To DMP or not DMP....?

L1cklePickle

Hello - I had my LBM yesterday after evaluating my finances and the hole I have dug for myself.  I have about £25k debt and I earn £26500  (9k loan, the rest on credit cards) - I pay off per month the CCs are currently 0%.  I worked out that I could be debt free by 2026 if I stick to the budget I have set myself, but this budget is pretty strict - it doesn't include any money for me to treat myself or holidays as I guessed I would have to suck that up for a while.  

My question is this: if you knew you were able to pay it off without going down a DMP route but with not much of a life for 6 years would you do that - or would you go down the DMP and be more comfortable? I would worry when applying for a new job this would show up when they do the Equifax checks (my last job needed to undergo credit checks - my credit score is pretty good as I always meet payments).  I am ashamed I am in so much debt, but I wouldn't want anyone knowing I had to do a DMP....no one knows how much debt I am in (single parent - no partner to tell - my dad would go ballistic). 

And....I have a mortgage with equity.  If I did the DMP route, would the remainder of debts be secured on my house?

Any guidance would be greatly appreciated - I have signed up to the grocery boards to help me cut my food shopping down and have hit drinking on the head for now as that was getting out of control due to lockdown. 
Thanks

L1cklePickle

On a side note I feel terrible at the thought of not taken my child on a holiday for the rest of his child years - like he's being punished for my terrible life choices - sorry, I am being quite sentimental today

Kakiste

I started a DMP just under 2 years ago and ive paid over 50% of mt debt off so far- and i had a LOT of debt.

I ebay stuff and sew and make stuff to sell so that I can afford to save up for big things like birthday parties and Christmas presents for my daughter. We didn't go on holiday this year (covid) but we could've afforded to go away for 4-5 nights somewhere in this country. Next summer if everything settles down we may go away for a short foreign break costing us about £500 which we will both start to save for in the new year. 

Like you I chose to go down the frugal every day living route (we only spend £25 a week on food, no takeaways or alcohol) that way we always have a small budget each month (£80) for activities with our daughter who is 6. I'd rather go without drinking/takeaway so that I can take the kid swimming, to the cinema, trampoline park at the weekends- as you said I felt it was too harsh to deprive her of such things given it's not her fault we're in debt. 

DMP's aren't secured against your house, So you're good there.

monetxchange

These are UNsecured debts, so aren't going to have any effect on your house. Yeah, your credit file will be trashed by a DMP, but that's a small price to pay to get this sorted plus you don't need any more credit anyway. What kind of credit checks do you undergo for your work? Is this definitely something that would effect it? An SOA would be helpful so your options could be explored on here.

sourcrates

What kind of work do you do that requires a credit check ?

A DMP, or debt management, is just an informal way to repay what you owe, at a reduced monthly payment.
Hopefully interest will be stopped, which would result in you repaying the balances sooner.
There is no formal mark on your credit file for this, if your accounts default, then you will have defaults recorded, sometimes they just get marked “AP” arrangement to pay, so the result will be negative information on your credit file regardless.

But the important thing is the debts get repaid, however if this will be a problem then stick to the frugal approach and tough it out.
Unsecured debts are all non essential, and low priority, a CO can be applied for if legal action is taken, but normally companies don’t bother as it’s of no real benefit to them, and going to court is rare, DMP’s normally tick along quite smoothly, creditors are used to them now.

enthusiasticsaver

If the CCs are 0% and you have a workable budget with room to save for emergencies and a bit for entertainment I think I would opt for non DMP. Your house is safe whatever and I would not worry about holidays for now. None of us will be going on them if this situation with the virus carries on. 

L1cklePickle

Hi - I just wanted to say thanks for your replies! I really appreciate it.  So my current job is in a law firm and when I joined they said they would need to do a credit check and asked for an Experian consent form (I guess to make sure I wasn't struggling financially in case people out there steal from employers I guessed as some of my job is handling cash transactions).  So I guess from your views I should just carry on as I am for now but it is great to know my house is safe, and maybe look to DMP if I was struggling when the 0% interests are up and unable to transfer over?

Sharon87

Yeah for now try to pay off as much as you can whilst it's on 0%. If you struggle to get more deals - whether 0% or low balance with 0 fee for the long term then consider a DMP.

If you could save on every day spends - dropping a brand on food, cutting utilities and mobile bill, sell old things on ebay, then use those savings for 'fun stuff' for your child. Holidays don't have to be expensive and abroad. Camping holidays or caravan holidays can be very cheap, day trips can be done instead of week long holidays. Kids will enjoy it either way.

Don't put yourself in further debt by wanting to spend lots on fun stuff. Assign an amount you can afford to pay to your debts and stick to it, ideally above mimimum payments on at least one of your debts. I had 15k of debt and put over £300 a month towards them, it's almost halved now and I'm still paying the same amount or more in to pay it down, as well as building up a small emergency fund.

