Sholud we go down the DMP route?

highdebts

Hello and Merry Christmas!

We posted recently regarding our 80K debt. At the moment, despite the debts being high, we are able to afford the payments, plus an overpayment, without it leaving us short for our essential livings costs. We pay around £300 interest each month, as the debts are not all on 0% deals.

My wife has been looking into DMP's and thinks that we should consider it. My understanding was that DMP's are for people who cannot not afford minimum payments, which we can.

Is my wife right?

Karonher

Going on a DMP will ruin your credit rating so it depends on how whether or not you may need to borrow in the future - I mean in the way of a mortgage renewal or whatever.

Could you cut back more and pay even more over the minimum - it could save you some interest? I am not sure if interest has to be stopped when it will be clear that you can manage the payments. If you are paying over the minimum you could be asked to prove what has changed and why you can no longer pay.

James1968

It appears you are already able to not only meet your debt payments, but make overpayments as well.

At this moment, you appear to be on top of your debts and are reducing them to boot. The time to consider a DMP is when circumstances charge and you can no longer afford even minimum payments.

Craig1981

agreed with the above - DMP is not an option at the moment if you are affording to repay and overpay and no defaults on your credit files

are all cards/debts on the same APR/balances? best way forward would to be overpaying a single account first, one with the highest APR/Balance ratio - one that is costing the most interest.

enthusiasticsaver

Are you budgeting properly as in are you saving for annual bills, holidays, Christmas, car maintenance and emergencies? If the credit cards are only being paid because you aren't keeping some money back for these things then a DMP could still be the answer.

Obviously the biggest advantage for you would be saving the £300 interest each month as most creditors would freeze the interest. However if you4 soa shows you can afford minimums plus a bit towards overpaying then it won't be for you.

Presumably at the moment you are no longer being offered 0% deals? Why not put an soa up here and we can suggest ways of you tackling this? Usually you would target the card with the highest interest rate.

A DMP can work well for people with high levels of debt who literally spend all their income on essential bills and debt repayments. If you have spare income think again as it will affect your ability to borrow or move to other 0% deals for six years or more.

highdebts

Thanks for comments. I agree that it's not for us and to be honest it's not something that I want to consider at present, as we can make the payments. The interest worries my wife a lot. I am not so worried about it. My take on it is to just keep paying as much as possible and keep an eye out for 0% deals that we may be eligible for. We haven;t added to the debt for over 6 months and have made great progress in tackling our previous uncontrolled spending.

I will put together a SOA at some point over the next week.

We are lucky to have quite a small mortgage ( 55K) against our house which is worth somewhere in the region of 220K, so I am viewing the unsecured debt as an extra 'mortgage; that we have to deal with.

fatbelly

Of course your unsecured debt is in a much much safer place than your mortgage.

You can view it as a game, trying to get as much on to 0% as possible, and keeping it there.

You might want to browse 'stoozing resources' - in the old days when you could get decent interest on savings, 'stoozers' would often rack up 80k of interest free cash and invest it.