP? As the interest is already front loaded I don’t understand the benefit of including it in a DMP as there is no ongoing interest to freeze and any reduced payment would just increase the term......so if the point of a DMP is to still pay all of the debt back, what is the point in dragging it out and defaulting if you don’t actually save any interest? (I’m guessing I am missing something obvious here?!)
3. We have a joint unsecured loan in with the mortgage (the old dreaded Northern Rock Together product). As we pay one single DD payment to NRAM which encompasses the mortgage and the loan, would a DMP count this as just being the payment to the mortgage and continue to pay it in full, or would the unsecured bit be separated out in any way?
4. Going back to point 1 above, Is there any other alternative to deal with 2 problem credit cards short of a DMP etc? Other than these 2 cards which equate to just short of half of all our huge unsecured debt, all our other debt is on loans which while being high balances, are coming down and have an end date and have reasonable APR’s. The problem is simply that the APR on these two cards is making it impossible to pay anymore than the minimum payments and so as we all know, nothing is coming off the balance in real terms.
5. Even though it has been tough for many years we have NEVER missed a payment to any debtor, even when this has caused us great stress and pressure. However this clearly counts for nothing as they have continually rate jacked us over the years and generally treated us with disdain. So I am today, for the first time ever, considering not paying one or both of the 2 credit cards this month just to simply allow us to buy food etc and not have to worry and go cap in hand again to family. So my question is: is it better to simply not pay at all or to tell them that we are struggling this month and make a reduced payment? I know we’ll get hit with charges as we are not in a DMP (yet?) but if this is the start of dealing with them more long term then I can take a hit on that for now?

Sorry for going on but just got a million things whirring round my head and just don’t know what to do for the best, but know that we need to do something quick. We are both committed to paying everything back and we're not looking for a ‘get out of jail free’ card. But we do just need some breathing space now and simply can’t figure out how best to go about it?

Any opinions or advice will be greatly appreciated.

Thanks for reading
DM

bess1234_2

I looked back at your thread a year ago. Is that £65000 of unsecured debt? You need help now. Go to stepchange or PayPal and ask them the questions. They won't make you do anything you don't want to, but you need expert help. Umming and ahhing won't solve this. You have cut all your costs.

~Beanie~

I can answer one question at least:

2. In a DMP you agree to treat all your creditors equally, thus if you are making reduced payments to one, you must do it to all.

DebtMagnet

bess1234 wrote: »

I looked back at your thread a year ago. Is that £65000 of unsecured debt? You need help now. Go to stepchange or PayPal and ask them the questions. They won't make you do anything you don't want to, but you need expert help. Umming and ahhing won't solve this. You have cut all your costs.

Yes it is (or was) £65k of unsecured debt! It is slightly less now but still shockingly bad...... and you are spot on with the umming and ahhing comment.

Thanks for the reply and the advice

~Beanie~ wrote: »

I can answer one question at least:

2. In a DMP you agree to treat all your creditors equally, thus if you are making reduced payments to one, you must do it to all.

Ok thanks. I guess that I knew that really but I was just trying to understand how it would work with a loan that has front loaded interest. Maybe you just pay it off over a longer term rather than have any reduced interest.

Clearly I need to speak to the people in the know and talk it all over.

Thanks again
DM

lizzy23

if you have a joint loan this has to be put in the DMP so both parties end up in, most of the debt was in my name ( cos hubby didn't have the income because he's self employed) but we had one joint loan with Santander, plus overdrafts on joint accounts so in order for it to work he had to come in, if he didn't he would be liable to pay the full amount when I defaulted

DebtMagnet

Many thanks lizzy23!

Been working away so only just saw your reply but that makes sense. I have spent so much time trying to figure out if just one of us could be in default rather than both of us and what you said now makes me understand why that would not work.

There are a number of reasons I was trying to avoid both of us being in default not least the fact that we are trapped on the SVR for our mortgage with NRAM. If the base rate starts shifting (as it will have to some day), then this could cause further problems so I had hoped one day to be able to shift the mortgage elsewhere before the ticking time-bomb goes off! With the prospect of several years of DMP followed by a further 6 years of poor credit history the chances would obviously be non-existent for many many years.

I think I am being delusional though to imagine that having just one defaulter is any more likely to be accepted on a re-mortgage application than 2 defaulters :embarasse

I suppose if we were on a DMP and the mortgage started going up then we would just cut back payments to creditors to match the increase in mortgage?

lizzy23

DebtMagnet wrote: »

Many thanks lizzy23!



I suppose if we were on a DMP and the mortgage started going up then we would just cut back payments to creditors to match the increase in mortgage?

this exactly, your mortgage is a priority debt, unsecured credit cards and loans aren't

DebtMagnet

Thanks again lizzy23!!!

eyeopener2

I had a loan in my DMP and yes,and it increased the term of the loan, makes things more manageable. In my case, as the dmp progressesd and debts were paid back, the loan repayments increased and were actually, in the end, higher than the contractual payment.

eyeopener2

You wouldn't necessarily have a further 6 years of poor credit if you got all the creditors to default early on in your DMP, easier said than done though.

DebtMagnet

Thanks eyeopener2 as the loan interest is one thing I was failing to understand the logic of.

As for early defaults, yes I can see from reading on here that it is a bit hit and miss to say the least. It seems as though you could do with maybe not playing ball at all for a while and get an early default before doing things right from then on, but I'm guessing that is a dangerous game to play and probably not the best way to get them on side and agreeing to freeze interest etc later on?