Going insane with DMP

Iwanttobefree

Hi all, am after a little advice as currently I feel like there's little point going on (while I feel like that, I'm I am not actually suicidal)

Short version:

We have 30k of unsecured debt

I am 52 and cannot work at present due to long term health problems hence my annual income is £5500 incapacity benefit

My wife is 50, she is self employed and earned £18,921 Gross profit last year, £11,291 net.

However her earnings are not even every month, she makes far more near Christmas , Easter etc

In January we realised we had got into to much debt, our fault we know.

We were referred to Payplan via a debt advice charity.

I don't want to be unfair to Payplan, I realise they are a charity, but at the same time, I cant say I am very happy.

One of the worst things with my illness is stress, the slightest trivial thing makes me ill, so being in this much debt is obviously a nightmare.

Having to constantly deal with creditors is slowly killing me and my wife looks very ill and like she is on the verge of a nervous breakdown, all due to the stress of our debts.

When we took out our DMP we didn't have actual figures for her earnings and estimated them stupidly based on Christmas earnings which were far to high. I'll come to that in a minute.

So we speak to Payplan, they seemed very nice, but thinking back, the whole conversation is very wishy washy, almost like a heavy handed salesman quickly mentioning the smallprint in passing as though it wont affect you.

They worked out what they thought we could pay and happily told us we would be debt free in x amount of years. They quickly brushed over that companies don't have to agree, implying that it was a sort of formality and that DMP plans by organisations such as themselves are respected etc.

They tell us they deal with our creditors for us and all sounds rosy.

The main thing we wanted was a stop to the letters, or to simply be able to forward them on.

The more I think about the way Payplan operate, the more I think they have a big conflict of interest. They seemed more keen on pushing their own insurance products etc.

They talked us both into paying £5 a month each for life insurance and it was implied that in the event that one of us dies, the other wont have to worry about their dead spouses debts, but looking into it since, if I die, as far as I can see, debts in my name cannot be passed over to my wife, so the whole insurance is totally pointless.

I logged onto my account yesterday to check payments and I see I can buy a car through them and add it to my DMP, again I feel like there is a huge conflict with the financial services they offer.

I've just loigged on to check a figure and am presented with the following huge banner

"Household goods, no deposit 100% finance"

Sorry if I sound harsh, I do realise they are a charity,, hopefully if you read on, you will understand either my frustration or my misunderstanding on how DMP charities work.

At first everything seemed fine, we gave them details of our creditors, they wrote to them all giving our financial situation and saying what we could afford to pay.

I was told I had a case officer assigned, but every single time I have contacted them (a lot of times), a different person responds and I sort of get the feeling I'm simply dealing with call centre staff who are reading off a script.

Most of the creditors seemed OK (KandCo being the exception), creation finance sent us letters about our 3 accounts and everything was forwarded onto Payplan for them to deal with.

This is where I have big problems. While I am capable of checking over things with a fine tooth comb and working out what's going on, many many people aren't. When we started getting our creation bills, for every £100 a month we were paying them, we were getting charged £90 interest.

Payplan hadn't noticed this (and we had two other similar accounts with creation) and it was only on me checking the statements that I realised how much we were being charged.

If we carried on like this, the date Payplan said we would be free of debt, well you could probably add another 50 years to it.

So I sent Payplan an email about it, hoping they would sort it out, but got a wishy washy response that companies aren't obliged to freeze interest and that I could write to the FO if I wished.

I felt like I was simply left to it myself.

Again I really don't want to be unfair to a charity, but the whole reason I contacted them is the situation and the letters are too stressful for me to deal with myself.

To cut a long Creation story short, I wrote to the FO regarding the 3 accounts, they forwarded my complaints to Creation to give them time to respond, they didn't uphold any of the complaints but refunded 6 months worth of charges for my wifes two accounts (but not mine) and reduced the interest on all 3 accounts so that we now pay £12 interest on a £105 repayment.

But that took me about 16 letters and 3 phone calls over a period of 3 months.

Then we have KandCo. A situation where one hand doesn't know what the other is doing. We were getting £12 a month charges in February, we are still getting £12 a month charges in August. My wife has phoned them numerous times, every time getting told something different.

Sometimes we are told it's passed to NCO, other times they tell us there's no record of it being passed when we mention it, But finally two months ago we received a letter from NCO saying they are dealing with it, all info passed to Payplan and they started paying them.

So when we get a bill from Kays saying we haven't paid and another £12 charge this month, we forward it onto Payplan, us both at our wits end (we have contacted Payplan numerous times over the problems with KandCo, explaining everything that's going on), only for Payplan to reply telling us

I have attached your Document on file for your records, in this circumstances K & Co are part of the shop direct group, Payplan deal with NCO who are part of the Shop direct group that deal with Debt Management Companies, NCO do not normally apply any interest and charges to your account.

