Fearing our DMP is a massive mistake

larnier

We embarked on a DMP in October 2013. We did it because we felt overwhelmed by our total debt of £60,000 and were really struggling to make ends meet, despite being relatively high earners with 4 children, two in full time child care. When we met the DMP (charity) they were really positive told us this was exactly the right thing to do - far better to go to them before we in trouble than after etc. They were aware we had never ever missed a payment so effectively weren't in immediate trouble. They worked out our total debts and how long it would take to pay them (this was based upon all interest written off) and it was around 4 years. They did not guarantee interest would be written off but we were told it was very likely. The first two budgets had quite significant errors both of which made us look far worse off on paper than we were. When the errors were corrected and payments were made to creditors this was 2 months after they had told us to stop paying creditors and pay the DMP instead. So by then we had had weeks of hell being heavily pursued by creditors by phone and letter, significant arrears and penalties. Now it turns out that the two major creditors (credit cards which represent nearly half of the total debt) are being paid more under the DMP than they were when we were paying minimum payments, therefore they are refusing to acknowledge the DMP but are pursuing us for the arrears which we can't pay off in full because of the DMP. We have been black listed re credit reference and it would appear that after almost 6 months only 3 of our 14 creditors have agreed to stop interest (representing less than 10% of the whole debt).

I can see very limit benefit in terms of interest being written off. We are struggling on a tough budget where we have less available income than before the DMP because we are paying more off our debt than before (which is very tricky in relatively high powered jobs where you are expected to be able to pay for petrol / events / contributing to charities and birthday gifts for colleagues etc). I have tried discussing this with the debt management company and they just say trust us. But I find this hard I am not sure we were suitable for this process and feel it should have been predicted that if we pay off more than before banks won't accept we are in hardship. They have suggested we go for IVA instead but that could cost my husband his job as he is in a regulated job, so it would have to be disclosed to his regulatory authority. I know we will pay off the debt sooner this way but I am not sure it will be significantly sooner. In the meantime I am living in terror that we will be taken to court (we have had solicitors letters from Lloyds who have been hideous). We approached this charity due to feeling a bit out of depth but now we feel far far worse.

Has anyone had a similar experience and is there any hope that things will get better. Should we try and get out of the DMP ???

katsu

Can you pay all the full minimum payments? It seems like you could do that before but your debts were not really decreasing?

Under your DMP who are you paying less than minimums to? Must be some debts where that is the case or else a DMP would not be relevant.

Hard for us to advise further without seeing an SOA.

Maybe tell people at work you are saving for something big in the future?

Time_to_face_the_music

larnier wrote: »

We embarked on a DMP in October 2013. We did it because we felt overwhelmed by our total debt of £60,000 and were really struggling to make ends meet, despite being relatively high earners with 4 children, two in full time child care. When we met the DMP (charity) they were really positive told us this was exactly the right thing to do - far better to go to them before we in trouble than after etc. They were aware we had never ever missed a payment so effectively weren't in immediate trouble. They worked out our total debts and how long it would take to pay them (this was based upon all interest written off) and it was around 4 years. They did not guarantee interest would be written off but we were told it was very likely. The first two budgets had quite significant errors both of which made us look far worse off on paper than we were. When the errors were corrected and payments were made to creditors this was 2 months after they had told us to stop paying creditors and pay the DMP instead. So by then we had had weeks of hell being heavily pursued by creditors by phone and letter, significant arrears and penalties. Now it turns out that the two major creditors (credit cards which represent nearly half of the total debt) are being paid more under the DMP than they were when we were paying minimum payments, therefore they are refusing to acknowledge the DMP but are pursuing us for the arrears which we can't pay off in full because of the DMP. We have been black listed re credit reference and it would appear that after almost 6 months only 3 of our 14 creditors have agreed to stop interest (representing less than 10% of the whole debt).

I can see very limit benefit in terms of interest being written off. We are struggling on a tough budget where we have less available income than before the DMP because we are paying more off our debt than before (which is very tricky in relatively high powered jobs where you are expected to be able to pay for petrol / events / contributing to charities and birthday gifts for colleagues etc). I have tried discussing this with the debt management company and they just say trust us. But I find this hard I am not sure we were suitable for this process and feel it should have been predicted that if we pay off more than before banks won't accept we are in hardship. They have suggested we go for IVA instead but that could cost my husband his job as he is in a regulated job, so it would have to be disclosed to his regulatory authority. I know we will pay off the debt sooner this way but I am not sure it will be significantly sooner. In the meantime I am living in terror that we will be taken to court (we have had solicitors letters from Lloyds who have been hideous). We approached this charity due to feeling a bit out of depth but now we feel far far worse.

Has anyone had a similar experience and is there any hope that things will get better. Should we try and get out of the DMP ???

Hi Larnier

Have just responded to you on the DMP & Mutual Support thread. Come back and see us there, we can help you with this.

TTFTM x

larnier

The biggest two debts are just under half the total debt and we are paying well over the minimum amount on them £60 and £90 per month extra respectively. We are paying more than the minimum amount on a few other debts but they are generally small debts on credit cards where we just paying £10 per month. The middle debts are loans and we are paying less on those but will be paying them for longer as some of them were within a year of finishing. Overall each month we are paying about £200 per month more on our debt than before the DMP.

I wasn't really expecting specific advice but wondered if anyone had been in a similar position? It feels quite lonely this process especially when it seems to be making more problems than it is resolving. I think I would just like to have realistic expectations of the process as I think the DMC gave us unrealistic expectations - but that could be because they worked our initial budgets out wrong. I think we will pay off the debt sooner because just under 10% of the debt is now interest free. My fear is that we will still be in the DMP for very many years (I think assuming we had no interest the terms is 4 years 8 months so with interest still payable on over £50K it will be longer).

