Scared of starting a DMP

missymish

Hi Everyone,

I am looking for a little advice. Currently I have around 8k this is a combination of loan and cc debt.

It all got a bit of control last year when I stopped being self employed and then went into employment but also through my own stupidity. Because of these changes my tax credits/housing benefit/council tax benefit all got into a bit of a mess so I ended up putting quite a lot of my living costs on credit cards (not all the debt is because of this)

I am now at the stage where I am making all my minimum payments and never miss any but it is a big struggle each month and I feel I am putting these payments above essentials such as food and clothing for myself and my 3 children.

My question is how much damage will a DMP do to my credit file (its currently not the greatest due to historical problems, last year it started getting better and I began to get credit which at the time I could afford and now I feel very foolish as my circumstances changed very quickly)

I am very scared of going on a DMP but I feel at the moment all I am doing is firefighting and not putting out the fire by just meeting the minimums each month. Just yesterday I spoke to one of my CC'S (which is my largest balance at 3k) and have gone on an arrangement for 3 months and freezing interest for that time but they said this will go on my credit file?

Sorry for such a long post I am just worried about it all and just want to know what would be the best path to take?

Thanks any help appreciated.

sourcrates

Hi, it will affect your credit file, no question.
But it seems to me that should not be your biggest worry, as you say you are only just making the minimum payments, and your debt is not reducing very fast, do not ever put credit payments above your essential living expenses, I suspect you are about to have your "lightbulb moment" the point at which you realise you cant go on paying at the rate you currently are, and things need to change.
If there is no realistic way you can up your income, or reduce your outgoings, I suggest you contact stepchange or national debtline who offer free advice on debt solutions, do not ever pay a company to administer a DMP when it can be done for free.
I think you know things have to change, these guys can tell you all you need to know.

glentoran99

what damage is a DMP going to do really? You probably cant get any more credit now even if you wanted to, you are just meeting minimums so your balance is going nowhere, so no more credit for a while, and your already needing payment arrangements

Best thing i ever did was go on a DMP was such a weight off

DebtClearer

it really depends on your circumstaces. Personally I am doing all I can to avoid going on a DMP but I know that in the next year I will have cleared 2 loans freeing up an extra £230 and am due a pay increase, thus allowing me to tackle the cards.

If you have no need for credit for the next few years then a DMP may help you but from what I understand creditors will only accept this if you have defaulted.

Growurown

A DMP will affect your credit rating as others have said. In my case I had no option but to go on a DMP as our CC's upped their minimum payments and we had very little money left to live on. I can honestly say that (apart from the credit rating which I'm not too bothered about) it has been the best thing. The relief of being in control of my money is fantastic, and the stress for the most part has gone. It comes back occasionally when the car goes wrong resulting in a large bill but I have managed. I am paying off my debts and not getting into any more debt and I only wish I had done it years ago instead of struggling on.

glentoran99

DebtClearer wrote: »

it really depends on your circumstaces. Personally I am doing all I can to avoid going on a DMP but I know that in the next year I will have cleared 2 loans freeing up an extra £230 and am due a pay increase, thus allowing me to tackle the cards.

If you have no need for credit for the next few years then a DMP may help you but from what I understand creditors will only accept this if you have defaulted.

ive 4 creditors on mine (well 3 now as i settled one) but 1 of them hasnt been defaulted