Are Debt Management Plans any good? I'm starting to doubt it.

stan_p

Hi there,
I've always thought that I won't allow myself to get in this situation, but here I am 3 credit cards later and 5000 in debt, because I've been stupid but there is no turning back. Reality hit when I realized that I won't be able to cover the minimum amount for each of my credit cards that month. Anyways, I've made the rash decision to go on a Debt Management Plan. But even though I've been paying £150.00 to these people every month, I am still constantly chased by the banks receiving a letter every week and being called up to 10 times a day. I called the Debt Management company and they said this is normal, but I'm starting to doubt it and I am really freaked out now. I've been paying for 4 months now, but the calls won't stop. I consider cancelling my Debt Management Plan and call up each of the credit companies and try to negotiate directly. I am in desperate need of advice on what to do next. Can someone please help?

Pinkwhisk

Hi,

As far as I know, as DMPs aren't legally binding - yes your lenders can call/write. The company your doing a DMP through I think should be able to tell you how long you have in it until it's all paid. Again, I have limited knowledge of DMPs so may be totally wrong! Also, I think your lender can still add interest/charges, although most stop for good will.

If you could post a statement of affairs that will help give a bigger picture. Sorry I can't link. Hopefully somebody will be along with more accurate information soon, or you could post on the DMP thread.

PW X

Bigrachel

Have you got a Noddle account? You can log on and see who the debt is owed to. Usually the debt management companies would pay off the debt from the banks and then you would pay them back. Your credit report would show you. If it is saying you are defaulting on payments, then I may begin to worry.

Good luck!

zenshi

Bigrachel wrote: »

Have you got a Noddle account? You can log on and see who the debt is owed to. Usually the debt management companies would pay off the debt from the banks and then you would pay them back

Good luck!

Not that I've ever heard of?!?!?!


OP, are you paying you debt management people?

I'm on a self managed plan, I deal direct with the creditors involved. Initially, I got letters and phone calls but once it settles down this usually stops. I'm three years in now and maybe get one call a year

stan_p

Yes I received an email from Capital One saying that If I don't start to repaying my account will default

I have to pay to the following creditors:

Barclaycard - £2400.00
Capital One - £500.00
Nat West - £500.00
Very Account - £600.00

I can afford around 150.00 a month to pay up for these.

Yes, I am paying up my Debt Management Company. They have an account and send them around £150.00 each month.

zenshi

But the plan you're in with this company should be allocating the money you're paying them to each creditor equally?

sourcrates

Hi OP,

You should never trust a 3rd party debt management company with your money, these companies regularly go bust taking all your cash with them, and creditors are seldom paid on time.

DMP`s are FREE through the debt charities, you should not pay for this service.

Please reconsider your position, contact stepchange, they will work with you for free, no charge, nada, nowt, gratis, your money is safe, no chance of them turning turtle, and all of your £150 per month will go towards your debts.

What you are presently doing is prolonging the time your in debt, and it also sounds like they are mismanaging your account, my advice ?

Ditch them today, and contact stepchange.

stan_p

They are sending me a letter each month with where my money is going. I am not sure now, but I think they pay my largest credit first (Barclaycard). I can check tonight once I'm back from work.

I have spoke with them now and they said that it's normal for my accounts to default? I highly doubt this... Am I being scammed?!

sourcrates

stan_p wrote: »

I have spoke with them now and they said that it's normal for my accounts to default? I highly doubt this... Am I being scammed?!

That part is correct, you want a default as soon as possible, so you know 6 years from that date, they will be gone.

Still take my advice above though !!!

stan_p

I am trying to get in touch with the company now and cancel it immediately. No one is picking up though. Will have an update soon! Thank you all for your help!

sourcrates

stan_p wrote: »

I am trying to get in touch with the company now and cancel it immediately. No one is picking up though. Will have an update soon! Thank you all for your help!

Stan,

Its best if you do this in writing, just send a letter canceling the arrangement, its just an informal agreement, so there will be no charge for cancellation, if they say there is, refuse to pay.

Cancel any recurring payment you have to them, go to the stepchange website, sort your new plan out with them.

Good luck, any help you need, just ask !!