Drowning In Debt

sourcrates

Craig32 wrote: »

I actually misread a part of the DPP. The DAS Administrator takes a fee of 2% from your payment, whilst StepChange take a fee of 8% due to being my pay distributor.

Would anyone know why there is this charge for a DPP of 8%, when they don't charge for a DMP when acting as the pay distributor there?

Over the course of my payment plan that would be costing me £2,907, and it doesn't make sense to my novice eye.

A DPP is only available in Scotland, and is a form of insolvency, similar to an IVA in England, that is why there is a fee for the service, as an administrator is needed to administer the DPP under a DAS.


A DMP however, is an informal arrangement, between you and your creditors, and does not require an administrator, hence no fee is payable.


info here :


http://dasscotland.gov.uk/about/how-does-das-work

Craig32

Sourcrates,

Again, thank you for your input here. That is a great link with some excellent information within it. This seems a lot more stronger than a DMP.

Dobbibill

Hi Craig32,

Please think long and hard about your decision to enter into a DMP or DPP with Stepchange. This is likely to trash your credit file for 6 years!

If your future landlord was to run a credit check now or then, would there be a difference in whether or not you are accepted as a tenant. Admittedly you are in a lot of debt now but some of that can be gone before you move which could make a big difference. I just want you to be mindful that you will need to be prepared for changing circumstances in the future, that you are already aware are due to happen.

DB

Craig32

Dobbibill wrote: »

Hi Craig32,

Please think long and hard about your decision to enter into a DMP or DPP with Stepchange. This is likely to trash your credit file for 6 years!

If your future landlord was to run a credit check now or then, would there be a difference in whether or not you are accepted as a tenant. Admittedly you are in a lot of debt now but some of that can be gone before you move which could make a big difference. I just want you to be mindful that you will need to be prepared for changing circumstances in the future, that you are already aware are due to happen.

DB

Dobbibill - my credit file is poor right now, but this isn't due to defaulting, as I have never missed a payment. It is due to my constant applications for loans this year.

To be honest, I had never given thought to landlords doing credit checks. I guess I just assumed that if you could put up your deposit of 2 months rent, it would all be good. You've given me food for thought now.

My problem right now is, that whilst I have never defaulted before, I am about to on my 3 credit cards come the middle of August when the next payment is due. With July pay I had to pay off 2 other payday loans which decimated my available money. All the other loans for this coming month have been paid fine though.

Craig32

sourcrates wrote: »

Craig,


If you need time to think things through, and/or to get a good emergency fund together, and you are not too bothered about your credit file, you can stop all your credit payments, should you wish to.


The debt collection process can be very long winded, for example, if you stopped paying everything tomorrow, you would have a month or so before you would be passed to collections, they would attempt to get you to pay, if this failed, either an internal or external DCA, would then be passed the account to attempt collection, this could be for 6 plus months or so, if that proved fruitless, it may be passed to another DCA, this could happen numerous times, and over a period of a couple of years or more.


Eventually, the debt would be sold, and a DCA would buy it, they would then start the process again, and another 6 months or a year, would pass, eventually, if you had not paid up, they may take you to court to get there money.


Now I`m not advocating withholding payment as a lifestyle choice, just showing you that the collection process can take a very long time, so don't rush into anything with little or no emergency funds, take your time, and save up, apart from letters and calls, nothing else will happen anytime soon.

Sourcrates,

I have now been given a lot of thought towards an emergency fund.

If I went down the DPP or DMP route, would I be right in thinking I could have an emergency fund in place from August pay?

My thinking was if I went down the debt help route, from the day I signed off on it, it gives a window for chosen charity to get everything in place over 4-6 weeks, so say come the beginning/middle of September, with everything in place they would allocate a date in line with my pay day at the end of September to start the plan payments.

Or would they still dip into my August pay? If they didn't then I would have a full wage that could be stored as an emergency fund.

Does that make sense?

coolcait

Craig32 wrote: »

I actually misread a part of the DPP. The DAS Administrator takes a fee of 2% from your payment, whilst StepChange take a fee of 8% due to being my pay distributor.

Would anyone know why there is this charge for a DPP of 8%, when they don't charge for a DMP when acting as the pay distributor there?

Over the course of my payment plan that would be costing me £2,907, and it doesn't make sense to my novice eye.

You don't pay those fees - your creditors do.

Basically, in a DPP you pay back the full amount of the debt.

AiB and the Payment Distributor fees are taken off the money you pay, but the creditors have to treat it as if they have received the full amount . So it doesn't actually cost you anything.

The Payments Distributor will be StepChange if you do the DPP through them. It might be another organisation if you do the DPP through CAB, for example.

As far as making your first payment goes, that could be a couple of months down the line.

First of all, StepChange have to check all of your debts with your creditors, go through your income and expenditure and so on. They might be able to give you an idea of how long that usually takes.

Once they have all that information, they send a proposal to your creditors. They have 3 weeks to reply. If they all accept it, or don't reply (so it counts as accepting!) then your DPP will be approved.

If any of them reject the proposal, the DAS Administrator (AiB) will decide if it's "fair and reasonable" or not. Sometimes that happens in a day or two, sometimes it takes longer.

