Is DMP for me?

sammyjammy

Of course there is another option, sell the car, what is it worth now? It would probably pay off more than half your debts and you could snowball the rest.


Have you thought about how you came to be in debt in the first place? This is an important step.

Indebtj

Thanks for your reply, The car is worth around £7000 and I still have over 10k left to pay on it, if I understand correctly because of this it wouldn't be an option as I wouldn't be able to cover the difference.

EssexHebridean

OK - notwithstanding whether a DMP is the right thing for you, I'll take a look at your SOA.

I'll also say that in the long term you way well come to consider yourself as very fortunate to have been turned down for a loan to consolidate - this is rarely a good way to attempt to get out of debt, and equally rarely works.

Indebtj wrote: »

Statement of Affairs and Personal Balance Sheet

Monthly Income Details
Monthly income after tax................ 1271
Partners monthly income after tax....... 0
Benefits................................ 0
Other income............................ 0
Total monthly income.................... 1271

Monthly Expense Details
Mortgage................................ 0
Secured/HP loan repayments.............. 241
Rent.................................... 150 You are extremely fortunate to have rent this low and you must capitalise on that while you can
Management charge (leasehold property).. 0
Council tax............................. 0
Electricity............................. 0
Gas..................................... 0
Oil..................................... 0
Water rates............................. 0
Telephone (land line)................... 0
Mobile phone............................ 20
TV Licence.............................. 0
Satellite/Cable TV...................... 24 I'd suggest getting rid of this for now and putting the money towards debt - would I also be correct in assuming that what is shown here is actually half the monthly bill as it would be split with your partner?
Internet Services....................... 12
Groceries etc. ......................... 160 If this is half the bill for two of you then it needs to reduce - you could both be eating for that figure you've stated!
Clothing................................ 25
Petrol/diesel........................... 110
Road tax................................ 12
Car Insurance........................... 26
Car maintenance (including MOT)......... 20 Are you sure this covers everything it needs to? Your fuel bill suggests fairly high mileage, so remember to take account of servicing costs (do you get through a year on a single service or are there years when a second would be required in a 12 month period, for example) also tyres, wiper blades, screenwash, cleaning...
Car parking............................. 0
Other travel............................ 0
Childcare/nursery....................... 0
Other child related expenses............ 0
Medical (prescriptions, dentist etc).... 8 Is this prescription costs? If so using 3 monthly pre paid certificates in conjunction with carefully chosen collection dates could save you a little money
Pet insurance/vet bills................. 30
Buildings insurance..................... 0
Contents insurance...................... 0
Life assurance ......................... 0
Other insurance......................... 0
Presents (birthday, christmas etc)...... 25 I think this could probably be reduced a bit.
Haircuts................................ 10
Entertainment........................... 40
Holiday................................. 0
Emergency fund.......................... 0
Work meals.............................. 50 Take food from home - for someone in your position this is a lot of money each month that you don't need to spend.
Savings................................. 20
Bank account fee........................ 17 No - just get rid and switch to a free account. £204 straight back in your pocket.
Contribution to partners finance ...... 16 Your SOA says you don't have this spare - you need to have a serious chat with your OH.
Total monthly expenses.................. 1016


Assets
Cash.................................... 0 You save £20 a month, and set money aside for car maintenance, haircuts, clothing, Christmas etc, but you have no cash saved?
House value (Gross)..................... 0
Shares and bonds........................ 0
Car(s).................................. 1
Other assets............................ 0
Total Assets............................ 0


Secured & HP Debts
Description....................Debt......Monthly...APR
Mortgage...................... 0........(0)........0
Hire Purchase (HP) debt ...... 10500....(241)......6.1
Total secured & HP debts...... 10500.....-.........-

Unsecured Debts
Description....................Debt......Monthly...APR
Barclaycard ...................6500......160.......15.9
MBNA...........................2300......60........18.9
Aqua...........................1300......30........34.9
Paypal.........................330.......15........14.9
Argos..........................299.......0.........0 Is this really 0%? Buy now Pay later? if so it needs to be paid off before the deadline.
Halifax Overdraft..............600.......0.........0 Sure there are no charges related to this?
Halifax Loan...................380.......190.......28.9
Klarna Finance.................438.......25........0 Allowing that you're living with the in-laws what is this - and the other Klarna one - relating to? Is it anything that can be sold to clear off the debt?
Klarna Finance.................725.......26........14.9
Total unsecured debts..........12872.....506.......-


