Debt/DMP Advice

Northernboy

Hi,

New to this site and this is my first post!
The wife and myself have finally decided to face up to our debt problems. I visited the step change website and filled out their debt remedy form and realised what a large amount of money we owe. £56k on unsecured loans and credit cards. This was a massive shock to us both and a wake up call
After speaking with step change they advised us that a DMP would be the best solution, I am a little unsure if this is the best action for us, this is where we need your advise.
1, all of the debt apart from £13k is either on a loan that is due to end in just over 2 years or on long term 0% or low rate credit cards.. Would we be best seeing these out and re-thinking in a few years
2, step change were planning on us paying all of our spare cash every month, we have sat and done a budget and we can afford all the current card/loan payments (even overpaying on the high rate cards), the only thing with step change we would be debt free in 3 and a half years.. Are we best doing this or taking the DMP
3, I am worried that if we took the DMP our credit score would be so bad we would struggle to get a new mortgage deal when our current one ends in 18 months along with getting a car loan or pcp when our current one ends in 3 years

To add we have never missed a cc or loan payment, I think with a strict budget and some lifestyle changes we can beat this without the DMP

Any thoughts or tips/suggestions

Sunkencosts

I guess it comes down to whether you really can afford to do this without a DMP. Perhaps complete a SOA and the people here will offer opinions as to whether it looks realistic. Have you figured out how long it would take you to pay everything off not on a DMP?

We too have similar levels of debt but aren't doing a DMP; mainly because we can (just) continue to service the debt (like you, a lot of it on loans and low/0 interest rate) but also because a large portion of it is family debt which wouldn't be included so a DMP wouldn't help.

Re Mortgage deal, I think credit score will only be important if you switch lenders - switching deals with the same lender is usually fine even within a DMP.

sourcrates

Hi,

Obviously if you can avoid a DMP, then do so, you haven't given us many figures to work with, but 56k is a massive chunk of debt, so i am assuming you have a reasonable rate of income, however if you can manage to get through the next two years by cutting back on your spending, then that is a lot better (credit file wise) than any form of debt management.

Once the loan is repaid, you can throw more at the rest of the debt, and clear that away as quickly as possible.

It will take fairly strict budgeting, but it can be done, just do not be tempted to run up the debts again once cleared, as the debt solutions for people with property are extremely limited.

National_Debtline

Hi Northernboy


It's only necessary to consider a DMP if you cannot afford all the minimum repayments on your debts. That suggests the figures you went through with StepChange showed they were not affordable. It's down to you and your wife to decide what's best for you, but there are a few things to consider:


1) If you've made changes to your budget that allow you to afford these debts, is it realistic you can stick to these figures in the long term?


2) If you are only just managing the minimum repayments, how long will it take you to repay the debts? Usually it takes a very long time to repay debts this way.


3) Given what is a relatively high level of debt, what are the chances of continuing to switch between 0% interest offers on your credit cards? Sometimes there comes a point where you run out of options to switch cards.


I agree posting a copy of your budget on here will help others give you more advice on this. I hope it all goes well.


Susie
@natdebtline