Chance to get off Debt Management Plan - can I get a loan?

DCFC79

Consolidation rarely works as something else crops up that needs replacing or repairing and it then gets put on the back burner.

It will onylwork if your really really strict.

LeicsRed

SOA without consolidating is below.

I've not included my wife's salary as we don't actually know yet what it will be (she's got an hourly rate which I've done a pro-rata calculation on), and we can't guarantee it going forward, though it will help certainly to pay some towards it.


Statement of Affairs and Personal Balance Sheet

Household Information
Number of adults in household........... 2
Number of children in household......... 2
Number of cars owned.................... 1

Monthly Income Details
Monthly income after tax................ 2615
Partners monthly income after tax....... 0
Benefits................................ 0
Other income............................ 0
Total monthly income.................... 2615

Monthly Expense Details
Mortgage................................ 0
Secured/HP loan repayments.............. 0
Rent.................................... 650
Management charge (leasehold property).. 0
Council tax............................. 149
Electricity............................. 50
Gas..................................... 50
Oil..................................... 0
Water rates............................. 34
Telephone (land line)................... 0
Mobile phone............................ 60
TV Licence.............................. 12
Satellite/Cable TV...................... 30
Internet Services....................... 40
Groceries etc. ......................... 400
Clothing................................ 60
Petrol/diesel........................... 150
Road tax................................ 26
Car Insurance........................... 68
Car maintenance (including MOT)......... 30
Car parking............................. 10
Other travel............................ 38
Childcare/nursery....................... 0
Other child related expenses............ 0
Medical (prescriptions, dentist etc).... 30
Pet insurance/vet bills................. 0
Buildings insurance..................... 0
Contents insurance...................... 24
Life assurance ......................... 0
Other insurance......................... 0
Presents (birthday, christmas etc)...... 50
Haircuts................................ 20
Entertainment........................... 20
Holiday................................. 0
Emergency fund.......................... 50
Total monthly expenses.................. 2051


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
Parents........................4200......165.......0
Total unsecured debts..........4200......165.......-


Monthly Budget Summary
Total monthly income.................... 2,615
Expenses (including HP & secured debts). 2,051
Available for debt repayments........... 564
Monthly UNsecured debt repayments....... 165
Amount left after debt repayments....... 399

Personal Balance Sheet Summary
Total assets (things you own)........... 0
Total HP & Secured debt................. -0
Total Unsecured debt.................... -4,200
Net Assets.............................. -4,200

Created using the SOA calculator at (linked removed as not allowed to post as new user).
Reproduced on Moneysavingexpert with permission, using other browser.

LeicsRed

I haven't included the car in the assets by the way because it's worth about £20 based on We Buy Any Car quote of £50 from a couple of years ago 13 years old with just under 150,000 miles on the clock, and starting to struggle a little, so don't think it's got long left.

January2015

I'm confused by your SOA - you say this is the situation without consolidation - but where are the debts for the DMP and HMRC?

sourcrates

I’m actually baffled by your entire post.

You earn near to 50k a year, your debts are quite small, by any standard, and can easily be tackled by correct budgeting.

Why would you need a loan ???

LeicsRed

HMRC take my debt straight out of my wages, hence me showing the income as £2,615 instead off £2,920. I left the DMP off as I thought this was the idea, that it would show what my income/expenditure is without paying the creditors so we can see how much I'm then able to pay towards them.

However, I think I have a plan that doesn't include consolidation or another loan at all.

Looking at my statements from the DMP, they are actually paying the creditors in a truly weird way which I'm sure only they can understand. The creditor who are owed the most (i.e. £14k of the £15.5k total on the most recent statement) is getting just 8.8% of what we pay monthly, whilst the 2nd biggest creditor are getting 62.5% (though it's student loans who don't tend to budge, and also I think continue to charge interest), and the 3rd smallest are getting 23.76%. All I can imagine is that they are trying to get the small ones out of the way so they can then concentrate on fewer creditors.

