Debt management plan

fatbelly

If  Consolidation Express are offering a debt management plan  it will come with  a fee.

One of fatbelly's golden rules is that when you're in  debt, the last thing you need is someone else to pay money to.

We have mentioned the companies that do not charge a fee: CAP, Stepchange and Payplan
and one that gives impartial advice without having a product to sell: National Debtline.

I often get companies popping up on media: AskMeg was one. Avoid.

However, the conclusion of  Consolidation Express may well be right: if you cannot afford the contractual payments on your debts but can offer something to then then a dmp is a better safer option than an IVA for 15k debt.

hedboo

In answer to my own question, 😉 I have just been Googling Pay Plan and it looks like they can offer what I need without the fee so I will definitely speak to them today. Thanks everyone for the advice. Very much appreciated

barbiedoll

I completely understand your MH concerns, and why you want someone to "manage" your DMP for you. However, I do feel that it's really important to understand the process of debt management, it's a really good incentive to get you out of that cycle of repaying it all, only to start going back to the same old habits which caused this in the first place.

I was really scared of getting letters, phone calls and visits from debt collectors. With loads of help from the posters and board guides on here, I discovered that I could legally request that ALL communication be in writing only. I've never spoke to any of my creditors on the phone, apart from one lovely woman at Capital One, who asked me if I was happy to provide proof of my identity (my card was in my maiden name, but I had got married and the DMP was in my married name). The "You are over your credit limit, please pay the balance immediately" letters were initially very frightening, but once you realise that there are specific ways that you can deal with these, the fear goes away.

I'm so glad that you are going with PayPlan. But do come back and let us know how you're getting on, you can ask any questions here, and you'll get the answers you need. I hope it all goes well, good luck!

sourcrates

hedboo said:

Would Payplan or Step Change actually be able to manage it for me? I got the impression that SC would be self managed - though it’s a long time since I spoke to them. x

Hi,

I have responded to your other post on the DMP support board, i`m glad to see you have steered away from a fee charging DMC.

Allow me to clarify just what debt management involves, basically you repay your debts at an affordable rate, with hopefully all interest and charges stopped.

Some people can sort this arrangement out themselves, this is refered to as "self management", others choose to let a free to use debt charity do the negotiating on their behalf, but then some are dazzled by adverts on social media from companies trying to sell them something, the latter should all be avoided.

All the DMP provider does is get you to produce a budget, they then work out what your payments will be, and present that to each creditor, along with an appeal to stop charging interest etc.

So basically they write them a letter, creditors can take their time responding, they are in no hurry, some will accept, some may ignore, they still get paid regardless, if the creditor dosen`t like the arrangement, they will simply sell the debt on, or pass it to a debt collector, either way the same arrangement continues.

Now a debt charity does all this for free, but a debt management company will typically charge an upfront fee, plus 35% of each monthly payment, it can amount to a conciderable sum of money, and remember, all this just to write a few letters !!!

Another reason to avoid such fee charging companies, is the regularity they tend to go bust, and take all your money with them, one company last year, never paid their clients DMP`s for months, then went under, on average each client lost around £5000, and one lost £15.000, so doing your reseach on these matters is imperative.

Jude57

I totally agree with everyone here saying you shouldn't pay for a Debt Management Plan and that you should speak to one of the recommended debt advice charities but I do have one word of caution: If you can, on paper, meet your monthly contractual payments, after your priority payments (mortgage/rent, Council Tax, utilities etc) are paid, you are unlikely to be offered a DMP. They are not offered (by reputable organizations) to anyone who wants one, only to those for whom they are the best option which may explain why StepChange didn't offer you a DMP previously.

Having said that, it's very likely that there are areas of your monthly income and expenditure where changes could be made, up or down, and I'd be willing to bet there are things you don't budget for at all which should be included. That's why the regular posters here always ask you to do a Statement of Affairs, as it's this which is your starting point for any kind of debt solution.

As a first step, why not do your SOA and post it here so we can advise, you'll need it anyway before setting up a DMP, and although it may not feel like it now, it's also the first step towards taking back control of your money.

Good luck with whatever you decide to do.

hedboo

Thank you for the much appreciated advice. I am going to speak to Payplan tomorrow and avoid anywhere charging fees. Although I’d love to avoid a DMP, I’ve tried many times to take control off my finances and I just cannot seem to do it.  This has taken its toll in my mental health after years in this cycle. Not sleeping - constantly having a knot in my stomach. Always terrified every time I use my card. I can honestly say that even just posting has alleviated some of that stress and made me feel a sense of control. I’m going to take it step by step and not rush into any decisions. You don’t know how much better I feel this evening. I may even get some sleep tonight 

enthusiasticsaver

I would second the advice given above to contact payplan/stepchange or one of the free charities.  When you come to remortgage just stick with the current lender as they won't credit check you.  Make sure you do a realistic budget and build in a monthly figure to save for emergencies/unexpected costs for car or whatever as you will not have access to credit.  First thing is to build up an emergency savings and default as soon as possible as the defaults will disappear off your file after 6 years. The stress will go when you feel more in control of your finances.