Six months down the line we are getting a lot of hassle from banks which is mainly due to the arrears when there was a 2 month gap (due to the budget errors) between us starting to pay DMC and them paying the creditors. The money we paid them is sitting in the DMC account and we are still getting penalties for not paying the arrears and threats of court. We will pay the arrears off eventually, but if you take one account we are paying £60 more than the min monthly payment, but because of arrears of £500, they charge us £40 penalty each month because we haven't paid min amount plus arrears. Therefore although we pay £60 more than before only £20 of this goes to the arrears - so it will take us 2 years to pay off the arrears we only got into because of the DMP !

It feels such a mess.

Time_to_face_the_music

larnier wrote: »

The biggest two debts are just under half the total debt and we are paying well over the minimum amount on them £60 and £90 per month extra respectively. We are paying more than the minimum amount on a few other debts but they are generally small debts on credit cards where we just paying £10 per month. The middle debts are loans and we are paying less on those but will be paying them for longer as some of them were within a year of finishing. Overall each month we are paying about £200 per month more on our debt than before the DMP.

I wasn't really expecting specific advice but wondered if anyone had been in a similar position? It feels quite lonely this process especially when it seems to be making more problems than it is resolving. I think I would just like to have realistic expectations of the process as I think the DMC gave us unrealistic expectations - but that could be because they worked our initial budgets out wrong. I think we will pay off the debt sooner because just under 10% of the debt is now interest free. My fear is that we will still be in the DMP for very many years (I think assuming we had no interest the terms is 4 years 8 months so with interest still payable on over £50K it will be longer).

Six months down the line we are getting a lot of hassle from banks which is mainly due to the arrears when there was a 2 month gap (due to the budget errors) between us starting to pay DMC and them paying the creditors. The money we paid them is sitting in the DMC account and we are still getting penalties for not paying the arrears and threats of court. We will pay the arrears off eventually, but if you take one account we are paying £60 more than the min monthly payment, but because of arrears of £500, they charge us £40 penalty each month because we haven't paid min amount plus arrears. Therefore although we pay £60 more than before only £20 of this goes to the arrears - so it will take us 2 years to pay off the arrears we only got into because of the DMP !

It feels such a mess.

Yes I have been in a very similar position but if you check my signature you will see it can be sorted. Please come back to the DMP & Mutual Support thread.

sourcrates

Hi,
Tricky situation this, people usually go into a DMP after they have been struggling for a while, missed payments etc, and the accounts have either gone to collections or been passed to a DCA, because you have been responsible and tried to pre-empt this action, the original creditors are treating you as though you have just missed a couple of payments, hence the charges.
To be honest, and this may sound daft to you, your best course of action is to stop your payments completely, allow the debts to either be passed on to a DCA or sold on to a DCA, then all charges and interest will stop and you will just be left with the balances outstanding on each account, then will be the time to enter a DMP, you have jumped the gun a little bit, so to speak, that would be the usual scenario.

loveka

Hi there, this sounds really difficult for you.

You could self manage your DMP- although it sounds like you have quite a few creditors so it may be time consuming. By contacting creditors yourself you would be effectively self managing anyway -just add setting up direct debits to each one and you have a self managed dmp.

A DMP is not legally binding in any way, so you could easily stop the one you have and do your own. Phoning mainstream lenders and explaining your financiall difficulties is not scary and as long as you follow up with what you have agreed in writing, then you have an instant result.

Your budget should not leave you short. There are guidelines as to what is acceptable to them to allow for food, pets etc so don't put less than that on the soa you provide them with. The soa does not have to be proved!

Stewart_78

Have to say I agree with Sourcrates. I would tell them that you are sorry but due to a financial emergency, you will be unable to pay anything for 6 months, or pay them £1 per month each as a token. This should give them enough time to default the accounts and maybe sell them on. Although it sounds counter-intuitive, it may well be better to have these accounts defaulted now rather than later. A defaulted account will fall off your file 6 years from the default date. If you are being marked with late payments or arrangement markers, these will stay on your file for 6 years from the date of final payment.

As mentioned, lowering your payments to £1 per month will also make freezing of interest more likely.

Second thing. When were these accounts first opened? Are they cards / loans or overdrafts? If any cards or loans were taken out pre 2007, you may be in a much stronger position.

desperado88

this is kind of worrying reading.... iam about to go down this road myself,not such a high earner but not defaulted on anything YET!

sourcrates

desperado88 wrote: »

this is kind of worrying reading.... iam about to go down this road myself,not such a high earner but not defaulted on anything YET!

You may encounter a similar situation then, I once spoke to one of my creditors (years ago) and asked them this very question, there reply was "we don't accept lower payments or DMP`s until the account has defaulted for at least 3 months" crazy as it may sound, its better for you, to wait until the accounts have either been sold on, or assigned to DCA`s, because otherwise most creditors only want full payment or nothing !!

dumpyboy

sourcrates wrote: »

You may encounter a similar situation then, I once spoke to one of my creditors (years ago) and asked them this very question, there reply was "we don't accept lower payments or DMP`s until the account has defaulted for at least 3 months" crazy as it may sound, its better for you, to wait until the accounts have either been sold on, or assigned to DCA`s, because otherwise most creditors only want full payment or nothing !!

Take this advice started mine in 2007 , one creditor gave me hell made me rase my payments with a help of solicitors letter full of what they could not do but I thought they could at the time the other 7 defaulted agreed a plan with no interest there selfs or sold on then and all someone excepted it which are all paid off and sorted now where the creditor that gave me a hard time did not stop interest for 3 years is still 8 years on doing the same