Anyway, I've been back to my trusted spreadsheets and had a fiddle. If I offer student loans a small amount more than they are being paid now, I can have it paid off in 1.5 years. If I can get the largest creditor to accept the 80% discount in 12 monthly installments (the letter states 3-6 months), then I'll have them paid off in 1 year at £233 per month. I'll also add £10 to my parents installments which will mean their card is paid off in exactly 2 years. The 3 other creditors on my DMP total £235, I think I could potentially get a settlement of £100 from one taking it down to £150ish, which I'll pay straight out.

Not taking my wife's wages into account this will leave things a bit tight for a while, particularly as my car is due an MoT in March, is likely to fail on a few things due to the high mileage and the fact it appears to be on it's last legs and so might cost me quite a bit (more than it's worth). However, it will get everything paid off and we'll be debt free (hopefully) within 2 years. If my wife's job turns out to be stable then things will be better and I can start paying more towards it to get it paid off even quicker (though I'm not convinced of the stability, not due to my wife, but due to the nursery relying on funding and the children she's looking after staying there, hence me trying to discount her wages for now).

My only concern now really is the creditors accepting my offer, which they should as it will be higher than they're getting now, but often I'm told (please correct me if I'm wrong) that they prefer to go through a DMP than direct as they feel more confident of getting the money.

January2015

My comments in red below

LeicsRed wrote: »

SOA without consolidating is below.

I've not included my wife's salary as we don't actually know yet what it will be (she's got an hourly rate which I've done a pro-rata calculation on), and we can't guarantee it going forward, though it will help certainly to pay some towards it.


Statement of Affairs and Personal Balance Sheet

Household Information
Number of adults in household........... 2
Number of children in household......... 2
Number of cars owned.................... 1

Monthly Income Details
Monthly income after tax................ 2615
Partners monthly income after tax....... 0
Benefits................................ 0
Other income............................ 0
Total monthly income.................... 2615

Monthly Expense Details
Mortgage................................ 0
Secured/HP loan repayments.............. 0
Rent.................................... 650
Management charge (leasehold property).. 0
Council tax............................. 149 Is this over 12 months ?
Electricity............................. 50
Gas..................................... 50
Oil..................................... 0
Water rates............................. 34
Telephone (land line)................... 0
Mobile phone............................ 60 Even if this is for 2 phones this looks very high
TV Licence.............................. 12
Satellite/Cable TV...................... 30 Satellite/Internet @£70 total is very high - look to change to lower cost deal
Internet Services....................... 40
Groceries etc. ......................... 400 Try shopping at Aldi or Lidl - you could cut this to under £300 if you try
Clothing................................ 60 That's high every month - you could cut this
Petrol/diesel........................... 150
Road tax................................ 26
Car Insurance........................... 68 This seems very high
Car maintenance (including MOT)......... 30
Car parking............................. 10
Other travel............................ 38 What is this for?
Childcare/nursery....................... 0
Other child related expenses............ 0
Medical (prescriptions, dentist etc).... 30
Pet insurance/vet bills................. 0
Buildings insurance..................... 0
Contents insurance...................... 24
Life assurance ......................... 0
Other insurance......................... 0
Presents (birthday, christmas etc)...... 50 if you are struggling you really need to consider cutting this back a bit
Haircuts................................ 20
Entertainment........................... 20 what is this ?
Holiday................................. 0
Emergency fund.......................... 50 you need an emergency fund but are you really saving £50 p/m ?
Total monthly expenses.................. 2051


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
Parents........................4200......165.......0 Where are the debts for the DMP ?
Total unsecured debts..........4200......165.......-


Monthly Budget Summary
Total monthly income.................... 2,615
Expenses (including HP & secured debts). 2,051
Available for debt repayments........... 564
Monthly UNsecured debt repayments....... 165
Amount left after debt repayments....... 399

Personal Balance Sheet Summary
Total assets (things you own)........... 0
Total HP & Secured debt................. -0
Total Unsecured debt.................... -4,200
Net Assets.............................. -4,200

Created using the SOA calculator at (linked removed as not allowed to post as new user).
Reproduced on Moneysavingexpert with permission, using other browser.

