DMP or DRO?

Cheetara101

Hi, this is my first post and not the lightest note.

A little background, I got a credit card when I was younger and had all good intentions of just using it for online purchases which I did for a while but then it became too easy to spend when the money wasn't going out of my current account. I'm now in the position where I've maxed out 3 credit cards and the interest free period have run out on all 3, I also have a £300 overdraft so in all I owe about 6k.


I was paying the minimum on all 3 cards but when the interest kicked in I became out of my depth, the repayments were over 3 times what I was paying before and I couldn't afford it. I went onto a Stepchange DMP, I couldn't get a DRO as my car was worth over £1000. I then lost my job and couldn't afford to pay my DMP so I made token payments, I now have a new job after moving but my outgoings have gone up and after all my bills each month I'm left with about £35 surplus money, I've sent a revised budget plan to Stepchange but I'm worried my creditors won't accept the new amount as it's £60 less than I was paying before. My car is now also worth less than £1000 so I'm wondering if a DRO would now be an option? I'm just a bit concerned that Stepchange will think I'm trying to bail on my debts by suggesting the DRO but I can't see my financial status changing anytime soon and I'm really struggling with money, it's causing so many arguments and I'm too scared to speak to my family about it.


I just need some advice really, what would be my best option?

welshgirl2

You legally only have to pay what you can afford to each creditor each month, so if that is only £1 per month, Stepchange will accept it. Make sure that you contact each creditor yourself to make sure that they have frozen the interest charges as sometimes it won't get done by Stepchange as they are ran by the creditors.
Don't panic, Stepchange will accept the £1 as they would rather you pay something to the debts than nothing at all.

cookyy2k

you could try sticking all your info into the stepchange website adviser, it's an anonymous calculator that tells you what's right for you.

Sazzie23

Hi, well done for getting a new job and preparing a budget with an excess. I think if you cant keep up the repayments on a DMP you will hit trouble in one way or another, especially if you are not able to share with family. Why not call stepchange and see what they say...?

When_the_going_gets_tough

Hi you can also try the National Debtline and they will be able to talk through your options with you. Good luck.

fatbelly

Cheetara101 wrote: »

I now have a new job after moving but my outgoings have gone up and after all my bills each month I'm left with about £35 surplus money, I've sent a revised budget plan to Stepchange but I'm worried my creditors won't accept the new amount as it's £60 less than I was paying before. My car is now also worth less than £1000 so I'm wondering if a DRO would now be an option? I'm just a bit concerned that Stepchange will think I'm trying to bail on my debts by suggesting the DRO but I can't see my financial status changing anytime soon and I'm really struggling with money, it's causing so many arguments and I'm too scared to speak to my family about it.

Stepchange should act in your best interests and they are a 'Competent Authority' so are permitted to do DROs.

From what you say, your choices appear to be a 15 year dmp or a DRO (debts discharged in 1 year). Given your credit file will already be shot, and you can't see your situation massively improving over the next 12 months, I would be considering a DRO. If they come up with an argument against one, can you post it here?

Is the overdraft connected to the credit cards? I think you will need a new current account and the overdraft joins the credit cards in the DRO. Are there any other debts that potentially could go in?

Remember the £90 has to be paid in cash at a Post Office so you need to work out where that is coming from.

And do your reading so that you understand how they work. National debtline has a factsheet and there is the official guide.

Factsheet Debt relief orders

'Guide to Debt Relief Orders' - latest version on http://www.bis.gov.uk/insolvency/Publications - many organisations are still linking to out of date versions of this.

Former_StepChange_Rachel

Cheetara101 wrote: »

Hi, this is my first post and not the lightest note.

A little background, I got a credit card when I was younger and had all good intentions of just using it for online purchases which I did for a while but then it became too easy to spend when the money wasn't going out of my current account. I'm now in the position where I've maxed out 3 credit cards and the interest free period have run out on all 3, I also have a £300 overdraft so in all I owe about 6k.


I was paying the minimum on all 3 cards but when the interest kicked in I became out of my depth, the repayments were over 3 times what I was paying before and I couldn't afford it. I went onto a Stepchange DMP, I couldn't get a DRO as my car was worth over £1000. I then lost my job and couldn't afford to pay my DMP so I made token payments, I now have a new job after moving but my outgoings have gone up and after all my bills each month I'm left with about £35 surplus money, I've sent a revised budget plan to Stepchange but I'm worried my creditors won't accept the new amount as it's £60 less than I was paying before. My car is now also worth less than £1000 so I'm wondering if a DRO would now be an option? I'm just a bit concerned that Stepchange will think I'm trying to bail on my debts by suggesting the DRO but I can't see my financial status changing anytime soon and I'm really struggling with money, it's causing so many arguments and I'm too scared to speak to my family about it.


