DMP questions

AJK89

Hi I’ve recently entered a 3 and half year DMP with Payplan and have a few questions that I’m struggling to get any advice on. It’s my first month and safe to say it’s been messy. The time frame hasn’t fitted in with my creditors direct debits, all my accounts were up to date no missed payment over many years very good credit but my first payment to Payplan occurred a matter of days before my direct debits were due hence I couldn’t afford to pay both Payplan and my creditors, therefore I’ve incurred several missed payments most accounts have now defaulted and have accepted Payplan offers. I’m pretty sure this could of been handled better but I did as I was told. Now I’m expecting my credit to be shot. 

My partner and I have been together over a year he knows about my financial status but wants to look at buying a house in another year at least, I feel like this is going to be unlikely due to affects of this DMP am I right in thinking this? Also I know the defaults are erased after 6 years but is that 6 years from default date or 6 years from account settlement date taking into avoiding im likely to be debt free in less 4 years. I do wish I’d done this all myself I feel like I could of managed it so much better equally I have no experience so maybe this is all normal. 

sourcrates

Hi,

On these boards we always recommend you never start debt management until all your debts have defaulted, only then is your agreement terminated, only then does interest definitely stop, and only then do you have a clear 6 year window to the defaults dropping off your file, you appear to have made the unfortunate classic newbie error of rushing in too soon, without really understanding how the entire DMP process actually works.

But its not really your fault, Payplan should have explained this process to you, alas its not top of their to do list.

Your direct debts should have been cancelled months ago, its also considered good practice to have saved up an emergency fund, by not making payments to your creditors for at least 6-8 months, prior to starting your DMP, as credit won`t be available to you.

Basically you plan and map out the course of events prior to the start, it appears you have done none of that, and unfortunately this is all too common, if you had asked on here first, we could have helped you organise yourself.

Let me just run through how debt management works, as you appear to be confused, your DD`s need to be cancelled, and pronto, the payment you make to pay plan gets distributed by them, to your creditors, that is now your monthly payment to them, now you've started, you may as well continue, debt management is always going to have an adverse effect on your credit file, as you are not maintaining the contractually agreed repayments, again, they should have told you that, meaning you were prepared for it.

If you hadn't missed a payment, can I just ask why choose debt management so quickly ?

Also defaults disappear 6 years from the date the default was first registered.

AJK89

I was using my wages to pay my bills and getting through the month using credit and at 18k of debt it became a little too overwhelming. Granted it was a snap decision to go into a DMP off the back of the advice given to me from Payplan and now I know it could of been handled so much better. 

Going forward I guess I’m best to continue with what I’ve signed up, cut my losses and learn from it.  Can you help me now by advising what I should expect over the next 6 months? Thanks for your help here. 

sourcrates

Well hopefully your creditors have all stopped adding interest, if not, then write to those who are still doing so and complain.

We have a dedicated DMP support thread here -

DMP mutual support thread part 13 !! - Page 400 — MoneySavingExpert Forum

All the answers to your questions will be there, and if not, feel free to ask, they are all like minded people in debt management plans.

BlueJ94

AJK89 said:

I was using my wages to pay my bills and getting through the month using credit and at 18k of debt it became a little too overwhelming. Granted it was a snap decision to go into a DMP off the back of the advice given to me from Payplan and now I know it could of been handled so much better. 

Going forward I guess I’m best to continue with what I’ve signed up, cut my losses and learn from it.  Can you help me now by advising what I should expect over the next 6 months? Thanks for your help here. 

I disagree with carrying on. Who are you with? I was with Payplan and I cancelled within a month of being with them. I've since spoke to all Creditor's and gone through my budgets with all, they've all stopped interest, late payment fees and can offer payment holidays. But you do need to be honest with them. At first I was the same as you just everything became overwhelming and I just snap decision chose to go onto a DMP. Worst thing I've ever done. I've found managing my own finances I have a better understanding of it all. If you can cancel it and work it out yourself and think you can handle it all, I honestly would. 

Suseka97

Have to disagree with you @jadewest94 - you are effectively in a self-managed DMP, unless you are continuing to make your contractual payments to your creditors.   So a DMP is not the worst decision people can make, rather people need not to rush into setting up a DMP, whether it be self-managed or managed via 3rd party, and hold out until their debts are defaulted and that means interest and charges stop.  From that point onwards they can take control and determine what happens next.

BlueJ94

Suseka97 said:

Have to disagree with you @jadewest94 - you are effectively in a self-managed DMP, unless you are continuing to make your contractual payments to your creditors.   So a DMP is not the worst decision people can make, rather people need not to rush into setting up a DMP, whether it be self-managed or managed via 3rd party, and hold out until their debts are defaulted and that means interest and charges stop.  From that point onwards they can take control and determine what happens next.

Yeah sorry I meant, it's easier to self manage DMP rather than being with Payplan I also meant it was the worst idea for me personally. It may work for others. 

fatbelly

A lot of people start with a dmp manager (sometimes even one that charges a fee, though we would never recommend that) and then realise that they would appreciate the control that self-management brings, and that they can handle the additional paperwork.

It's an individual decision.

The sad thing here is that the excellent explanations offered by sourcrates and suseka should have been given by Payplan and somehow this didn't happen.

