What are the negatives to a DMP?

**laura**

We've been making token £1 payments to debts of £57k(!). OH is now in FT employment and last night I spent 2.5 hours on to step change redoing our budget. They are sending me the papers to sign for a DMP through them. I can see so many positives. I felt so relieved last night that this was in order and was manageable and affordable. We will be far better off than we have been for years. But I just wondered, aside from the fact we won't be able to get credit (which we don't want but I think is still likely to be a negative), what are the other downsides.
What have others in a DMP found to be a problem that they hadn't known/considered before?
Thank you x

DorisTrousers

Timescale is a massive factor. No one should be recommending a DMP with a greater timescale than 10 years without clear and concise reason to do so. To clear in 10 years or less therefore, you need to be paying in a minimum of £475 per month. That assumes interest and charge freeze as well, which is by no means a given. Can you afford that? If not, how much can you afford, after re-doing your budget?

Is there anything stopping you looking at a formal Insolvency such as Bankruptcy or even an IVA, for example assets or employment to protect?

sourcrates

57k repaid by a DMP ?, that could take a while, have you concidered IVA ? Do you own a property ?
In answer to your question, only down side to it, is length of time your paying it, and a wrecked credit rating, the latter you will most likley have already anyway.

Growurown

I'm paying back a DMP amount of approx £48,000. We have been paying off around £1,200 a month.

Apart from the comments already made the downside I have found is that there was not enough money in the budget for car repairs. The amount that SC provided in their budget was not nearly enough. We had several occasions where we were unable to make our regular monthly payment due to the cost of repairs.

On the personal side it caused OH to be pretty grumpy at times because he couldn't just go out and buy stuff, but basically when on a DMP you just have to suck it up. Not much money for luxuries, stress at Christmas time and no holidays. However our situation was that there was no other option, we had reached the end of the road. I am now only two payments away from being debt free, so even though the DMP wasn't all plain sailing I am glad we went into it and can't wait to be debt free.

Kate_fixing_it

As others have said there's the inevitable brain re-training which takes time and discipline. The only negatives I've found were rushing in too quick (no emergency fund built up) and the wall you hit when the novelty wears off. It's a kind of "I'm so sick of this I want to go out and SPEND" coupled with impatience to pay it off.

As you've said there will be no more credit but that gives you plenty of time to do the brain re-training. It's been win-win for me. I've learned some tough lessons but ultimately I'm glad I chose this route.

Kate x

Westminster

My DMP was originally 78k and was projected to take something like 17 years at the initial payment level - although as a home owner, it was pretty much my only option.

If I were in the same position again - I would ensure ALL my creditors issue a default as quickly as possible (3-6 months of £1 a month should do that) as this will limit the impact on your ability to get credit in the future to a maximum of 6 years. I had 1 creditor who never issued a default. The details are long and boring but both the ICO and FOS upheld their view despite their actions putting me in a worse position that someone who stuck their head in the sand and paid nothing at all. So that account (and all the AP markers) drops off my CRA in January despite all my other creditors defaulting within a few months of each other in 2006.

What the DMP does give you is the ability to sleep at night, and also it gave me the opportunity to settle all my accounts for 30-70% of the outstanding balances.

A few months ago I got a headline mortgage rate at 5x my income from a high-street bank - so a DMP is not the end of the world.

The key question is though - do you have any property that you particularly want/need to protect?

If not then there are undoubtably better options out there for you.

PS - ensure you ONLY use one of the free DMP companies (Payplan or Stepchange)

**laura**

Thank you all. Yes we do have property. We have our own home that is probably around break even and then another that is in negative equity that we rent out.
The main reason we haven't looked at any other options is that OH works in the financial sector and anything like that would mean he lost his job.

crazy_cat_lady

I haven't really seen much of a down side in the past 5+ years. The mental rethink had to happen otherwise I would just have carried on living beyond my means, and it was tough. And there were times I panicked, usually when the car needed really expensive repairs - but I sleep much better than I did when I was worrying about paying back tens of thousands of pounds...
Good luck with it.