DMP and the new pension rules

ryedweller

Had a dmp for a few years. Original debt 65k now 41k. Had a call from the dmp company to make appointment for telephone review. This time they have asked for proof of any pension money. They have never asked about this before.Think it may be because of the new pension rules and our ages.
As we are 56 and 58 years old and have 100k in pension savings from former employer, 2 questions
1 Can we be made to cash in the money to clear the debt?
2 Should we cash it in anyway and pay them off as we are really sick and tired of struggling every month? Due to decreasing our monthly payments we will be in our 70's before it's cleared. We know there will be tax implications but may be able to claim this back later.

Has anyone else in our age group been asked about pension money by dmp company?

Any advice or suggestions much appreciated.

DorisTrousers

On a DMP you cannot be forced to cash in, but it is clearly prudent of them to see if there is anything that may help you become debt fre quicker.

Whether you should cash in is really a question that cannot be answered here. If you didn't cash in early (assumedly) though, how long would it be until the policies paid out? 65?

Do you have any other assets you are protecting, such as property? What is your current contribution to the DMP?

ryedweller

Originally pay out would have been 65.
The mortgage on the house is now slightly less than we could sell for. If we sold it we would be paying more in rent than mortgage payment is.
Current dmp payment £25.

Tixy

Which DMP company are you using?

Definitely cannot be forced to cash it in on a DMP.

But if you are paying £25 a month payments on £41k of debt then they are perhaps wondering whether you could consider other options to help clear your debts instead of a DMP.

DorisTrousers

£25?

Per week or month? You seem to have got your debt down by a goodly amount, so have you reduced your payments drastically?

ryedweller

Had to reduce payments to £25 per month due to illness and short time working in building industry.

DorisTrousers

Fair enough.

Are you homeowners? If so, is there any equity in the property?

ryedweller

Very little equity and to rent a one bed flat would be more than current mortgage payments.
Going to get advice on what we can do with pension money as really at end of tether worrying about it all and always having to account for what we spend. Thanks for replying.

Mrs_Nobody

I had my DMP review with PayPlan about two weeks ago. We adjusted figures as appropriate and I also mentioned I was interested in perhaps some full and final settlements given I'd started the process of drawing down from my pension plan to pay off the mortgage and there would be a bit left but that the pension company couldn't, at this moment in time, confirm when that money would be available. The consultant was absolutely fine with that - no "you must use it to pay this off now!"

ryedweller

Thank you Mrs Nobody. That's good to know.

DorisTrousers

As you are property owners that seems to rule out BR. You have little equity, and no affordability, so you can't release equity and you can't really afford payments on a monthly basis.

However, you do have an asset in the pension fund(s). My understanding of this (I work in debt not in pensions so get some regulated advice) is that you are free to ELECT how and when you draw down from any pension fund(s). If I were you, I would be asking the question as to whether it would be possible to draw a partial lump sum against the pension(s). As a ball park figure you can look at somewhere between £8 to £15k. If this is possible, you can use it to offer a short settlement of the debt. Undoubtedly the best way to do that would be via a single premium IVA, as that would tie in anyone playing hardball with you on the amount they would accept in settlement (assuming the IVA was approved). You can negotiate yourself without an IVA, but creditors, in my experience at least, want much more as an amount from an individual than they would be prepared to accept on an IVA. It can always be proposed in such a manner that it is a take it or leave it deal, and my experience in this area says that in over 95% of cases they will take it.

An IVA protects your assets, so the house is safe, and the remaining pension pot will be protected as well. Be aware, though, that an I.P. will expect you to co-operate with an investigation into any possible mis-selling of PPI.