DMPs

edwardo27

Not sure if this is in the right place, I am new


Can someone give me a quick overview of DMPs? The websites just seem to keep saying "help with debts" but how, they seem vague?


I am in around £4.5k of debt. I know it doesn't sound much compared to some people (which what puts me off) I have 2 credit cards. 1 loan. 1 store card. Sofa and car are both on finance too.


I really struggle monthly. I just afford to pay the interest on the credit cards so the debt goes no where. My credit rating is really bad, so I assume it cannot get any worse with a DMP??


If anything "else" comes up like car issues, birthdays, trips home to Manchester I am screwed. I have just took on a 2nd job to help with more income, and I want to finally get serious and debt free.


You guys have any advice?

sourcrates

Hi,
Best thing is to post up a "statement of affairs" available in the stickies at the top of this forum, then people can advise you better.

Tixy

A DMP is an informal agreement with your creditors (usually arranged by a DMP provider) where you pay a fixed amount to your debts each month because you are unable to afford to meet your minimum payments. That payment is then split between your creditors.

Your creditors will be sent an income & expenditure statement to show you are paying all you can afford and be asked to consider freezing interest (though they do not have to).

As part of the DMP you agree not to take out any more credit for the duration of the DMP.

If you are considering one then do make sure you only use one of the charity/free providers not a company who will take a monthly fee from your repayment.

In terms of your credit file mostly creditors will file defaults on your credit file (if they haven't already) and these stay on file for 6years from the date they register the default.

On a DMP it is still possible that a creditor will take court action against you to try to obtain a CCJ, but that is rare.

Depth_Charge

Hi

General info below from Citizens Advice Cabmoney on Debt Management Plans, free providers & self administering etc

https://nedcab.cabmoney.org.uk/remedy_4.asp

DC

edwardo27

Tixy wrote: »

In terms of your credit file mostly creditors will file defaults on your credit file (if they haven't already) and these stay on file for 6years from the date they register the default.

On a DMP it is still possible that a creditor will take court action against you to try to obtain a CCJ, but that is rare.

It seems quite extreme for the amount of debt I am in.

sourcrates

edwardo27 wrote: »

It seems quite extreme for the amount of debt I am in.

Hi OP,
There is no real mystery here, if you are "struggling" as you say you are, that means you are having difficulty sticking to your contractual repayments.
Missing these payments will have a negative effect on your credit file, no question about that.
What you need to ask yourself is can I keep up this level of repayment much longer ?, if the answer is no, then common sense dictates you need to seek out an alternative solution, that usually means a DMP or similar.
The only other alternative is not to pay at all, and possibly end up in all kinds of other trouble, legal action, etc etc.


I suggest you speak to one of the free debt charities like step change or National debt line, they can offer you good advice.


Never ever consider going with a fee taking debt management company, all they do is fleece you for every penny, always choose a free provider like I have previously mentioned.

Tixy

edwardo27 wrote: »

It seems quite extreme for the amount of debt I am in.

Sounds like it might be sensible to do a detailed statement of affairs to see how far short you are of being able to meet your repayments each month (after accounting for things like car maintenance/presents etc that don't happen every month).
Then you can probably decide whether you can manage as you are with perhaps a few changes to your outgoings or finding ways to increase your income. http://www.stoozing.com/calculator/soa.php

If you can make changes and pay a little above the minimums you could look to see how long it would take you to get debt free using the snowball calculator. http://www.stoozing.com/calculator/snowball-calculator.php

If when you do a full SoA you find it is not workable and your cannot meet minimum payments without reusing card then that would be the time to consider a DMP.