DMP's and Emergency Funds

meredith132

I am still trying to work out whether to DMP or not!!!

I would want to get an emergency fund sorted but what is the SC /creditors attitude towards any savings or do you just not declare it if you are able to achieve one?

HappyMJ

Technically you don't declare one but you can put down what you would spend on groceries if they were not on special and you did not down shift brands. You could say if you were to buy exactly what you want would cost you twice what you actually spend then use the "savings" you make by buying items on special to put towards an emergency fund.

Onthelongroad

the amount i actually spend on groceries was alot less than SC would allow me to enter onto their income and expenditure form.

I just put the minimum amount they'd allow for and now use that difference for my emergency pot.

Monkeyballs

Hi,

It's worth making a short payment for the first month to give yourself an immediate pot to last you through the long haul...

You can do this by just making a token payment in either the month before or the first month of you DMP and then going on to normal payments the month after (although some people make a couple of months of just token payments). When speaking to your DMP provider explain that there is an un-forseen expense so you can only afford maybe £1-5 each and then put the rest to one side.

After that, do as Happy and 'Road have mentioned and 'over budget' and save the extra.

Remember you still have to pay your debts off but you're not going to sacrifice yourself to God of debt either so be realistic and give yourself some wriggle room each month or you'll struggle and possibly sabotage yourself further down the line

MB

meredith132

Thanks everyone, I couldn't see how you could get through this if you didn't have an emergency fund.

National_Debtline

Hello there,

We would generally include an amount to cover this sort of thing within the 'other spending' section on our (industry standard) financial statement. It's important to have some money that can be set aside for eventualities that may pop up from time-to-time. They do happen after all!

Our 'your budget' section on our website has a financial statement you can take a look at.

Very best wishes,

David @ National Debtline.

Tixy

Even if you do have an emergency fund on a DMP you could have a bigger emergency than you have saved for.

If that happens then it is possible to contact your DMP provider and explain and ask to drop to just token payments for a couple of months whilst you pay for the emergency item before resuming your usual DMP payment.

Killick

I have had to reduce my DMP payment on two occasions after unforseen costs wiped out my emergency fund.and I still didn't have enough money to cover the costs.
The important thing is to contact your DMP provider AND your creditors, if your provider advises you to do so. Pay what you can and get back to full payment as soon as possible, your creditors may not like it but these things can and will happen from time to time

sourcrates

A DMP is an unregulated agreement between you and your creditors, you are free to vary the amount you pay them as your available funds dictate, without any penalty, so financial emergencies can be catered for, were as if it were an IVA which is a legally binding agreement, you cant vary your payments without your IP`s permission.

meredith132

Thanks everyone. I like the flexibility it will offer. I was also thinking about what if I had a good month could I pay a bit extra? So obviously it will work both ways. Even an extra tenner here and there will pay it off quicker. So much to think about!