DMP - Should I?

rebeccam81

Hi everyone, this is the 1st time i've ever written on one of these forums so here goes..........
I am considering entering into a DMP with Payplan and although on the surface it seems like a good option I can't help thinking it's too good to be true   It would relieve a huge amount of stress for me but I am scared to death!  Anyone got any experiences they could share? 
One of my main concerns in entering into anything like this is how it will affect my mortgage?  My current mortgage is an interest only one (joint with my husband and our only financial link) which we did when we moved a couple of years ago to give us time to sort out a couple of things, we are planning to change that to repayment in September next year when it is due to be renewed but I'm not sure how me being in a DMP would affect that?
My other worry is the fact that if I go ahead with the plan Payplan have told me to cancel all my direct debits and pay a token payment to creditors while plan is being set up, I have NEVER missed a payment in my life and this terrifies me!

Suseka97

You say that you have not missed any payments yet, so what caused you to contact Payplan?   Presumably though, if Payplan have recommended a DMP then it is the right course of action for your situation.

A DMP is certainly a good option for people who are homeowners or who are in occupations where formal arrangements such as Bankruptcy or IVA would have a negative impact on their careers.  

As for the joint mortgage, I can't really answer the question about moving from an interest only to repayment  - but when you enter into the DMP your credit file will be affected.  I was able to switch products, although I've always been on a repayment mortgage, with my then mortgage company without difficulty, but that's because in that situation the mortgage company doesn't carry out any sort of hard search on your file.  

It's always a 'deep breath' moment when stopping payments for the first time - but it's a necessary one.  I hope PP have also advised that you shouldn't be banking with an organisation associated with your debts (credit cards, loans or overdraft) if you are then you should set up an new and separate bank account before heading down the token payment route (although, personally, I think tokens are a waste of time) and you should also give yourself at least 6 months of non-payment to save up that all important emergency fund.  Ideally, if heading down the DMP route you want your debts to be defaulted which means all future interest and charges stop.

You might want to head over to the DMP mutual support thread (its a biggie, so grab a coffee...) which is filled with lots of useful advice and experiences from people in the same position as you now find yourself.

EssexHebridean

yes - the first thing that struck me here was that with no defaults you could be in for a long road before your credit history starts looking up much, and that in itself can be demoralising. 

it sounds as though you're keeping your head above water right now but only just, and it's feeling like more of a struggle each month - would that be a fair assessment of the situation? If so, then it sounds like you've done the right thing by asking for ways forward. 

I'd suggest your first port of call is to put together your SOA (Statement of Affairs) hit "format for MSE" at the end and post that into here for us to take a look over. It may well be that we can immediately identify a few savings which you have missed, and that in itself could well give you some breathing space to increase your options. When completing the SOA make sure it's an open and honest reflection of how things are now - trust me we have no preconceptions about what we "expect" to say, and it will only do you any good if it has the accurate figures in it. that's a good first step to see what might work for you. I would say that moving to a DMP without accounts having defaulted though is not a great plan, and also you definitely want to make sure you have your emergency fund saved first off, assuming you don't already have one. 

Sncjw

I second post soa before jumping to dmp

rebeccam81

Thank you for all your replies.  I am keeping my head above water at the moment however my credit cards are all on 0% deals are all about to come to an end and once that happens I will have no money left and will only be making minimum payments hence why pay plan have suggested a dmp….I am just trying to avert disaster before it happens.  I have spoken to a financial advisor today who has advises I should sort my mortgage before I go ahead with dmp so that will be the initial thing I need to do as my credit rating will inevitably take a nose dive if I go for the dmp.  I am feeling sick to the stomach about it and above all completely ashamed and alone.  

EssexHebridean

No need to feel ashamed, and as for alone, you’re not that either now you’re here. 

Kakiste

Agree with others if you do decide to go down the DMP route- stop paying for a few months before you start paying via your DMP- that way you'll have made sure that the companies have defaulted you then rather than more than a year into your DMP as was the case with mine. If you are going to default get them in early and that way the clock down to the 6 year drop off point starts ticking straight away. 

Suseka97

rebeccam81 said:

Thank you for all your replies.  I am keeping my head above water at the moment however my credit cards are all on 0% deals are all about to come to an end and once that happens I will have no money left and will only be making minimum payments hence why pay plan have suggested a dmp….I am just trying to avert disaster before it happens.  I have spoken to a financial advisor today who has advises I should sort my mortgage before I go ahead with dmp so that will be the initial thing I need to do as my credit rating will inevitably take a nose dive if I go for the dmp.  I am feeling sick to the stomach about it and above all completely ashamed and alone.  

I would have suggested the same had you not mentioned you planned to do this next year - so if you can bring it forward, then it makes sense to do so.  Try and put yourself on a good fixed term product and then so when/if you go down the DMP route you won't have to think about that for a while - but remember that it is easy to switch to different products staying with your current lender without a hard search, so you'll be fine if you stay with your lender for the duration of the DMP.

Above all, there no need to feel shame or alone - as has been said by @EssexHebridean.  If you go onto the thread I suggested you'll realise just how many people out there are in the same position regarding finances, all with different backgrounds and reasons.  There's no shame in taking control of your financial future and doing what you need to do to stop things worsening.  That takes gumption