Taking Action - is a DMP our best option?

4latariel

Hello lovely forumites After a very tricky couple of years my partner and I have today realised we are at financial breaking point.

He has contacted Step Change who have suggested a DMP but before we go ahead I was wondering if you helpful lot believe this to be the best course of action? (I've been here before, you see, a few years ago with 6k of debt which I paid off and I greatly appreciated the advice and support at the time). 

We have together a whopping c.40k of debt made up of two loans, credit cards and overdrafts. He earns 28k and I was on 18k, but this reduced due to furlough and then SMP and am now not earning as I am temporarily going to stay at home with our son. Hopefully I can find a job soon so I can help more financially, but unfortunately I would only just make enough to cover childcare in my old job. 

We are in a fortunate position that we have a home which I have been gifted. But it is very old and things are constantly breaking/falling apart and until now we have been putting repairs etc. on credit.

So, currently we have £28000 coming in only. We have created a budget which we will be sticking to. I have some MH issues which can sometimes result in spending sprees which I will be keeping a close eye on.

Do you guys think a DMP is a good option? We have no savings - are you able to budget in small savings per month? My partner provided his details but not mine so they advised it would be 8 years before the debts were settled but it will be longer when we add my debt into the equation and that's worrying as it's a long time to have no 'safety net'.

Sorry for the long ramble - am feeling quite emotional! I did the classic, bury your head in the sand move and had no idea how bad it actually is.

Thank you for reading. 

sourcrates

Your only real choice as a homeowner, there is the possibility of an IVA, and that may be worth looking into.

Mort

Saving on a DMP is hard as creditors may expect you to put all available cash into paying down what you owe.
When getting your budget sorted out make sure that you account for all spending. I included haircuts for myself even though I did my own. Look at car servicing, MOT and repair bills for the last few years and put down a weekly amount to cover these. Dental charges need to be budgeted for as well, you may get them for free right now but the free period will come to an end so make sure you allow for yourself. If you have pets include their insurance and vet fees as well.
You can put the money for these things and any other annual bills into a separate account which can form the basis of a safety net for you.

As long as the amounts in your budget are all reasonable you shouldn't have a problem getting the DMP setup. I found with my DMP that reducing the payments outside of the annual review process was awkward.

Also you need to inform Stepchange what your full debt position is.

fatbelly

Actually a dmp is an informal solution so you can save on the side - particularly if you do it yourself. It's often a good strategy - using full & final settlement to finish things off.

If you post a statement of affairs we can give better guidance

CL16Fan

We just started a DMP with Stepchange and they actually recommended we add savings into our budget. So we have £20 a month going into our savings pot. At first I was absolutely terrified of speaking to Stepchange but they turned out to be really sympathetic and non-judgemental.