DMP payment question

Christopherrobin

Hello, I have had my call with Step Change on Saturday and just wanted to ask how they come up with the figure you should be paying? It's just that currently I pay £220 a month, and the first monthly figure the adviser came up with was £297. I said I didn't feel it was affordable and she said I was paying more than that now.

They have my contractual payments as £331 on the email that came through, do they have an average interest rate and minimum payment they work from? The figure were reworked to £230 now which feels more manageable.

I am nervous and excited at the fact things are moving after I have been treading water for so long. I have to try to get into town some time this week to open a basic bank account and get the ball rolling. If my creditors agree to freeze the interest I could be debt free in four years, 3 if I can manage the higher figure!

As an aside if you are on a DMP but haven't actually missed payments beforehand were your creditors reluctant to freeze charges?

Sazzie23

Hi ChristopherRobin,

What stepchange do is add up what you should be spending on rent, mortgage and other essentials, then add up what you budget for food, fuel etc, add that to what you should be saving for car tax, house repairs etc. once they have this figure, say £1200, they then take that away from what you earn, say £1500 and this would leave £300 for unsecured debt repayments.

I did mine on line on the debt remedy which is free with SC and maybe you should have a go to see what the results work out that way, maybe something was missed off the budget. Don't be tempted to make your budget 'look better' as you've realised it needs to be affordable in the long term.

Regards freezing interest, I had never missed a payment until I couldn't pay any more, 6 cards, 3 have no interest, 2 have very reduced interest and one (HBOS) have fixed at 16.9% which is a lot less than 29.9% they were charging me pre-DMP but still means I only pay off a small amount per month. My repayments are now above the minimum on nearly every card so I'm hoping I don't start get charged interest again.

If you can afford the minimum are you sure a DMP is the right solution? It will trash your credit rating for at least 6 years and your access to credit will be nil unless you have a partner not in DMP with better credit standing.

Christopherrobin

Hi, thanks for your reply. I cannot see an alternative at the moment. I was going to round the payments up and switch to standing orders so the repayment was fixed but I feel it will take too long.

I am hoping a DMP is right for me. I can afford the minimum but cannot overpay by much, just a few pounds. Interest on the biggest debt is 24.95% and I owe £5200 on that card. I am getting very down at how long it would take to pay off even just that debt if the interest remains that high.

I have recently split from my ex and have a young child to support and the thought of all the debt is crushing me. My credit is already bad, I cannot get a contract phone etc. I know it will affect my credit badly and would love to buy a house one day but at the moment my credit is shot, I am in a low paying job so the chance to just get this one part of my life under control is very tempting.

I can't phone the companies myself ad ask them to freeze or reduce the interest as it makes me so anxious to talk to them. Up until recently I have just paid by DD/standing order and nit even opened the statements.

sourcrates

Hi,
Best advise is never to speak to creditors on the phone, do everything in writing.
Stepchange do a very worthwhile job, but there method of working does not suit everyone, if you feel they are asking you to pay too much, theres nothing to stop you going self managed, and pay a lower figure, you are more happy with.

You do not need any 3rd party help to run a DMP.

As regards creditors not stopping interest, this is quiet common, you can tackle it in one of two ways, either keep paying and suffer the interest, or stop paying that particular creditor, allow the account to default, and eventually, the debt will be sold on.
The DCA that picks it up will not normally be allowed to add further interest and charges, so at least you know the debt can be paid down.

I`m not advocating non payment as a lifestyle choice, but sometimes it can be beneficial to play the game to your own advantage.

peteuk

Hi

I had a DMP with CCCS and then Step Change (when they changed the name) I had a review and from that point on it was never right.

I decided to set up my own DMP, but as all my debtors had the SC plan they were happy to set up payments at the same or slightly below what SC had suggested.

I found it very simple to set up and have the template for my budget so I change it as/when required and provide either a 6 month or yearly review.

SC do a very good job, if you don't think you can afford what they suggest tell them. you may be able to get a reduction for a few months just to see how things are.

Good Luck!