what if there is no money left for DMP???

R.j.Belcher

Hi have had a DMP for almost a year and currently paying about £360pm. What is worrying me is the cost of living crisis. We have been manageing fine with the payments but our mortgage (interest only tracker) has gone up £200pm, which my wife has paid for. However if interest rates do go to 6% as predicted then that will add another £600pm which will mean my DMP will not get paid at all. What happens in those sort of cases, would I have to go bankrupt? Really interested if anybody knows?

Rob

RAS

Hi, how much do you owe?

R.j.Belcher

I owe around £31k on loans and CC.

sourcrates

You're a homeowner, you cannot go bankrupt as your home would be at serious risk.

Unsecured consumer credit debts are all deemed to be non-priority, which means if there is not enough in your budget to pay them, then so be it, your creditor will just have to accept that.

Affordability is key these days, as is communication, if you are struggling to pay, you must tell your creditors as soon as possible.

If your budget says you have no money, then the creditors will put your accounts on hold, usually for 3 months, after which they will check up on you, if the situation improves, a more affordable payment plan can be worked out, if it doesn't improve, then more hold time and/or write off`s become more likely.

That is how the majority of lenders operate these days, the same budget would be provided to the court, and they can also decide whether you should pay any judgement, or not, based on that budget.
So, taking legal action is pointless if you can`t afford to pay.

The creditors just have to take the hit, they can`t take what you do not have, as affordability is everything in this current climate, so I would not worry too much about your bills rising, lots of folk are in the same boat that you are, in the majority of cases, you will be dealt with sympathetically.

R.j.Belcher

Thanks sourcrates thats very useful to know. We are ok at the moment but getting worried by such massive potential rises in rates.
thanks
Rob

Makingabobor2

When I lost my job we had to drop our payments from over £800 a month. We gradually lowered the payments  and in the end had to offer only £1 a month to most of the creditors. They were more than happy to take it from us, no problems

fatbelly

As above, if your surplus drops to zero you go to £1 token offers or stop paying altogether

EssexHebridean

I'd suggest you put together a new SOA so you can see the whole picture, and how exactly your budget is going to be affected. The debts can all be grouped under a single line called "DMP" as they are all being paid on that single payment, right now. 

At the end of the day, they can't have money you don't have in the first place, but the best way of dealing with the worry in the first instance is to arm yourself with information. The process might also show you if there are any areas of expenditure that have crept up a little without you noticing - for example a review of budgets often reveals to people that the dreaded "top up shops" have been creeping back in - meaning an extra £100 a month has been going to groceries, or that spend on petrol has increased - partly because of the rising costs but also because back when things were new and shiny everyone was focused on combining journeys, not driving if they could walk or cycle etc, but over time that's slipped a bit so the car is actually doing more miles again. Regardless of the outcome of the review though - it means you have taken a step to get yourself fully informed and have taken back control again - remember what a relief it was at the beginning of the process when you made the decision to start getting the debts tackled? 

Once you have the real figures, you can then speak to whoever is managing your DMP to tell them that changed circumstances mean you can now only afford X amount.