After it's approved, you have to make the first payment within six weeks. So you're looking at 9 weeks from the date that the DPP proposal goes to creditors before you need to make the first payment. Add on however long it takes StepChange to prepare the proposal.

Interest, fees and charges are frozen from the date the proposal goes out.

HTH

dawnybabes

Have you anything you could sell to raise some money for this months payments ? Clothes, jewellery, DVDs, old phones, Etc

Craig32

coolcait wrote: »

You don't pay those fees - your creditors do.

Basically, in a DPP you pay back the full amount of the debt.

AiB and the Payment Distributor fees are taken off the money you pay, but the creditors have to treat it as if they have received the full amount . So it doesn't actually cost you anything.

The Payments Distributor will be StepChange if you do the DPP through them. It might be another organisation if you do the DPP through CAB, for example.

As far as making your first payment goes, that could be a couple of months down the line.

First of all, StepChange have to check all of your debts with your creditors, go through your income and expenditure and so on. They might be able to give you an idea of how long that usually takes.

Once they have all that information, they send a proposal to your creditors. They have 3 weeks to reply. If they all accept it, or don't reply (so it counts as accepting!) then your DPP will be approved.

If any of them reject the proposal, the DAS Administrator (AiB) will decide if it's "fair and reasonable" or not. Sometimes that happens in a day or two, sometimes it takes longer.

After it's approved, you have to make the first payment within six weeks. So you're looking at 9 weeks from the date that the DPP proposal goes to creditors before you need to make the first payment. Add on however long it takes StepChange to prepare the proposal.

Interest, fees and charges are frozen from the date the proposal goes out.

HTH

Thanks Coolcait, that was extremely informative!

Craig32

dawnybabes wrote: »

Have you anything you could sell to raise some money for this months payments ? Clothes, jewellery, DVDs, old phones, Etc

Unfortunately not. Anything that can be sold has been sold.

My only option would be to borrow nearly £300 to make the minimum payments, which would be easy to source the money.

If I am going to be going on to a plan of sorts, my credit is going to be destroyed for years anyways, so these 3 cards with a missed payment, would it matter much??

Could I make a token gesture of a payment to each which I could afford (say £20 for example) to show that I want to make a payment, but just don't have the full amount?

Craig32

My SoA below seeing as I have never posted this.

Now as you can see my spending is pretty minimal, but I would hate to sign up to a DMP for the course of a couple of years and be committed to that much going to my repayments. Ideally I would like to pay £1000 a month.

Any thoughts welcomed.


Statement of Affairs and Personal Balance Sheet

Monthly Income Details
Monthly income after tax................ 1780
Partners monthly income after tax....... 0
Benefits................................ 0
Other income............................ 0
Total monthly income.................... 1780

Monthly Expense Details
Mortgage................................ 0
Secured/HP loan repayments.............. 0
Rent.................................... 200
Management charge (leasehold property).. 0
Council tax............................. 0
Electricity............................. 0
Gas..................................... 0
Oil..................................... 0
Water rates............................. 0
Telephone (land line)................... 0
Mobile phone............................ 0
TV Licence.............................. 0
Satellite/Cable TV...................... 15
Internet Services....................... 6
Groceries etc. ......................... 60
Clothing................................ 30
Petrol/diesel........................... 0
Road tax................................ 0
Car Insurance........................... 0
Car maintenance (including MOT)......... 0
Car parking............................. 0
Other travel............................ 0
Childcare/nursery....................... 0
Other child related expenses............ 0
Medical (prescriptions, dentist etc).... 30
Pet insurance/vet bills................. 0
Buildings insurance..................... 0
Contents insurance...................... 0
Life assurance ......................... 0
Other insurance......................... 0
Presents (birthday, christmas etc)...... 15
Haircuts................................ 12
Entertainment........................... 30
Holiday................................. 20
Emergency fund.......................... 0
Total monthly expenses.................. 418


Assets
Cash.................................... 0
House value (Gross)..................... 0
Shares and bonds........................ 0
Car(s).................................. 0
Other assets............................ 0
Total Assets............................ 0

No Secured nor Hire Purchase Debts

Unsecured Debts
Description....................Debt......Monthly...APR
Hitachi Loan...................11000.....372.5.....34
Barclaycard CC.................5600......125.......0
RBS CC.........................1800......60........0
Bad Credit Loan 2..............1100......100.......71.58
Bad Credit Loan 1..............1000......73........55.24
Payday Loan 2..................300.......100.......292
Payday Loan 1..................400.......130.......292
RBS Overdraft..................4500......80........0
Natwest CC.....................3150......80........0
Total unsecured debts..........28850.....1120.5....-


Monthly Budget Summary
Total monthly income.................... 1,780
Expenses (including HP & secured debts). 418
Available for debt repayments........... 1,362
Monthly UNsecured debt repayments....... 1,120.5
Amount left after debt repayments....... 241.5

Personal Balance Sheet Summary
Total assets (things you own)........... 0
Total HP & Secured debt................. -0
Total Unsecured debt.................... -28,850
Net Assets.............................. -28,850

Created using the SOA calculator at https://www.stoozing.com.
Reproduced on Moneysavingexpert with permission, using other browser.