LeicsRed

sourcrates, the reason I initially wanted to look at a loan was because we received this offer of 80% discount, so paying £2,800 to clear our biggest debt. To me (before taking advice on here), getting a loan to pay this, and the other smaller debts on my plan, seemed like a good idea as it would get us off the DMP, and installments would actually be reduced (if including the HMRC debt as they are taking £300 per month out of my income tax to pay it).

We've actually tried updating our details with the DMP over and over again, sending updated financial statements, details of our marriage (they had us unmarried until not so long ago, despite us being married since 2008 and telling them several times), and still have us down as having no children (despite us having 2, which we also keep telling them). Although we are still paying a relatively small amount into the plan, because I'm the sole earner, and also have these debts which can't be put into the plan (i.e. my parents and HMRC), we've still not been comfortable at the end of each month. However, my recent pay rise due to promotion means we have a bit more, so if I could replace the amount we're paying to the DMP, and add not a lot more, it seemed I could get a loan to clear it all off, and still have some money left at the end of the month.

However, taking advice on here I've quickly realised this isn't the way to go, so have been doing a lot of calculating tonight to see what else I can do, and have come up with the above alternative plan.

January2015

Thanks for explaining about the HMRC debt - that makes sense now.

Regarding your concern about creditors preferring to go through a DMP - I assume you mean through a company or charity like Stepchange. Creditors have to treat you the same regardless of whether you are supported with your DMP or whether you manage it yourself. As an example I started my DMP owing over £95k and spent one year with Stepchange and then decided to manage it myself. Just over 2 years later and I am still self-managed. My creditors have all been fine and I have reduced the amount owing far more than had I stayed with Stepchange - and in fact I have paid far less than I would have with Stepchange because I checked credit agreements (CCAs) and negotiated some settlements at a discount. Had I stayed with Stepchange I would have been owing approx £63k, but by self-managing I owe approx £45k.

LeicsRed

Thanks for your comments January2015.

With regards to council tax it's over 10 months, so we're currently on a 2 month break.

The mobile phones is actually 3, we have one for our eldest daughter as she may need it if she misses her school bus home or has any other issues (she's having lots of issues with bullying at school so it's nice to know she's got a way to contact us if she needs to). However, hers is on a very cheap deal with Virgin Media through our package. We do need to look at cutting them down though when the contracts expire, and I'll be going on a SIM only deal.

We actually often do shop at Aldi and Lidl, but it still seems to come to a lot even when we don't buy any extras. It's one of the reasons we always seemed to go over - I'd budget £80 per week, which we seemed to spend at the supermarket, but then during the week we'd end up having to spend a bit more.

Clothing is very much based on school uniform - the amount the school requires now is ridiculous. Our youngest requires 4 pairs of shoes (indoor, outdoor play, indoor PE, outdoor PE). Our eldest is at secondary school and requires a school blazer with badge, several school branded items for PE, tie, etc. They are also growing very quickly, and we're struggling to keep up to be honest.

Emergency fund is based on what I've been seeing on the statements as going out in cash and other misc items, though I've actually reduced this down after seeing how much is going out.

Entertainment we don't actually generally do, but it's what DMP's tend to tell us we should put down - unfortunately it doesn't happen often due to other expenses keep coming up. If it does it's usually taking the kids out.

Car insurance I try to reduce every year, and usually get a better deal by getting comparisons and then getting my current insurer to match the best quote, so I can't actually get it lower than this. Possibly the area of Leicester I'm in - I did write one car off in bad weather, but that was about 8 years ago so shouldn't have an effect.

I didn't include the DMP in there as I thought it was meant to be without that (i.e. to see how much we can pay towards another (free) DMP or outside of it. We're actually only paying £150 at the moment, but I'm looking to pay more now as mentioned in a previous post above.