In this circumstance you would need to call K & Co to explain that you are currently paying the debt through Payplan to NCO reference 11096614, this should resolve your issue at this time I would suggest to see if the charges could be removed.

We both simply want to scream.

On a previous occasion when we contacted Payplan about Vanquis hassling us, their response (they copied the original email in their response) didn't even mention Vanquis, they simply asked me a question they had about a different account.

Since taking out the DMP we have had to borrow about £2000 from family and we realised something is wrong, and it was at this point we got actual figures from my wifes accountant and realised we had vastly overestimated how much she earns.

So we emailed Payplan and explained this all.

Their response

Just to make you aware a debt management plan is a flexible informal arrangement where you pay your creditors back on an affordable monthly amount until you have paid all your debts back in full, we revise your income and expenditure on a yearly basis during your Annual review to ensure your monthly payments are affordable and realistic, at this time we would send your creditors an up to date financial statement to try and put your arrangements in place for a following 6 - 12 months.

We do request for interest and charges to be frozen however this is nothing that we can ever guarantee as it is within your creditors discretion.

At any time in your debt management plan if you are struggling and are having to borrow money from family or friends we can go through income and expenditure to reduce your monthly payments. As we would never want to put you in any further financial difficulty at this we would also see if there are any other plans that would be more suitable for your circumstances.

If you feel you would benefit from a telephone appointment please call Payplan on 0844 855 2163 to book a suitable time and day, our opening hours are Monday to Friday 8am - 8pm and Saturday 9am - 1pm.

Again I don't know if I'm being unfair to them, but to me that response seems quite uncaring to a couple so stressed out they are on the verge of snapping.

When I have explained in detail in the email I sent that we overestimated our income by quite a bit, included the figures, which cuts down our money for a DMP from £466 a month to £96, getting the above saying "If you feel you would benefit from telephone call" seems like they haven't taken on board what we said at all.

Sorry for my rant, but we are both physically and mentally shattered over all of this.

I've worked out that it's going to take 25 years to pay off these debts at the current amount we can afford (there will be some months we can afford more but we are still talking about a good 15 years+), that means I will be 77 and my wife 75 (or 67 and 65 if we do it in 15 years)

Add the thought of that makes me think why bother.

My wife is coming in from work and literally falling asleep until bed time.

Going bankrupt would push us both over the edge, the one thing in all this is that they are unsecured debts and we love out house. We live in a very poor part of the UK, some of the lowest house prices there are, renting would cost us far far more a month than our mortgage is.

Due to property rises, even though our house looks like something from DIY SOS( needs completely refurbishing) it's still worth about 50K more than we paid for it 16 years ago which means getting something like an IVA is out due to the equity.

So we don't know what to do. We are happy to pay £100 a month to our creditors until the debt is finally paid off even if it does take 15 - 25 years (our main mortgage come to an end in 10 years, so that would give us £300 a month extra).

But the thought of every 6 months or every year having to go through negotiations, or having to deal with letters for the next 15 years, well it's going to kill us.

So we appear to be stuck.

I'm not trying to get out of our responsibilities, we borrowed the money we should pay it back, but I will say it's far far too easy to get credit. Having a £5000 balance always up to the maximum with minimum repayments made, asking for a credit limit rise and getting another £1000 isn't really responsible lending in my opinion.

Then applying for two 0% balance transfer cards with the same company and getting both , both with £5000 limits, again yes I applied when I was depressed and thought a 0% balance transfer might help, but they really shouldn't have given them to us.

And they should have insisted our other cards destroyed when we did these balance transfers, We stupidly thought, "this time we will be careful"

But it's happened now, although I sometimes feel criminals who rob banks get a less sentence.

So is this it for the rest of our lives. In debt forever, not having a day or night out for the past 3 years or a holiday of any sort for the past 5 etc etc etc?

Where to go from here is obviously very tricky. Part of me feels like simply going with another DMP such as Stepchange but will they do any different?

As it is, I might as well do the the whole thing myself as I am doing most of it anyway, but doing it is slowly killing me, that is the problem.

Anyway thanks for listening

Stuck from Hull

ConsumerWizkid

Sorry to hear of your troubles! It can be easy to generate debt and life doesn't always go to plan leaving it hard to escape.

PayPlan are as good as any other DMP, you might get slightly better service at private companies but they make their money by taking a cut of your repayments thus extending the time you'll be paying even further.

Most creditors will come to some kind of arrangement when approached by DMP agencies but they aren't required to do so by law, so you will never be able to completely stop communication with these companies only ever reduce it.