What I suspect is that the op has been bombarded by FCA-compliant documentation and has been unable to 'see the wood for the trees'. Professional debt advice is in a real mess in the UK and about to get worse.

Suseka97

jadewest94 said:

Suseka97 said:

Have to disagree with you @jadewest94 - you are effectively in a self-managed DMP, unless you are continuing to make your contractual payments to your creditors.   So a DMP is not the worst decision people can make, rather people need not to rush into setting up a DMP, whether it be self-managed or managed via 3rd party, and hold out until their debts are defaulted and that means interest and charges stop.  From that point onwards they can take control and determine what happens next.

Yeah sorry I meant, it's easier to self manage DMP rather than being with Payplan I also meant it was the worst idea for me personally. It may work for others. 

Ah, okay, I misunderstood... my bad  

What concerns me, often, when reading through the many... many.. posts on the DFW forum is how folks are persuaded to rush into a DMP because the 3rd party organisations such as Payplan and StepChange decree that you should.

Now, I'm not knocking them, but I really wish forums such as this were the first port of call and folks would learn how to play the DMP game.  

I could to on but its late and I'm tired... 

Zzzz_2

sourcrates said:

Hi,

On these boards we always recommend you never start debt management until all your debts have defaulted, only then is your agreement terminated, only then does interest definitely stop, and only then do you have a clear 6 year window to the defaults dropping off your file, you appear to have made the unfortunate classic newbie error of rushing in too soon, without really understanding how the entire DMP process actually works.

But its not really your fault, Payplan should have explained this process to you, alas its not top of their to do list.

Your direct debts should have been cancelled months ago, its also considered good practice to have saved up an emergency fund, by not making payments to your creditors for at least 6-8 months, prior to starting your DMP, as credit won`t be available to you.

Basically you plan and map out the course of events prior to the start, it appears you have done none of that, and unfortunately this is all too common, if you had asked on here first, we could have helped you organise yourself.

Let me just run through how debt management works, as you appear to be confused, your DD`s need to be cancelled, and pronto, the payment you make to pay plan gets distributed by them, to your creditors, that is now your monthly payment to them, now you've started, you may as well continue, debt management is always going to have an adverse effect on your credit file, as you are not maintaining the contractually agreed repayments, again, they should have told you that, meaning you were prepared for it.

If you hadn't missed a payment, can I just ask why choose debt management so quickly ?

Also defaults disappear 6 years from the date the default was first registered.

This seems to me a very sensible advice.

I have a newbie question, apology if that has been answered many times; just want this ingrained in my head.

Let's say once defauted, interests and charges stops then start the DMP, monthly payments evenly distributed among creditors however, wouldn't each creditor mark credit file with a default every month?

Could it mean even the debt is cleared in 6 years, last default (?)  marked in credit file will be at the end of 6 years and that will take another 6 years to drop off the credit file - essentially it will be 12 years to clear again??

sourcrates

Zzzz_2 said:

sourcrates said:

Hi,

On these boards we always recommend you never start debt management until all your debts have defaulted, only then is your agreement terminated, only then does interest definitely stop, and only then do you have a clear 6 year window to the defaults dropping off your file, you appear to have made the unfortunate classic newbie error of rushing in too soon, without really understanding how the entire DMP process actually works.

But its not really your fault, Payplan should have explained this process to you, alas its not top of their to do list.

Your direct debts should have been cancelled months ago, its also considered good practice to have saved up an emergency fund, by not making payments to your creditors for at least 6-8 months, prior to starting your DMP, as credit won`t be available to you.

Basically you plan and map out the course of events prior to the start, it appears you have done none of that, and unfortunately this is all too common, if you had asked on here first, we could have helped you organise yourself.

Let me just run through how debt management works, as you appear to be confused, your DD`s need to be cancelled, and pronto, the payment you make to pay plan gets distributed by them, to your creditors, that is now your monthly payment to them, now you've started, you may as well continue, debt management is always going to have an adverse effect on your credit file, as you are not maintaining the contractually agreed repayments, again, they should have told you that, meaning you were prepared for it.

If you hadn't missed a payment, can I just ask why choose debt management so quickly ?

Also defaults disappear 6 years from the date the default was first registered.

This seems to me a very sensible advice.

I have a newbie question, apology if that has been answered many times; just want this ingrained in my head.

Let's say once defauted, interests and charges stops then start the DMP, monthly payments evenly distributed among creditors however, wouldn't each creditor mark credit file with a default every month?

Could it mean even the debt is cleared in 6 years, last default (?)  marked in credit file will be at the end of 6 years and that will take another 6 years to drop off the credit file - essentially it will be 12 years to clear again??

No, defaults stay on file for 6 years, from the date the account defaults, after that they drop off your file regardless of what you do.

Accounts default just once, that status is then updated every month by the CRA`s, they are just reporting that the account defaulted, the default date stays the same, it just gets updated every month for 6 years.

You are confusing defaults with "AP" markers (arrangement to pay) these are how your file may be marked by a creditor, if you start debt management too early, before your debts default, now AP markers do exactly as you described in your post, they remain on file for 6 years after you finish making payments, so yes, potentially 12 years.

So AP markers in debt management are not good, but defaults are.