HELP DMP OR SECURED LOAN

Bloomers83

Hi

This is my first post although been reading through threads for a good while so hopefully in the right place. I am after some help and advice anything given would be greatly received.

I am looking at my debts and how to consolidate into one. The whole robbing Peter to pay Paul as well as childcare costs have crippled me, and cant keep my head in the sand any longer. I have 50k worth of debt and have been recently approved for a secured loan which will take up my equity in my home to 98% which i didnt think they could do. I have also made the steps to look into a DMP and filled in the planner on step change is to see how that looks like. The question is which is better?. Im not wanting any credit in the near future and am more than happy in my home. and believe that i can afford reasonable payments on my DMP as well as being able to live without credit which has been a long time. its just the interest payments are finally kicking in and killing me.

I have not spoken to stepchange yet, if im honest a little scared to admit an issue but have spoken to the broker who offered me a secured loan. Now the Broker has said that step change will make you do all the work yourself in setting up a DMP? and they mislead you into thinking everything is done by them? If this is the case then I am happy to do the work as looking on here the majority of posts I can see about stepchange are positive. It has just thrown me that the broker was quite negative in respect of the DMP  which I appreciate they will not make any money from this. I dont want to potentially take more borrowing out with more interest but on that side dont want to go into a DMP with a credit file that has not got any missed payments on yet is to find in a years time the DMP is making me worse off that the secured loan would be?

Just confused really, don't want to take the step into DMP to find that I get ccjs etc, as before the phone call today I read that if you keep up with your payments then this is unusual. I have not missed any payments as of yet but probably have 2 months max before the credit merry go round crashes down and will ultimately default. Does it look better on a DMP if i have not missed any payments before entering a DMP? or does it not matter? if i contact creditors will they accept a lower payment without a default if i say im getting help with my debts?

Very confused and anxious if im honest... so apologies about the thinking out loud and sporadic questions. Any help would be greatly appreciated.

Thank You

sammyjammy

No brainer, DMP, never ever change unsecured debt to secured, your secured loan broker does not have your best interests at heart.    If you don't want to go with Stepchange then you can easily do it yourself if you are willing to do the paperwork, google nedcab they will guide you through everything with all their template letters if you prefer.  Make sure the budget you agree with Stepchange is affordable, don't be too generous with your offer you are entitled to live!

Bloomers83

Thank you for your reply, I'm happy to go with either heard good things about step change, just really thrown me the conversion today with the broker. The realisation of the mine field to get round has begun, feel a bit overwhelmed by it all.

enthusiasticsaver

Definitely do not take out a secured loan especially if it takes you up to 98% LTV.  That is awful and should not be allowed.  Of course the broker is not keen on you doing a DMP as he gains nothing from it.  That is really irresponsible to direct you to take out equity from your home to secure unsecured borrowing.  

Consolidating debt never works.  Consolidating unsecured debt on to your property is the worst decision ever so I urge you to contact stepchange and look into a DMP.  You can then get away from the robbing Peter to pay Paul mentality, the payments will be set at an affordable level and you can start to budget properly and the interest frozen  so stopping the debt rising if you are paying interest at the moment which I assume you are.  Actually you have said it is the interest which is killing you so definitely a DMP is the way to go.  

Bloomers83

Thank you for your advice, I thought it was very irresponsible, obviously I get why they are doing it to get there slice of the pie. Just wanted to get a few opinions before I go down the wrong road AGAIN. 

All new to me this forum so apologies if  posting incorrectly, great to get dome info though
Cheers

Naomim

As others have said,  please do not secure your debt against your home.  Stepchange do all the work for you once you complete the paperwork. They contact your creditors and arrange the payments.  The broker was obviously trying to make you think the secured loan was the easiest option. 

Good luck and keep us posted. This site is a mine of information with many of us either currently in debt or have been.

Naomim 

madaboutspots

Step Change will be a fantastic start. The broker was only looking after himself. Please don't line his pockets!

You will find loads of support and help on these boards, we're all here to help you through with sensible (mostly) advice and clever ideas to help you manage the road ahead. 

Come back and lean on all of us as much as you need. A diary might help you to not feel isolated with your situation. X

BabyStepper

In your position, I'd put in a complaint about the broker. At the very least s/he should have said something neutral like 'I can't advise you on the best option for you. I can tell you about the terms of this loan that will be secured against your home so you can decide'. It is fully recognised now that people in debt can be stressed, get confused and make poor choices, and companies selling loans should not be taking advantage of that. Thank goodness you came on here for advice. Obviously, dmp is the way to go. Good luck.  

Suseka97

Another vote for the DMP here - and that broker is talking absolute c**p.  He really does not have your interests at heart, just his commission.  

The only reason you'd be facing the possibility of a CCJ is if you completely ignored the debt and the creditor, or DCA, was a particularly litigious one - even then, you would receive paperwork warning of that action and could still enter into an agreement at that point to avoid the court thing.   But you are a million miles away from that possibility and so just put that to the back of your mind and start working with the DMP option.  

Now, the best way to do that is to firstly write to all your creditors and explain that you are in financial difficulty and in contact with SC to discuss your options.  Their first step is likely to be they put your account on hold for 30 days and at that point you also stop making your contractual payments to them (and cancel the DDs).  Be prepared for the various statutory blurb/letters you'll receive  - they may sound scary, but they are simply a requirement to warn people of the possible repercussions of failing to pay.  Now, you also need to be prepared for your accounts to default - but if you've read on the DMP mutual support thread you'll know this is a good thing.

My advice is firstly to speak with StepChange and get the ball rolling, but give yourself a little breathing space (of not making any payments) for a few months to build up an emergency fund and push the accounts towards a default.  If your bank is linked to any of your debts (via a credit card or loan) then you will need to set up a new account with a bank that has no association to any of your debts.

Oh, and, just one more point - moving unsecured debt into secured debt is never a good thing to do.... I speak from experience!

Bloomers83

Thank you for your replies, I can't tell you how reassuring it feels is just to have people to pass information and experiences honestly it feels a lot less lonely.

 With the accounts wise if I default on them and build up an emergency fund, which would indeed be that will that not have an impact on the creditors accepting a DMP? And is it easier to write to your creditors rather than phone?

Thank you again.

sourcrates

Bloomers83 said:

Thank you for your replies, I can't tell you how reassuring it feels is just to have people to pass information and experiences honestly it feels a lot less lonely.

 With the accounts wise if I default on them and build up an emergency fund, which would indeed be that will that not have an impact on the creditors accepting a DMP? And is it easier to write to your creditors rather than phone?

Thank you again.

You are just an account number to them, they are not your friend, nor your buddy, its purely business, nothing more.
By the time you have saved up an emergency fund, and decided on your options, its quite likely your debts will have been sold, or at the very least, passed to a collection company to manage.

So its unlikely you will be dealing with the original creditors again, it will be collection companies instead.

This is good news on your part, as they are much more flexible with their repayment options, you can usually make arrangements via the companies website, or if your going the DMP route, stepchange will deal with that.

Where debt is concerned, you should be proactive, and do everything in writing only, it gives you a paper trail, and a record of what has been agreed, remember, only written comms are legally binding.