Monthly Budget Summary
Total monthly income.................... 1,271
Expenses (including HP & secured debts). 1,016
Available for debt repayments........... 255
Monthly UNsecured debt repayments....... 506
Amount short for making debt repayments. -251

Personal Balance Sheet Summary
Total assets (things you own)........... 0
Total HP & Secured debt................. -10,500Total Unsecured debt.................... -12,872
Net Assets.............................. -23,372

In theory you could make savings in various areas to - once the loan is paid off - clear the shortfall, but you won't have much left to throw towards clearing everything else, particularly while interest is being applied. In the meantime you still have two months of loan payments where you actually can't meet your obligations.

For what it's worth it it were me, I'd go the DMP route but would look to get the final payments on that loan done first as it's one less debt for the overall tally, and will also free up an amount that can immediately go elsewhere rather than just stretching it out for a lot longer into the future. Others may disagree with that though.

dreaming

I don't know if this helps but my DD got herself into debt and started a DMP plan 4 years ago - she made the final payment in August. During that time she moved 3 times into rental properties (on her own) and never had any problems. She did have to change her DMP payments a few times - mainly to cover the additional expense when moving, and once when she had a large vet bill - but she said Stepchange were always very helpful.

Indebtj

Thanks for your reply Essex I will try and answer your points, sorry if the formatting isn't ideal.

Satellite/Cable TV...................... 24 I'd suggest getting rid of this for now and putting the money towards debt - would I also be correct in assuming that what is shown here is actually half the monthly bill as it would be split with your partner?

£16 of this is for SKY as part of my arrangement towards rent I need to keep this running, the rest is amazon prime which I could stop freeing up £8

Groceries etc. ......................... 160 If this is half the bill for two of you then it needs to reduce - you could both be eating for that figure you've stated!

Work meals.............................. 50 Take food from home - for someone in your position this is a lot of money each month that you don't need to spend.

I will admit that one of my and my partner's main vices is overeating and I am a heavy guy. it has been a struggle working out what we have spent on food. and the above is considering we are going to start slimming world next week. and despite it being higher it will likely be considerably less than what we have been spending. I wanted to set a realistic amount as part of a potential DMP.

Car maintenance (including MOT)......... 20 Are you sure this covers everything it needs to? Your fuel bill suggests fairly high mileage, so remember to take account of servicing costs (do you get through a year on a single service or are their years when a second would be required in a 12 month period, for example) also tires, wiper blades, screenwash, cleaning...

You make a good point I actually increased this from 15 on what I told step-change originally i was thinking 240 would be enough as its a fairly new car (2017) so will need 2 more services before I would probably hand it in, a Minor (around 100) and a major (around 180) mot would be around £40 it shouldn't need new tires in the next few years. but your probably right and 25 would be more realistic.

Medical (prescriptions, dentist etc).... 8 Is this prescription costs? If so using 3 monthly pre-paid certificates in conjunction with carefully chosen collection dates could save you a little money

Its to account for 2 yearly dental check-ups, I have a medical exemption for prescriptions.

Presents (birthday, Christmas etc)...... 25 I think this could probably be reduced a bit.

Stepchange advised it was a little high but it's far reduced from last year, I have at least 10 people I need to give birthday and Christmas presents to and £300 would be on average 15 per person per event which isnt high.

Bank account fee........................ 17 No - just get rid and switch to a free account. £204 straight back in your pocket.

I hear you, my thought process is that that it meant 50% of my overdraft is interest-free and covered breakdown and mobile insurance.

Contribution to partners finance ...... 16 Your SOA says you don't have this spare - you need to have a serious chat with your OH.

I should have explained this better, my partner took out finance on a bed we both sleep on we agreed i would pay half it wouldn't be fair for me to pull out of this considering she has some debt issues too.

Cash.................................... 0 You save £20 a month, and set money aside for car maintenance, haircuts, clothing, Christmas etc, but you have no cash saved?

I probably haven't approached the SOA in the correct way, basically I have copied over the budget I provided as part of a potential DMP where I have had to average out expenses like car maintenance, haircuts, clothing, Christmas, etc I don't actually save up money for these I just deal with them when they come up, usually with credit cards or store credit. it was recommended to me to put an amount as saving £20 is what was chosen.

