In DMP - want to get out ASAP but need advice please! Considering bad credit loan??

Jennym

I hope someone can give me some desperately needed advice!.....here's my story:
I live with partner and 2 y/o with another baby on the way, we own our own house and never missed a mortgage payment.
We are in almost £20k debt and have been in a DMP for 2 years since I went on maternity leave - as we just couldn't meet the min payments and ended up taking out more credit to cover it...and it spiralled...

This is on my mind CONSTANTLY and I want to do anything to get out of it ASAP! We could carry on as we are and it would take around 8/9 years to clear the debt and then would still have an awful credit file for 6yrs.

We are desperate to move house as we have outgrown the small house we have, and we have another little one on the way it's going to be even more tight.

We have thought about going into an IVA and then would be clear after 6 years and start rebuilding our credit etc, so could potentially be able to look at moving a few years after that.. The idea of the IVA scares me as I'm scared we won't be able to get another mortgage after it's clear.

The other option we have considered is a loan to try and agree settlements with creditors and do it that way. Any advice from anyone on how/where we get a loan with such bad credit rating? Would also consider secured loans but don't know where to turn?

Thanks in Advance

(Extremely stressed - getting obsessive about getting this clear in the quickest way possible to rebuild our credit file)

Grumpelstiltskin

Jenny who is your DMP with, a fee paying company or a charity?

Jennym

DMP is with payplan

Dixi64

I'm no expert but a bad credit loan would not be a good idea. Extortionate interest rates compared to probably frozen rates now mean that you will be paying that off far longer than your DMP. Would it be possible to rent out your current house to cover the mortgage and rent a bigger one that will accommodate your growing family. Please don't rush into anything, speak to your DMP agent and see what they can recommend. In the meantime I'm sure people with more experience will be along to give you advice very soon.

Jennym

Thanks Dixi64, I know what you mean about paying higher rates. I'm almost prepared to do that (within reason), as the DMP would then be on my file for another 6 years only. I am not willing to rent out my house as we have done that in the past (we ironically had a windfall (life before debt) and went travelling for 7 months), and it got ruined!
Payplan not being particularly helpful. Thanks

Grumpelstiltskin

OK Then at least you are not paying a company.


You won't get a loan, and what would it achieve if you did?


You would still have to pay it off.

Grumpelstiltskin

If you are not happy with Payplan there is nothing stopping you moving to one of the other charities.


https://forums.moneysavingexpert.com/discussion/4228011

Jennym

Yes I know I would still have to pay it off, but my credit file would be better quicker:

If i stay in DMP - pay for 8/9 years until debt free and then wait 6 years until it's off my credit file

If I was able to get a loan (bad credit or secured), then I could pay over however many years - maybe 5 as I would likely be able to agree lower settlement offers to creditors. DMP will stop when debt is paid off with loan so therefore could be off my file in 6 years.

I'm looking at 14/15 years or 6 years of bad credit.

Has anyone used a reputable "bad credit loan" company (if there are any?)

NoMore

You may be misunderstanding the 6 year rule, for defaulted debts, its six years from the date of the default, NOT the date of settlement, before they drop off credit file. Even if you still owe money the default listing will disappear, however you still owe the balance.

You need to check your credit file and see who has defaulted you and when, you may well find that with 8/9 years left on your DMP, by the time you get to the end of it no defaults are actually shown on your credit report.

patman99

Op, over the next 8/9 years, your income will change (extra CTC, WTC and children's allowance for a start). Add to this, wage rises (for your o/h), return to full wages (yourself after maternity leave) and you may well find that by sticking to your DMP and putting away some of your spare income, you can save enough to make full and final offers to each of your creditors in turn.

In effect, you may well find that you end up paying off your debts in 6/7 years instead.

By taking-out a loan, you will be in a position that you will be paying a fixed amount each month. The loan will always need paying even if you find yourself short of cash and have to choose between paying the loan or feeding the family.

A DMP is based on your ability to apy based on income v. expenditure. A loan is based on how much the lender wishes to set the monthly payment at without regard to what you have left at the end of the week.

DCFC79

A loan isn't what you need, take on board the advice posted.