Paying CC without DMPs

changeforbetter

I know a lot suggest going to debt charities and arranging a DMP.

It seems to me there can be a cusp of being still able to pay that causes a dilemma.

If you can still pay, the debts reduce (but slowly) and you keep your normal credit rating. So future dealings are simpler.

If you take out a DMP the debts might reduce (lot quicker?) however you are essentially trashed as a person in money terms. Bit like becoming a money-lepper in the real world, and it makes the future look potentially tricky.

I keep bouncing between the pros and cons for both - and without any action am stuck paying smaller amounts off my debts each month solely because I can, when I know, perhaps, I should sort it a different way.

Can anyone else offer a deciding point in the case where you can still afford to make minimum payments each month (probably at least). :huh:

(Ps. of course if my money situation takes a drastic turn downwards that decision might be made for me of course!)

glentoran99

If you can only afford minimum payments how long will it take you to pay off? As for credit rating if you are already stretched you aren't going to be getting any more credit anytime soon.

It's up to you what you want to do, but sounds like your debt isn't going anywhere fast

changeforbetter

glentoran99 wrote: »

If you can only afford minimum payments how long will it take you to pay off? As for credit rating if you are already stretched you aren't going to be getting any more credit anytime soon.

It's up to you what you want to do, but sounds like your debt isn't going anywhere fast

First answer is currently: I'd guess a long time, as of course it pays slowly.

I know that is the obvious con for remaining on the normal payment scheme. However, the problems with the other side of the coin don't go away, and I know I can still (just about) avoid them by keeping payments up.

Can I also add it isn't just about getting more credit, but lots of things seem to get complicated (eg renewing the mortgage etc) when you default?

I guess knowing how much quicker my debts would reduce might help me consider the issue more, though that's something of a guess.

glentoran99

changeforbetter wrote: »

First answer is currently: I'd guess a long time, as of course it pays slowly.

I know that is the obvious con for remaining on the normal payment scheme. However, the problems with the other side of the coin don't go away, and I know I can still (just about) avoid them by keeping payments up.

Can I also add it isn't just about getting more credit, but lots of things seem to get complicated (eg renewing the mortgage etc) when you default?

I guess knowing how much quicker my debts would reduce might help me consider the issue more, though that's something of a guess.

Not necessarily as common practice is to stop interest and charges on a DMP, so take what you are paying out now and divide what you owe by that amount to get a realistic time frame, and check out the snowball calculator to see if you can reduce your debts faster now.

In my situation I was just about affording the minimus and keeping them at bay, but I had to do something as they were going to hang around forever as far as i could see, I just bit the bullet and went for DMP, and in 3 years time my credit file will be clear and ill have a lot more disposable income for the important things in life

Time_to_face_the_music

My advice would always be to never go for a DMP unless you need one but then I also say never leave it too late, as many of us do! The general rule is that if you can service your debts without increasing the total amount each month, a DMP is not required.

Try the debt snowball calculator, which shows you the order to pay off your debts, how long it will take you and how much interest you will pay:

http://www.whatsthecost.com/snowball.aspx

TTFTM x

changeforbetter

Time_to_face_the_music wrote: »

My advice would always be to never go for a DMP unless you need one but then I also say never leave it too late, as many of us do! The general rule is that if you can service your debts without increasing the total amount each month, a DMP is not required.

Try the debt snowball calculator, which shows you the order to pay off your debts, how long it will take you and how much interest you will pay:

http://www.whatsthecost.com/snowball.aspx

TTFTM x

That first part sums me up at the moment - there's a dilemma between whether I really need to, but not waiting too long! I can pay my payments each month and slowly reduce the amounts, but it will take a long time (even using the snowball approach). I understand I would speed up the reduction with a DMP (which would be great) but don't you get odd looks when going for things like mortgage renewals when under a DMP?

Time_to_face_the_music

changeforbetter wrote: »

That first part sums me up at the moment - there's a dilemma between whether I really need to, but not waiting too long! I can pay my payments each month and slowly reduce the amounts, but it will take a long time (even using the snowball approach). I understand I would speed up the reduction with a DMP (which would be great) but don't you get odd looks when going for things like mortgage renewals when under a DMP?

I don't have experience of trying to get a mortgage deal renewal on a DMP but I believe some people have managed it.

I knew we could never clear our debts without something miraculous happening but when I came here and started reading, I did not even know a DMP existed! That was our miracle

Why don't you come and have a read of people's experiences on the DMP & Mutual Support Thread and ask any questions, someone there will always try to help you.

https://forums.moneysavingexpert.com/discussion/4988866

TTFTM x

glentoran99

renewed my mortgage recently and they never even asked about my financial status or a did a credit check, although i was staying with the same bank,

changeforbetter

Ok, thanks - guess things like that depend whether you are looking for a newer deal or different provider.

Lensman_2

changeforbetter wrote: »

If you take out a DMP the debts might reduce (lot quicker?) however you are essentially trashed as a person in money terms. Bit like becoming a money-lepper in the real world,

I suffered from a drastic change in circumstances which led to a trashed credit file.

At no point did I think I was a "money leper". Or "trashed". Actually the point I let go of it all was liberating and the start of it improving.

A good job I wasn't looking for a mortgage at the time, agreed.

But there is life during and after a DMP and it taught me a life lesson. One that I appreciate.

NoOneAround

We have spent 2-3 years paying minimum on credit cards - -great whilst on 0% and I was shuffling to keep it so, however business did not improve and deals expired so for two years I was paying nearly 1700 per month towards loans and credit cards. and we were working all hours of the day to earn enough.


The companies I have written to have all frozen interest now and that is what will make the difference to being able to pay back.


Stepchange worked out and put it bluntly - despite having several cards at their limit (which was high because we have never missed payments) they were still writing and offering to extend limit and 0% balance transfer. and bank offered yet another loan to pay for overdraft because of our credit worthiness. Every offer make the banks money. Over two years we had paid £30K in interest... StepChange's words were that broken credit records could be fixed over a period of years, but a lost/repossessed home would be hard to recover from.


It's a really hard decision, Not sure how much your debts are, it may be that you can pay them off slowly, but in our case, especially due to self employment with no guaranteed income, it only too 6-9 months for situation to escalate out of control.


Wish you the best....