Payday Loans and DMP

david_bedford_2

Hey Guys,

I currently have some payday loans that have gone out of hand and i had a wake up call, cause i pay off one loan to borrow another so it's an endless spiral.

I currently have 4 loans
Wonga £550
Quick Quid £600
Pounds to Pocket £1000
Ladder loans £1000

2 of the loans I pay by monthly installments, however they are both high APR so leave me short everymonth.

I called Payplan and they advised to setup a DMP i would need to apply this to all my unsecure debt, which include my credit cards.

i currently have 4 Credit Building CC and don't want them included, this has left me even more frustrated becuase i only want a DMP for the payday loans as i can manage the credit cards easier, Payplan was recommended for being understanding but to all my unsecured debts really???

Tixy

Hi

All managed DMP providers will expect you to include all your unsecured creditors. Thats the main premise for a DMP - that all creditors are treated fairly - and means that they are more likely to accept the DMP and freeze interest and charges.

If your credit cards are just for credit building then presumably you are not carrying much of a balance on them? are you clearing it each month? if you just stop using them and pay off the balances then they won't need to be included in the DMP (although you shouldn't use the cards at all during your DMP).

If you don't want to do a managed DMP then you could try negotiating with the payday loan companies yourself and offering a repayment plan to them.

But if you do enter a DMP/repayment plan with the payday loans then this will affect your credit file anyway regardless of any history with the credit cards you have.

david_bedford_2

Tixy wrote: »

Hi

All managed DMP providers will expect you to include all your unsecured creditors. Thats the main premise for a DMP - that all creditors are treated fairly - and means that they are more likely to accept the DMP and freeze interest and charges.

If your credit cards are just for credit building then presumably you are not carrying much of a balance on them? are you clearing it each month? if you just stop using them and pay off the balances then they won't need to be included in the DMP (although you shouldn't use the cards at all during your DMP).

If you don't want to do a managed DMP then you could try negotiating with the payday loan companies yourself and offering a repayment plan to them.

But if you do enter a DMP/repayment plan with the payday loans then this will affect your credit file anyway regardless of any history with the credit cards you have.

i am just paying the balances on them, they are pretty small credit limits, understandibly this will affect my credit file but i need a wake up call. credit cards are not my main issue as they are pretty small repayments compared to the loan sharks. ala vanquis being the highest interest.

I have already taken the steps necessary.
1. Setup a new bank with barclays just awaiting paperwork.
2. Stopped all CPA's/DD for the Payday lenders.
3. Transferring balance to my other account.

The card they are using is blocked so the first payment 29th won't go through.

If i am going to do a summary of my budget to the Payday should i include repayments to my credit cards?

Thanks

David

Tixy

The usual way to submit a budget to a lender (in a DMP or self managed DMP) is to show the total amount of debts and the amount available for debt repayments (after living costs). You then demonstate to them that the offer is a fair proportion of your repayments.

E.g
Income £1500
Outgoings/living costs (excl unsecured debts) £1000
Left for debt repayments £500

Total amount of unsecured debts £8000.
Debt to this creditor £1200
Pro-rata payment £75 (being £500 /8000 x 1200)

You wouldn't show credit card payments separately and usually you don't give them a breakdown of your debts just a total figure.

Edit
If you do a self-managed DMP and treat you repayments like that you may well find that the pro-rata payment to your credit cards is higher than the minimum payments anyway, so you would only need to write to the pdl companies and not the card companies.

david_bedford_2

Tixy wrote: »

The usual way to submit a budget to a lender (in a DMP or self managed DMP) is to show the total amount of debts and the amount available for debt repayments (after living costs). You then demonstate to them that the offer is a fair proportion of your repayments.

E.g
Income £1500
Outgoings/living costs (excl unsecured debts) £1000
Left for debt repayments £500

Total amount of unsecured debts £8000.
Debt to this creditor £1200
Pro-rata payment £75 (being £500 /8000 x 1200)

You wouldn't show credit card payments separately and usually you don't give them a breakdown of your debts just a total figure.

Edit
If you do a self-managed DMP and treat you repayments like that you may well find that the pro-rata payment to your credit cards is higher than the minimum payments anyway, so you would only need to write to the pdl companies and not the card companies.

Thanks

So should it follow like this

Income £1387
Outgoings/living costs £824
Left for debt repayments £575

Total amount of unsecured debts
£18,195.00
Debt to this creditor £550
Pro-rata payment £17.60 (being £500 /18000 x 550)

is this correct?

david_bedford_2

The reason why it's £18k is because £10k of that is car finance, would this be secured though against the car? but then they wouldn't know about it.

sourcrates

if its only the PDL`s your struggling with, just write to them offering whatever payments you can afford, otherwise you will tie your self in knots, if your doing this off your own back, they don't need to know your life history, just make them an offer you can afford to stick too, and budget for your car and creditcards as well.

Also you can set up payment plans online with some of them, I know Wonga will agree to whatever you offer them virtually, unsure about the rest.

david_bedford_2

Update

I have got in contact with 3 of the Payday companies.
P2P wanted a breakdown of expenditure - completed
Ladder Loads - As Above
Wonga - As Above

The only issue i am not getting a response from is QuickQuid iv'e read all over the forums these critens wait untill you default. And pass the debt to MH.

i have offered all of them a monthly payment of £46.50 with a financial review on my 6th payment (01/05/2013) to see whether i can pay abit more.

Wonga seemed to be the most understandible, P2P and Ladder are looking to accept but just in communication at the moment.

My next step is to open a basic bank account so in theory i have 3 accounts.

One for my wages.
One for the monthly payments to other creditors
One for my Repayment plan - PDL

This means that if the repayment is agreed they can't shred my account, plus as it's basic there is no OD Facility.

*Foolish*

That's good that your getting somewhere. Before I went onto the DMP, I arranged a repayment plan with QuickQuid via their online chat, I did have to wait until I had defaulted (although a default was not registered on my credit file then) I think it was literally the day after it was due, they set it up with no problems and I managed to get it £10 less than they were suggesting, they kept the debt.
Good luck.

david_bedford_2

Well all seems to be good with the self DMP in place.

Wonga have agreed to freeze my interest and make 3 payments of £187, the payment arrangement is from the 29/01/2014, with small token payments over nov/dec.

Ladder loans have agreed 4 monthly payments of £46, with a reassessment in february.

Pounds2Pocket have received my SOA and awaiting manager approval for 6 months of £46.50.

Quick Quid sent email today with replayment plan offer and sent my SOA, awaiting confirmation if agreed.

My advice to anyone trying a Self DMP to advise the creditors beforehand and provide SOA (Statement of Affairs).

be reasonable with the Repayment plan i.e. short period of time 4/6 months. Most of them deal by email or live chat for those who are scared to speak to them on the phone.

Thanks

D