Preparing for a DMP

abaka

Hi,

I’ve been on a debt free journey for about 6 months and have seen my credit utilisation fall from around 30k to 20k since June.  It has been achieved through a combination of sacrificing and putting everything into debts, hard work, selling personal items and a bit of a lump sum for an inheritance.

However, as I prepare to ride the cost of living storm and potential for mortgages to skyrocket next year, I’ve today been accepted for a top up on a loan from Halifax which will see me 15k to clear my credit cards and means I’ll owe 20k on a personal loan.

The rate is affordable to me if I manage to get a mortgage renewal at around 7/8%.  Anything more than that and I won’t be able to afford anything.  But that would be the case even with the credit card debt.  It just means I can pay the £369 a month on the two loans and then pay the other £600 I pay on the cards at present into savings and prepare for next year….and if things do get really bad, it means I only have one debtor if I switch to DMP, and only need one default.

My only concern is if I was to go on a DMP for £20k worth of debt, would Halifax be more open to pursuing a charging order on the house and refuse the DMP?

I would hope that it won’t come to it and I can pay the loan as it stands and survive any extra mortgage charges…but I’m preparing for the worst and making sure I have options if needs be!

fatbelly

It's probably safer to have a number of small debts spread over many creditors rather than one debt, but there's not a lot in it.

Before you jump into a consolidation loan, have you checked to see if you can get some/all of your credit card debt on to 0%?

https://www.moneysavingexpert.com/credit-cards/balance-transfer-credit-cards/

Rob5342

Have you checked if the credit card debts are enforcable? If they are older then there is a chance some might not be, but by consolidating them all into one loan you will be guaranteeing the whole lot is enforcable. If you keep up with loan it wont matter but if you end up on a dmp it could be quite important.

sourcrates

DMP`s are never refused, if a certain creditor doesn't like what you say you are going to pay them, they just offload the debt to someone else who will accept it.

There is no acceptance or non-acceptance, as long as you have sufficient disposable income to play with, all debt management is, is an arrangement to pay basically, anyone can do it.

Now is not the time to be taking out a loan, especially for consolidation, your mortgage is a priority debt, none of the others are, cards/loans etc are all non-priority debts.

abaka

Atm, I’m not paying any interest on anything beyond my existing loan.

Im also not currently struggling to pay my mortgage and at present I usually have around 5-600 a month spare to pay debts.  This loan will allow me to consolidate and put the other 2-350 away into savings.

If I did take out the loan it would be affordable even if my mortgage was to go up by an extra 2-300…Anything beyond that would be where I would have to look at a DMP.

I’m opting for not taking it though.  Continuing where I am right now might be the better option.

I do worry that I will inevitably end up on a DMP pending on what happens next year when I have to refix my mortgage but perhaps I don’t take on more debt at this point and see where I am next year.

sourcrates

I would strongly support that decision not to get the loan, we see it all the time on here, people take these loans, in the mis-guided thought that their disposable income will increase, but what they fail to do, is take action to stop there bad spending habits, and a few months down the line, they have accumulated further debt, and now owe twice as much as before.

See how things pan out for you, a DMP is not the end of the world.

abaka

5 months ago I would have agreed with you and would have rushed into the loan and just increased the debt!!

Back before I started taking my debt seriously, I was overspending by near 1k a month, so I was effectively increasing the debt gradually each month.  However since June I haven’t put a single thing on credit card (I’ve made two purchases on cards and both were paid off straight away), and I haven’t went anywhere near my overdraft.

So I don’t think the loan would see my slip into old habits, as I wouldn’t be risking my finances I would suspect if I made another stupid decision with finances, I’d be losing my wife and daughter and I’m never going to risk that happen!!!

But I think I shall stay as I am right now and cross the bridge of extra mortgage payments when I come to it. A DMP might be in my future but I should exhaust all other areas before I get to that and right now I’m only paying interest on 6k of my debt and it looks like I can get balance transfers when the others expire.  I would welcome the relief of having one debt rather than 5-6 like I currently have but, by doing this loan is going to cost me 6k in interest and that 6k would be better suited to my debt!!!  

Rob5342

sourcrates said:

See how things pan out for you, a DMP is not the end of the world.

I'm on a DMP and agree with this. DMPs harm your credit record but sometimes it's better to get going on one and get it over with than to keep pushing it further and further down the line. You dont necessarily have to start one now, but don't let things get worse when a DMP could really help.

abaka

As it stands now, I’m comfortably paying all of my bills/mortgages and I’m not paying interest on any bar my existing loan so a DMP.

mu circumstances could change in April as I’m in a temporary role in work until March, it will be made permanent but I’ll have to apply.  If I get it, I keep earning what I’m earning now, if I don’t get it, I fall back to my substantive post which is a bit of a drop but again, still enough to meet all minimum payments.  

Even if my interest rate on my mortgage pushes my monthly payments up by £400 which seems like worst case scenario, I SHOULD be able to meet them.

So there is a possibility I might need a DMP
in the future if I don’t get my job permanently and if my mortgage goes up by more than I’m predicting but there’s too many variables to predict.  Right now I’m going to keep plugging away as I am and see what happens come October when I have to refix my mortgage.