If you post an SOA people here may be able to help with where you can make savings

CreditCardJunkie

Just wanted to say hi and as many of us in debt have found, extra income really helps to bring in some extra money for the nice things. Prolific is a good survey site to make a few extra pounds. Get selling any old/unwanted items, something is better than nothing!
Just to note about the holiday comment, I think as long as you're taking time to spend with the kid(s) does it really matter where you are? These strange times have taught us that health and family is much more important than fancy holidays, nice cars etc.
Also, the fact you're a single parent and you own your home is fantastic. Many two parent families struggle to buy a home. You can definitely do this 💪

L1cklePickle

Hey thanks guys - so I have just done my SOA and I can clearly see some things that need changing here

[font=courier new][b]Statement of Affairs and Personal Balance Sheet[/b][b]

Household Information[/b]

Number of adults in household........... 1

Number of children in household......... 1

Number of cars owned.................... 0[b]

Monthly Income Details[/b]

Monthly income after tax................ 1715

Partners monthly income after tax....... 0

Benefits................................ 200

Other income............................ 250[b]

Total monthly income.................... 2165[/b][b]

Monthly Expense Details[/b]

Mortgage................................ 548

Secured/HP loan repayments.............. 0

Rent.................................... 0

Management charge (leasehold property).. 0

Council tax............................. 76

Electricity............................. 50 (its 97 dual so split it over)

Gas..................................... 47

Oil..................................... 0

Water rates............................. 24

Telephone (land line)................... 0

Mobile phone............................ 14

TV Licence.............................. 14

Satellite/Cable TV...................... 0

Internet Services....................... 23 (BT, inc phone line and tv)

Groceries etc. ......................... 220 (120 monthl shop, 60 weekly fresh, 40 school account)

Clothing................................ 30

Petrol/diesel........................... 0

Road tax................................ 0

Car Insurance........................... 0

Car maintenance (including MOT)......... 0

Car parking............................. 0

Other travel............................ 120 (60 my bus fare, not used atm due to wfh, 40 sons, 20 ubers)

Childcare/nursery....................... 0

Other child related expenses............ 0

Medical (prescriptions, dentist etc).... 9 (my meds)

Pet insurance/vet bills................. 20 (insurance 10, flea treatment 10)

Buildings insurance..................... 22 (didnt realise it was so much)

Contents insurance...................... 12

Life assurance ......................... 18

Other insurance......................... 26 (homecare 400)

Presents (birthdays)...... 30

Haircuts................................ 20 (10 me, 10 son)

Entertainment........................... 20 (12 netflix, 8 amazon prime)

Holiday................................. 50

Emergency fund.......................... 75

Spotify................................. 13 (I used to have the free version but WFH listening to music the ads drove me mad)

Gym..................................... 17

Sons computer subscriptions............. 10 (xbox live and ea origin)

Sons Savings............................ 10 (his family trust fund for when hes 18)

School Trips............................ 15 (save up for when big ones occur)

Uniform................................. 15 (sons uniform - save up for emergencies)

Postcode Lottery........................ 10 (I know I know)

Washing Machine Insurance............... 4

Laptop Insurance........................ 7

Christmas Savings....................... 50[b]

Total monthly expenses.................. 1619[/b]

[b]

Assets[/b]

Cash.................................... 0

House value (Gross)..................... 120000

Shares and bonds........................ 0

Car(s).................................. 0

Other assets............................ 0[b]

Total Assets............................ 120000[/b]

[b]

Secured & HP Debts[/b]

Description....................Debt......Monthly...APR

Mortgage...................... 74000....(548)......0[b]

Total secured & HP debts...... 74000.....-.........-   [/b]

[b]Unsecured Debts[/b]

Description....................Debt......Monthly...APR

Loan...........................9242......272.......0

CC - Sainsburys................4975......120.......0

CC - MBNA......................2474......50........0

Very Account...................80........5.........0

CC - Halifax...................30........5.........0

CC - Barclays..................3743......65........0

CC - Lloyds....................4050......50........0[b]

Total unsecured debts..........24594.....567.......-  [/b]

not looked into APRs yet

[b]

Monthly Budget Summary[/b]

Total monthly income.................... 2,165

Expenses (including HP & secured debts). 1,619

Available for debt repayments........... 546

Monthly UNsecured debt repayments....... 567[b]

Amount short for making debt repayments. -21[/b]

[b]Personal Balance Sheet Summary[/b]

Total assets (things you own)........... 120,000

Total HP & Secured debt................. -74,000

Total Unsecured debt.................... -24,594[b]

Net Assets.............................. 21,406[/b]

[i]Created using the SOA calculator at www.stoozing.com. 

Reproduced on Moneysavingexpert with permission, using other browser.[/i][/font]

Grumpelstiltskin

Have you checked your contents insurance to see if Laptop and Washer are covered?
What exactly does Homecare cover?