It sounds like you do have one option, sell the house & pay the debt with the excess equity, buy a flat or smaller house which will produce a cheaper mortgage? Sure it would create different stress for a bit but not for as long as it will take you to clear off 30k debt through a DMP?

hohum

I don't know a lot about DMPs but you are clearly in need of support so just replying to bump your thread up.

I think there are a few people on here who self manage.

Also I think you should give yourselves credit for despite finding the process extremely stressful, you have kept in communication and on top of relationships with your creditors. Have a look at the DMP thread perhaps, there may be a number of people on there who can offer a perspective on what options work best for them.

Kays don't seem very easy to deal with from what I read on here. Have they defaulted the account? Apparently that can make life easier as then you deal with debt collectors who accept payment plans!

I also wonder if you have looked at reclaiming PPI/ are all of your debts enforceable?

maggiecon

I agree with ConsumerWizkid, selling your house is a good option, have a look around and see what you can get for £30k less than what your house is worth. and work your way up from there, Even if you only release £25k of equity it means you are only repaying £5k of debt as opposed to £30k.


Down sizing also has the added benefit of saving you money on council tax, heating etc. But more importantly a new home my offer you a fresh start with no debts hanging over your head and an opportunity to recover from the stress and sickness debt is causing you both.


I wish you the best of luck.

longtermplanner

hi "Stuck from Hull",

sorry to hear that your DMP with Payplan isn't going well. Just to correct a small misunderstanding, they are not actually a charity or a not-for-profit organisation. They are a commercial company that happens to make it's money in DMPs from (a) charging your creditors (which you may well think is fair game!) and also getting various sorts of commission if you buy other insurance products etc (as you seem to have spotted!).

Having said that, a lot of people have very happy DMPs through Payplan and there is little point in switching to a real charity such as StepChange because it won't solve your fundamental problem, nor will self managing (though actually I am a big fan of that for people such as yourself that can manage the letters.)

You have a temporary problem that you are paying too much in your DMP. This can be solved by phoning Payplan, saying you are not coping and are having to borrow money from family and you need to reduce your payment to £100 or whatever. You have got a perfectly good reason for this , your wife's seasonal earning were not properly accounted for. If Payplan don't say YES, then say you wish to put in a formal complaint.

The real problem is that you are stuck in a very long term DMP. An IVA and bankruptcy are ruled out because of your equity level. And you do not wish to sell.

Moving to StepChange or DIY will not solve this. Your creditors are not obliged to freeze interest in a DMP. Some will at the start but then the debts can get sold on. Your creditors can also decide to go for a CCJ and then get a charge over your house. Long term DMPs with a lot of equity are really not a good idea... This is not Payplan's fault so you have to seperate your irritation with them (understandable) from what you and your wife need to do.

Your options are a long-term DMP which may run into big problems and will leave you in a life sentence of poverty, selling the house (this isn't often discussed as a debt solution but sometimes it may be the best way forward see http://debtcamel.co.uk/hard-choices/sell-house/) or increasing your income.

Could you rent out a room in your house? You may not want to do this, but if doing it for a few years would let you really pay down this debt, wouldn't it be worth it?

When is your mortgage paid off?

Mothermercury30

Hi there


I haven't posted in quite some time, but I read your post with great interest and a bit of sadness too- you sound very frustrated and upset. Three years ago, I was in the same situation, and can honestly say I don't know how I got through it. But we did. My wife and I had been massively ripped off by a now dissolved company called DCM Money Solutions who took £4500 off us, and the creditors didn't see any of this. So much for the private, fee-paying companies.


We eventually sought the help of Payplan, who ran us through our budget, offered to set up a DMP for us, and, I'm pleased to say that 3 years later, our final payment to the creditors is due on 1st September 2014. We have cleared £20,000 of debt. I'm sorry they haven't hit the mark for you, but I just needed to balance this with the fact that it's worked for us, and they've been very helpful.


I do agree that they do tend to try and hard sell quite a lot, and we have arranged some of our finances through them. They aren't a charity, so I suppose they have to make their money somehow. However, at the point of service, their DMPs are free, so all the money you give them gets distributed, pro rata, to your creditors. They made it very clear to my wife and I from the outset that they will make every effort to make the creditors stop adding interest, but cannot guarantee this.


Please PLEASE stick with your path to being debt free. At the least, it has taught me that I was haemorrhaging money I didn't have. I now have better money management, and a huge sense of achievement. As Martyn has stated on many occasions- there is not a single debt issue he has encountered that cannot be solved. I wish you both success, and send my very best.

sourcrates

Hi,
As mentioned above, Payplan are not a debt charity, they are a commercial profit making company, and although they wont charge you any fees, they get paid depending on what debt solution they "sell" you.
I understand your situation, I don't live too far from you, its right that creditors are not obliged to stop interest, most people start a DMP long after the debts have been sold on to external DCA`s, once a debt is sold on, no further interest or charges are added.
By "doing the right thing" and starting a DMP with your original creditors, you have put yourselves at a dis-advantage.


