Advice Re DMP

Riverview8

Hello everyone, new to the forum and looking for some advice. I have built-up around £28K of unsecured debt on cc's and a loan, in part due to the loss of income from my wife being diagnosed with breast cancer and the two year fight to make ends meet with huge childcare costs, unpaid leave for hospital visits etc. After a number of months struggling I have recently had a LBM and contacted Stepchange.
I have not defaulted nor missed any payments but was worried I may shortly do so and wanted to do something about it beforehand. Stepchange were excellent and suggested a DMP which will mean I am debt-free in just over three years and it seems a sensible thing to do in the current circumstances as I have had no pay-rise for three years and struggling to meet minimums as well as the ever-increasing cost of living means I will take forever to pay it off otherwise.
My main questions are in relation to prior to the DMP getting started, should I continue to pay minimums prior or send a reduced amount, explaining that I am talking to Stepchange re a DMP? Will my creditors reject my DMP as I have never missed any payments and say I am not in difficulty?
What is worrying me more is that our joint mortgage is due for renewal in around 16 months and am worried about re-mortgaging with a DMP and defaults on record, especially with interest rates due to rise in the near future!
One final point, I work in the financial sector in which new jobs usually mean a credit check, will being in a DMP mean I will be stuck in the same job forever!? I have an interview this Friday for a new job on a lot more money which will help and mean I can comfortably meet my payments, if I get it should I not enter a DMP and continue with normal (above minimum payments)?
Apologies if odd questions but would be grateful for any thoughts.
Many thanks and best wishes to everyone on the thread, inspiring and hopeful reading to read many of your stories!

fatbelly

Generally a dmp involves making payments below the contractual amounts. On the positive side, interest and charges should be frozen (eventually) and so you make inroads into your debt. On the negative side, defaults are put on to your credit file and stay there for six years, meaning that the best credit deals are not available to you.

Now in your situation, your statement that you expect to clear 28k in a little over 3 years infers that you will be able to pay something like £700 per month to your debts.

Given your concerns over the mortgage and the nature of your job, and the possibility of more income, it would not be a bad idea to get some more opinions over whether this is the best option for you and/or whether the timing is right.

You are anonymous - how would you feel about posting a statement of affairs? The link is to a calculator. You will need to format for mse and (as a new poster) remove any links.

Thrugelmir

Your mortgage options would more than likely be limited to your existing lender. So a new product rather than an opportunity to remortgage. This is unlikely to change whether you are in a DMP or not.

On the basis that you will be credit checked as part of the application process for a new job. Take a look at what's on file with the 3 main agencies. At least make sure the data is accurate. Don't subscribe to any services. Just obtain the £2 statutory reports.

Lensman_2

If you are an "approved person" I guess getting a job with defaults on your credit file depends on the type of the job you perform.

I am no expert on this but I think Bankruptcy and CCJs are are the only "brick wall" bars.

You can read more for yourself on the FCA website here:
http://www.fca.org.uk/firms/being-regulated/approved/approved-persons

Deep_In_Debt

Both myself and my ex OH worked in the financial services industry; my OH was bankrupt and I was on a DMP. Neither of us were in advisory roles so we were fine and HR were ok with it too.

Good luck.

Decked

Hi Riverview8,
I can't comment on all of your queries but this was my situation. £58k debt of credit cards, overdraft and a couple of DFS loans. I had never missed a payment, I wasn't getting further into debt, but by paying the minimum every month I was only clearing a very small amount of the debt. Then some of the minimum payments went up significantly. I contacted Stepchange (thanks to Rachael responding to my post on this forum) and once we went through a proper budget and made proper allowance for all bills and costs etc, it turned out I could only actually afford about 30% of the minimum payments. At this stage I thought my credit history was good, but despite me not having any late payments, nobody would touch me for credit on affordability grounds. I planned my entry onto my DMP with Stepchange and didn't make any reduced payments prior to the DMP being set up. So now I am on the DMP, my credit score is shot, but no one would lend to me anyway. The thing is, most of my creditors have frozen interest and that means the £15k I have paid to Stepchange has come off my debt. Next month will see my 2 DFS loans totally paid off. In the meantime I have also paid off some HP that was kept outside of the DMP. Our mortgage isn't that bad a deal anyway, so fortunately I don't have to look around for a new deal. My wife works in a bank so had to tell them about our only joint debt which was the overdraft, it was embarrassing for her, but luckily there haven't been any other problems for her. I just wish I had done it earlier, but too be honest I did try and get advice but perhaps I was too trusting of what I was being told, I wish I had discovered this forum 12 months earlier than I did! What I am finding, is that just like repayments on debts can spiral up and up, because I am paying off some debts outside of my DMP and fortunately I have got a better job, I have also increased my monthly DMP payment.
If you do go the DMP route, be sensible with your budget, Stepchange won't judge you and if by chance you have a few quid over at the end of the month, maybe sneak a little treat. I am 18 months in to what was originally going to be a 7 year DMP, with a bit of luck depending upon mortgage rates and how much longer the creditors keep interest frozen, I reckon I will be debt free in less than 3 years. Obviously your circumstances are somewhat different than mine, but I hope the bits of story I have shared with you may help you make a more informed decision. Good luck!

Sazzie23

Hi Riverchange

I am approx 20 months into a DMP, I hope to be debt free in 2018 if not before.

Good advice re SC budget, if you do find yourself with leftover cash, you can make additional repayments or save it for a crisis or a treat as you wish.

My credit file shows one default and the rest are shown as up to date. Some of my payments though are now over the minimum which means I am paying interest (albeit reduced). SC are great and I would recommend them, however they can be inflexible and if you are able to, I'd consider the NEDCAB self managed DMP. Also remember that not all accounts may freeze interest which will obviously affect the length of DMP.

If you want to know a lot more about how DMPs work in practice, check out the DMP mutual support thread (part 10 ) from the link on the DFW forums front page and have a good read. Many DMPers including myself have managed to remortgage but mainly it's with the same lender. I got mine down to less than I was paying before !

Hope this helps a bit

Sazzie23

Oh and I went into DMP at missing one repayment when I realised there was nothing to rob from Peter to pay Paul.

Riverview8

Many thanks to everyone who has replied. Really appreciated. In answer to some of the points raised: SC are suggested just under £670 pm to clear in 3 years 11 months. My job role is back office based in financial services & not approved person status. As far as the mortgage it will be a rate switch with existing provider but am worried re higher rates but I guess DMP can be amended to provide for that. It is 16 months away anyway so maybe worry closer to the time!
NEDCAB DMP looks interesting has anyone had much experience with it?
Job interview this week so fingers crossed!
Thanks again for comments & everone's share stories. Best wishes to all!