DMP

KayB85

I have today been in touch with Payplan and they have recommended a DMP over 8 years to clear my debts. But I’ve read another post that says it’s not a good idea? Does anyone have any experience of payplan or a DMP? I’m worried I might do the wrong thing by agreeing too it? 

sourcrates

Well, if you give us a few more details about your situation, we may be able to help you.

For example -

How much debt do you have?
Homeowner or non-homeowner?
What`s your Income/expenditure?

If you can answer these 3 questions, I can give you a quick basic answer.

KayB85

Hiya, 

£30k 
homeowner
income of £1500 a month

sourcrates

KayB85 said:

Hiya, 

£30k 
homeowner
income of £1500 a month

As a homeowner you only really have two choices when it comes to unaffordable debt, and they are either debt management (DMP) or an IVA, which is a formal insolvency solution, but that protects any assets you may have, such as a house.

Pay plan may have deduced that a DMP is the preferred choice for you, it really depends how much disposable income you have monthly as well you see, debt management is an informal solution, which you can control to some extent, were as an IVA is a formal debt arrangement, which you have very little control over.

They most likely thing a DMP would be a better choice for you, what do you think about that?

KayB85

Thankyou

It does seem like a better option for me after discussing my situation. And it would alleviate a lot of stress and worry knowing my debts are being cleared. All be it slowly, but I keep seeing people saying they shouldn’t have rushed into a dmp and wait for defaults etc and I’m wondering why?  

KayB85

I was just wondering if anyone lose has used payplan and if they were helpful 

sourcrates

KayB85 said:

Thankyou

It does seem like a better option for me after discussing my situation. And it would alleviate a lot of stress and worry knowing my debts are being cleared. All be it slowly, but I keep seeing people saying they shouldn’t have rushed into a dmp and wait for defaults etc and I’m wondering why?  

Very simple reason why.

Defaulted accounts stay on your credit file for 6 years from the date of default, then automatically drop off your file on the 6th anniversary.

Unlike "arrangement to pay markers" or "AP" markers, they stay on your credit file for 6 years after you repay the debt, so your credit file is affected for a much longer period than if you defaulted first.

Nothing to do with which debt solution you choose, or which debt charity you go with, its simply about thinking about your position as a whole before you jump in headfirst.

If your credit file is not important to you, go ahead as soon as you like, if it is of some importance, non-payment for 6-8 months usually encourages sale of the debts and a default to be registered, which also has the benefit of all interest being frozen once defaulted as well.

Most people prefer this route, although, like you, were unaware of it prior to entering a DMP.

fatbelly

KayB85 said:

I was just wondering if anyone lose has used payplan and if they were helpful 

They don't charge a fee and a dmp is an informal solution. 

At some point you may well want to go self-managed but it's not a bad idea to let Payplan get things set up for you.

KayB85

Can I ask what self managed entails? Sorry I’m new to all this? Is it not the same to have them do it or do you liaise with the creditors yourself? 

sourcrates

KayB85 said:

Can I ask what self managed entails? Sorry I’m new to all this? Is it not the same to have them do it or do you liaise with the creditors yourself? 

It`s a posh name for paying your own bills, that`s all.

Instead of making the contractual repayment, you instead pay what your disposable income allows.

Obviously, you must write to your creditors, let them know you're in financial difficulty, they will automatically refer you to the debt Charites at this point anyway.

Once you`ve had any breathing space or time to save an emergency fund etc, you ask for their payment details, input them to your online banking, and make the agreed lower monthly payment, quite easy, and simple to do.

Or you can let Payplan or Stepchange do it for you, there role is basically akin to PayPal, a 3rd party payment arranger, that`s all, there is very little in the way of negotiation or management, they simply process and distribute your payment on your behalf.

KayB85

sourcrates said:

KayB85 said:

Can I ask what self managed entails? Sorry I’m new to all this? Is it not the same to have them do it or do you liaise with the creditors yourself? 

It`s a posh name for paying your own bills, that`s all.

Instead of making the contractual repayment, you instead pay what your disposable income allows.

Obviously, you must write to your creditors, let them know you're in financial difficulty, they will automatically refer you to the debt Charites at this point anyway.

Once you`ve had any breathing space or time to save an emergency fund etc, you ask for their payment details, input them to your online banking, and make the agreed lower monthly payment, quite easy, and simple to do.

Or you can let Payplan or Stepchange do it for you, there role is basically akin to PayPal, a 3rd party payment arranger, that`s all, there is very little in the way of negotiation or management, they simply process and distribute your payment on your behalf.

That’s really helpful. I think I will start with a DMP and go from there as it seems the most sensible Thing to do and will lower my monthly outgoings which at the moment are swamping me.
Just working out who to use out of payplan or stepchange as reviews are leaning more towards payplan as so many negative towards step change