DMP advice re equity

Marcus3344

Good evening all.

If I can try and lay out where we are at currently, any words of advice would be appreciated as to the best course of action to take next .....

House value 175k
Owe mortgage 104k
Secured loan 26k
DMP unsecured debts 35k
11 creditors

DMP plan been going only 4 months, on a very low short term figure to clear secured debt arrears, and whilst my partner found work.
The arrears will be cleared in 5 weeks.

Now we are both back in work.... I am going to need to update our household incomes with HMRC, to stop our tax credits and avoid too high an overpayment (couldn’t notify straight away as if they stopped benefits the we would not have survived awaiting monthly pay packet)
So there is question 1.... should I update my details with HMRC
sooner rather than later? Is there a time frame?

Question 2) when should I update the DMP (step change) with our new household income and expenditure figures?

Question 3) in my mind I don’t want to lose our family home.
Is there a way of negotiating with our creditors , to try for a heavily reduced full and final payments?
Is there a way of releasing equity to pay the creditors with such a poor credit file at present ?
Question 4) how long is it best to be on a DMP to have the best chance of negotiating a reduced settlement?
Is there a percentage of the total debt that they will not go below?

I appreciate the above may be a little bit out there... but if anyone can give feedback on any points above I would really appreciate it.....

Marcus

Marcus3344

Good evening all.

If I can try and lay out where we are at currently, any words of advice would be appreciated as to the best course of action to take next .....

House value 175k
Owe mortgage 104k
Secured loan 26k
DMP unsecured debts 35k
11 creditors

DMP plan been going only 4 months, on a very low short term figure to clear secured debt arrears, and whilst my partner found work.
The arrears will be cleared in 5 weeks.

Now we are both back in work.... I am going to need to update our household incomes with HMRC, to stop our tax credits and avoid too high an overpayment (couldn’t notify straight away as if they stopped benefits the we would not have survived awaiting monthly pay packet)
So there is question 1.... should I update my details with HMRC
sooner rather than later? Is there a time frame?

Question 2) when should I update the DMP (step change) with our new household income and expenditure figures?

Question 3) in my mind I don’t want to lose our family home.
Is there a way of negotiating with our creditors , to try for a heavily reduced full and final payments?
Is there a way of releasing equity to pay the creditors with such a poor credit file at present ?
Question 4) how long is it best to be on a DMP to have the best chance of negotiating a reduced settlement?
Is there a percentage of the total debt that they will not go below?

I appreciate the above may be a little bit out there... but if anyone can give feedback on any points above I would really appreciate it.....

Marcus

Suseka97

To answer your questions:-

Q1. I don't know if there is a timeframe for updating HMRC, but I suspect you are meant to do so as soon as there is a change in your circumstances. Best to contact them direct.

Q2. I would update your details with SC as soon as you have accurate information about your revised income and outgoings.

Q3. You won't lose your home as long as you keep up with your mortgage and secured loan repayments. If the question regarding F&Fs relates to the secured loan - I very much doubt you'll be able to get an F&F accepted, not when the loan company can pretty much guarantee full repayment if you default on that agreement. I can't see you'd be able to release equity short of selling your home -and I certainly wouldn't pursue that avenue if I were you.

Q4. You are too early in your DMP journey to be in a position to get F&Fs accepted. The accounts would need to be defaulted for starters, which may or may not be the case here. Also if, when your DMP payments increase, the likely outcome is your DMP will be cleared in say 3, 4 or even 5 years - DCAs are happy to play the long game. So it does rather depend on your individual circumstances. As for %s - well that's the million dollar question. All creditors and DCAs have their own criteria and accept varying amounts depending on how much you owe and how long it would otherwise take them to get what's owed. Some don't accept F&Fs regardless of amounts owed or timeframes. So, unfortunately there is no magic number and again, when the time comes it'll be based on a number of variables and your personal circumstances - also how good you are at negotiating

jwil

I think you need to notify HMRC within 30 days of a change in circumstances.

Your DMP is more informal, so there isn't the urgency. Once you've cleared the secured loan arrears, you should build up an emergency fund before upping your payments to creditors.

I personally wouldn't release equity from your home to clear your debts (even if your mortgage co allows it). Just make sure your budget is reasonable so you can live, and try and squirrel a bit away for F&F in the future.

I would guess the longer your DMP runs, the more likely you are to achieve better discounts for F&Fs. Also send in CCA requests to your creditors. Any which are unenforceable may achieve better discounts than enforceable ones.

There's a DMP thread on here and also a F&F one, both which are full of helpful advice.

Good luck

sourcrates

Hi,


Please try not to open multiple threads on the same subject, it just gets confusing for people.


I have merged both together, if you have any questions about this policy please email [EMAIL="forumteam@moneysavingexpert.com"]forumteam@moneysavingexpert.com[/EMAIL] thanks.

Marcus3344

Many thanks for the advice and feedback, I really appreciate it.

jools1985

It's best to update HMRC sooner rather later. The longer you put it off the higher any potential overpayment will be. As has been mentioned above all changes in circumstances should be reported to HMRC within 30 days if there is a Tax Credit claim in place.


Good luck with your DMP.