Argos..........................299.......0........ .0 Is this really 0%? Buy now pay later? if so it needs to be paid off before the deadline.

You are correct 200 of needs to be paid in December this year the rest in March of next.

Halifax Overdraft..............600.......0.........0 Sure there are no charges related to this?

there are charges but Halifax doesn't seem to quote an APR its 1p per £7 owed per day. not including the firs £300 with the £17 account. there isn't a minimum payment as I dip in and out monthly.

Klarna Finance.................438.......25........0 Allowing that you're living with the in-laws what is this - and the other Klarna one - relating to? Is it anything that can be sold to clear off the debt?

That one is the mobile phone I brought on finance which is worth around £400 but then I would need another one, the £20 previous is sim only I will reduce this next April to something cheaper. The other is a Monitor for a desktop (i know it wasn't a good idea buying a £900 monitor) but I could probably only sell that for around 400-500 too.

I don't know if this helps but my DD got herself into debt and started a DMP plan 4 years ago - she made the final payment in August. During that time she moved 3 times into rental properties (on her own) and never had any problems. She did have to change her DMP payments a few times - mainly to cover the additional expense when moving, and once when she had a large vet bill - but she said Stepchange were always very helpful.

Thank you dreaming for your comment, I have been going through the forums and can see similar experiences I am now leaning towards taking out a DMP.

EssexHebridean

Indebtj wrote: »

I probably haven't approached the SOA in the correct way, basically I have copied over the budget I provided as part of a potential DMP where I have had to average out expenses like car maintenance, haircuts, clothing, Christmas, etc I don't actually save up money for these I just deal with them when they come up, usually with credit cards or store credit. it was recommended to me to put an amount as saving £20 is what was chosen.

OK - this is what we call an aspirational SOA - and I'm afraid it doesn't really help you an awful lot until you're found whether, realistically, you can live by what it says.

You now need to think about things like - do you have an "needs" (not wants" for clothes coming up soon - so work clothes that must be replaced for example; Does the car have a service due soon; How long before you need a haircut; what do you propose to do about Christmas this year... at the moment you have no means of paying any of these things as with the position you are in using further credit for them isn't an option.

You need to stop using cards - and stop applying for store credit for everything you fancy buying. If that sounds harsh I'm sorry - but look around the things you've bought in this way and then ask yourself whether it's all worth the time it's going to take you to pay the debt off, now? Add up what you've spent on the car that you'll be handing back once it hits 50% - again - worth it for the time you've had?

You need to start living within your means and if you ever want your own home, and to be able to go on holiday, buy a car again, or even just go out for a nice meal with friends without worrying how to afford it - you need to start doing it right now.

Indebtj

Thanks for the advice, agree completely with what you have said. I do believe I can realistically live by the aspirational SOA as it leaves space for improvement. after the advice, I have been given I will probably look to stop all payments now for the unsecured debts. During this time I will see if I can adhere strictly to the SOA. using some of the money saved by not paying the debts to spend on any essentials in the meantime and the rest towards an emergency fund. If I find that the budget isn't viable I can amend it by the time I am ready to set up the DMP.

Does this sound like an ok plan of action? if I don't have any access to further credit I can only see my situation improving over time.

Willing2Learn

I agree with EH's observations. It is so important that you have a realistic SOA before the DMP begins. Otherwise you could be setting yourself up for failure...

Indebtj

Hello, I am looking to post the following to my creditors. please advise if it will suffice.

Dear Sir/Madam

Account No:

I am writing to tell you that I am getting advice and help with my current financial difficulties.

Because of this, I would appreciate it if you could hold action on the above account for a period of at least 6 months to give me the breathing space I need to do a budget sheet and work out the best way to deal with my debts. the Debt Management Plan start date is 01/03/2020
Also, if you are adding interest or other charges to the account, I would be grateful if you would freeze these during this period so that my debt does not get any bigger.

I will contact you again as soon as possible with further details of my financial situation and my proposals for repaying my creditors.


I look forward to hearing from you as soon as possible. I request any further correspondence only be in writing to the above address.

Yours faithfully

sourcrates

Hi,

They may put your account on the back burner, but they won`t hold action for 6 months, the accounts will probebly go to a debt collector who will run through their standard range of template letters with you.

You should be ok, it will just involve a bit of letter tennis to keep them up to speed on your situation, the debt collection process takes quite a long time, anywere up to 2-6 years at times, so there will be no problems with 6 months.