There are various things you can do to improve your situation.


I am assuming your debts are made up of the usual loans, cards and catalogues, is that correct ?


How old approx. are the accounts, when were they all opened ?
do any of them originate from before April 2007 ?


If so, you can do what they call a "CCA request" to all your accounts, this is a request for a copy of your original credit agreement, for accounts opened before April 2007, they have to provide a copy of the original, if they cant, they may not be able to enforce the debt.
In your situation you need all the help you can get, just by making the request automatically puts an account on hold, and it usually takes a creditor a month or so to comply, you don't have to pay anything until they do comply, so would give you some breathing space at least.
To be fair, I would stop paying all your debts, and allow all the accounts to be sold on as this again, would give you a few more months to formulate a plan, and DCA`s are a lot more amenable to payment plans, and all the interest would stop.


I think long term you need to be looking at an IVA or similar solution, to sort this out, I think you would be well advised to contact National Debtline or stepchange for some advice.

moohound

A DMP that will take you into retirement age is not a viable solution, I am sorry to hear about your ongoing health problems, it must be hard, and as you say the stress doesn't help, some creditors are persistent in their calls and letters even though you are on a DMP.

I think Sourcrates advice might be the way to go.

I too am from 'ull by the way

MadelinesMum

I do agree that Payplan seem to push extras on you, like life insurance, white goods insurance etc... They do also seem to read from a script but I suppose, in that way, they don't give any wrong advice.

Re: Cre****n - i totally loathe them and would never use them again. Last year I actually pulled out of an insurance quote as it was financed by Creation. They are greedy and will penalise you willy nilly.

seanavfc92

Do you have all of the reference numbers for your debts? Have you got a recent bank statement showing your income? If you do I'd be inclined to give StepChange a call. Nothing against Payplan but SC do it a lot better.

They're right in what they said though, no debt management company can get the creditors to freeze interest or charges. It does depend entirely on the creditor, unfortunately.

Maybe a DMP isn't the best option. StepChange will give you what they think is the best solution based on your circumstances.

Whatever solution you get, you're always better going to a not for profit company. No one should have to pay a company to get them out of debt!

Iwanttobefree

Many thanks, I think I will give Stepchange a call.

Unfortunately these debts are since 2007.

While I understand the advice about us selling, it's a no go suggestion.

We've lived here for 16 years and we intend to die here. Over that time I have gradually been modernising it and am about 2/3rds of the way there.

We also have a dog that is part of the family along with two cats, hence renting will be almost impossible

We would rather be in debt for another 20 years than loose our house, our house is the one thing in life we've aimed for and managed. If we lost it, it would be almost like the whole of our life plan has been for nothing.

We have a main mortgage and a 2nd mortgage both with high street banks, both at good rates

I know I'm asking for advise and them chucking it back at you, it's hard to explain about how we would feel if we lost it.

Our main mortgage will be paid off in 10 years time, at that point the remaining mortgage will be just £124 a month (at todays rate) meaning we would straight away be £362 a month better off and never have to worry about rent again.

Strangely after writing my original post, I'm feeling a bit better and thinking more clearly.

25 years to pay the debt off isn't taking into account our main mortgage ends in 10 years.

It's also based on my wife's worst months income, and many months in the year we will be able to pay at least double if not treble the amount.

My health is also improving so hopefully I will be able to go back to work at some point in the next couple of years, even part time on min wage, I will get more than I am currently getting on benefits, approx 200 - 250 more a month.

So the outlook isn't as bad as it first seems (I think)

What we need to do is get the creditors to agree a minimum payment of about £100 a month between them all for say 12 months, with the assurance that some months they will get more.

What will cause us the biggest problems is if every 6 months or a year, we start getting charges etc again.

Sourcrates suggestion of simply not paying is an interesting one, if things are handed over to debt collectors, does this mean that the bill they present me with is a final bill that the DMP can then start working to pay off and it's never going to increase?

Or does it mean that every year they will find new ways to add charges or sell the debt to someone else.

I suspect I know the answer to this, but could it be worth me contacting the companies (Creation mainly) asking to come to some sort of arrangement where we do our best to pay off the debt as quickly as we can, but that the small amount of interest we are paying doesn't increase until it's done, and say that otherwise we have been advised we would be better off withholding payment until it's passed to a debt collector to get the interest frozen?

I also hear about charges being put on the house, it seems wrong to me that we took out unsecured loans and they can then be secured against our house. Could they force us to sell if this happened?

All debts are in either my name or my wifes, none are in both, and the house is in joint names if that makes any difference.

Is there any benefit at all to having two separate plans, one for my wifes debts and one for mine?

Or is that just pointless?

Sorry for all the questions