I just need some advice really, what would be my best option?

Hi there,

Thank you for posting

If you give us a call we’ll be able to give you advice on the available options. If your available money for debt has dropped quite a bit then this may mean a DMP isn’t your best option and make things like DROs more likely.

It’s hard to be definitive without your full details but I can promise you that we’d never judge someone for considering something like a DRO. It’s always best to keep your mind open to all the possible options. The fact that you made contact with us in the first place to try and resolve the problem shows a proactive effort on your part.

I just wanted to clarify something that was mentioned in this thread about us not being able to encourage creditors to freeze interest. As a registered debt advice charity, we are completely independent of creditors and we do our best to encourage all of them to freeze interest once a person seeks advice on their debt from us. We actually have an excellent success rate with this as the creditors know we treat everyone equally and advise based on realistic circumstances.

Secondly, no company or charity can guarantee frozen interest on your debts while you're paying via token payments or a DMP. It is always at the creditor's discretion whether they freeze interest or not.

I hope this clarifies things a bit, and I just wanted to reassure you that no matter your change in circumstances, we're here to make things as stress-free as possible.

Best regards

Rachel

Cheetara101

fatbelly wrote: »

Stepchange should act in your best interests and they are a 'Competent Authority' so are permitted to do DROs.

From what you say, your choices appear to be a 15 year dmp or a DRO (debts discharged in 1 year). Given your credit file will already be shot, and you can't see your situation massively improving over the next 12 months, I would be considering a DRO. If they come up with an argument against one, can you post it here?

Is the overdraft connected to the credit cards? I think you will need a new current account and the overdraft joins the credit cards in the DRO. Are there any other debts that potentially could go in?

Remember the £90 has to be paid in cash at a Post Office so you need to work out where that is coming from.

One of the credit cards and the overdraft were both with the same bank but I have set up another account with a different bank now so I'm ok in that aspect. My only debts are the 3 credit cards and the over draft, I'm up to date on our rent and bills but after they're all paid for each month I'm left with about £35 left over, my other half pays the majority of the utility bills and tv licence as he earns a bit more than I do but I can't expect him to pay for everything otherwise he'll end up in the same position I am with no surplus money and I can't punish him for my problems.


As for the £90, I could probably borrow the money from my other half and pay him back over a few months, I'm sure he wouldn't mind if it helped me get out of the mess I'm in.


I feel terrible that I'm single handedly ruining things for us both, we can't do any nice things together, we'll never be able to buy a house as I can't afford to and my credit rating is in tatters and I haven't seen my family in over a year because I can't afford the drive there

StepChange_Rachel wrote: »

Hi there,

Thank you for posting

If you give us a call we’ll be able to give you advice on the available options. If your available money for debt has dropped quite a bit then this may mean a DMP isn’t your best option and make things like DROs more likely.

It’s hard to be definitive without your full details but I can promise you that we’d never judge someone for considering something like a DRO. It’s always best to keep your mind open to all the possible options. The fact that you made contact with us in the first place to try and resolve the problem shows a proactive effort on your part.

I just wanted to clarify something that was mentioned in this thread about us not being able to encourage creditors to freeze interest. As a registered debt advice charity, we are completely independent of creditors and we do our best to encourage all of them to freeze interest once a person seeks advice on their debt from us. We actually have an excellent success rate with this as the creditors know we treat everyone equally and advise based on realistic circumstances.

Secondly, no company or charity can guarantee frozen interest on your debts while you're paying via token payments or a DMP. It is always at the creditor's discretion whether they freeze interest or not.

I hope this clarifies things a bit, and I just wanted to reassure you that no matter your change in circumstances, we're here to make things as stress-free as possible.

Best regards

Rachel

Thank you Rachel, I will try and give SC a call tomorrow after work to discuss my current situation.

fatbelly

Cheetara101 wrote: »

As for the £90, I could probably borrow the money from my other half and pay him back over a few months, I'm sure he wouldn't mind if it helped me get out of the mess I'm in.

OK, but the 'official' answer is ... he's paying it!