Can I get a mortgage on a DMP

katherinealice_8

Has anyone ever had success getting a mortgage whilst on a debt management plan? 

I got myself into really heavy debt (£48K) when I was younger. My mental health really contributed to this. I always paid my payments on time and never missed any, but until very recently, I needed to move out. By doing so, I’ve had to contact creditors and offer them lower amounts as I won’t be able to pay the contractual amounts with rent and bills etc. 

I would absolutely love to get a mortgage eventually. My other half is self-employed and doesn’t have any bad credit etc. if we had the deposit, we would try and go with a different specialist - I know high street banks would be a no. 

Just wanted to see if anyone had any success?

It’s all confusing really because I feel like my debt situation will go against me regardless. Part of me wonders whether I should have just done an IVA and be done with it all in 6 years with a clean slate or pay off lower amounts for 15 years and still be penalised 😖

Have never missed a payment before in my life. 

Everything I read online sounds awful. I’m trying to make amends to the debt I racked up and pay it off, but I feel like I can’t do good either way. My biggest fear is being homeless again as I was for a while when I was 17 and my parents abandoned me. I still have this fear. And everything online makes it sound like you can never have a home. Can’t rent with an IVA for 6 years, so do a DMP to avoid that but then can’t buy a house 😖 

Just feel like a massive failure. 

sourcrates

Bad credit does not follow you around forever, the rules on this are very clear, six years is the maximum that defaults, or any regulated debt solution are shown on your credit file for, after that you are free to start again.

If your DMP is forecast to last 15 years, you may as well go bankrupt now, and in a years time you will be discharged, 5 years on most traces of the bankruptcy will be gone, only the London Gazette keeps records longer, and creditors don`t access that information for lending purposes.

An IVA is for homeowners with assets to protect, you have no assets, so an IVA is not right for you.

Six years hence a mortgage should be as obtainable for you, as it would be for a non bankrupt.

katherinealice_8

The problem I’ve got is that if I go bankrupt, I lose my car on finance which I need for my job and I won’t be able to rent anywhere. No landlord will have me if I’m bankrupt which will put me at risk of homelessness. I won’t get any help from the council either because I earn well…

katherinealice_8

sourcrates said:

Bad credit does not follow you around forever, the rules on this are very clear, six years is the maximum that defaults, or any regulated debt solution are shown on your credit file for, after that you are free to start again.

If your DMP is forecast to last 15 years, you may as well go bankrupt now, and in a years time you will be discharged, 5 years on most traces of the bankruptcy will be gone, only the London Gazette keeps records longer, and creditors don`t access that information for lending purposes.

An IVA is for homeowners with assets to protect, you have no assets, so an IVA is not right for you.

Six years hence a mortgage should be as obtainable for you, as it would be for a non bankrupt.

The problem I’ve got is that if I go bankrupt I will lose my car which is on finance and I need my car to get to work. I also won’t be able to rent anywhere if I needed to leave this place as no landlord or estate agent will accept me if I’m bankrupt. I can’t get help from the council as I don’t fit the criteria…

MalMonroe

Hi, oh no, please don't feel a failure. Many of us on here have been in debt, some larger and some smaller than yours but with the right help, encouragement and advice, we made it out. And so can you.

Do you feel able to approach whoever helped you to set up your DMP? Did you use one of the free debt help agencies? If so you could go back to them and tell them how you feel about it and that you want to change to another solution.

I do agree with sourcrates, above, that you could go bankrupt - and after six years you can start again. It does sound dramatic, yes but it is a definite way to restart and not all that scary once you've started on it.

Did you see Martin Lewis' TV programme this last week? There was a section all about debt and how to manage it. And he also gave details of the three debt help agencies that are most-recommended - National Debtline, StepChange and Citizens Advice, plus another one called Cap UK. All is definitely not lost for you.

I would urge you, though, to contact one of the free debt help agencies and talk everything through with one of their very knowledgeable advisors. They are non-judgemental, kind and friendly, all of which really do help. I know this because I used StepChange and without them, I just don't know where I would have ended up.

I do hope you manage to get sorted with a more positive plan that is suited to you and your circumstances - but you are not alone. As Martin said on his programme, there are many, many people at the moment suffering with debt. But they - and you - can definitely be helped.  All the best to you. x

katherinealice_8

MalMonroe said:

Hi, oh no, please don't feel a failure. Many of us on here have been in debt, some larger and some smaller than yours but with the right help, encouragement and advice, we made it out. And so can you.

Do you feel able to approach whoever helped you to set up your DMP? Did you use one of the free debt help agencies? If so you could go back to them and tell them how you feel about it and that you want to change to another solution.

I do agree with sourcrates, above, that you could go bankrupt - and after six years you can start again. It does sound dramatic, yes but it is a definite way to restart and not all that scary once you've started on it.

Did you see Martin Lewis' TV programme this last week? There was a section all about debt and how to manage it. And he also gave details of the three debt help agencies that are most-recommended - National Debtline, StepChange and Citizens Advice, plus another one called Cap UK. All is definitely not lost for you.

I would urge you, though, to contact one of the free debt help agencies and talk everything through with one of their very knowledgeable advisors. They are non-judgemental, kind and friendly, all of which really do help. I know this because I used StepChange and without them, I just don't know where I would have ended up.

I do hope you manage to get sorted with a more positive plan that is suited to you and your circumstances - but you are not alone. As Martin said on his programme, there are many, many people at the moment suffering with debt. But they - and you - can definitely be helped.  All the best to you. x

Thank you so so much for your comment. Was really nice to read this knowing I’m not alone. I used StepChange as my DMP provider and they were so lovely. They did say a DMP is better than bankruptcy because I do need my car to get to work and I need to be able to rent - which I won’t be able to do if I do an IVA or bankruptcy. 

My plan is to increase my payments and then in 7 years I am all done! X 

EssexHebridean

That sounds like a reasonable plan - however, an alternative could be to leave the payments as they are but stash away whatever you can into savings ready to make Full & Final offers along the line? Might mean you end up paying off less overall, and possible quicker too. 

One question I do have - when you entered into the DMP had the debts defaulted first? What does your credit file show on this? 

katherinealice_8

EssexHebridean said:

That sounds like a reasonable plan - however, an alternative could be to leave the payments as they are but stash away whatever you can into savings ready to make Full & Final offers along the line? Might mean you end up paying off less overall, and possible quicker too. 

One question I do have - when you entered into the DMP had the debts defaulted first? What does your credit file show on this? 

That’s not a bad idea! 

So I have never ever missed a payment before in my life. I’d been paying the total amount on time every month. The only reason I decided to do a DMP with StepChange was because I had no choice but to find somewhere to live and I knew that with rent and cost of living bills, there would be no way I’d be able to afford the usual debt repayment amount as well as these. I contacted StepChange as soon as I found out about my situation and set up a direct debit for end of this month - so there will still be no missed payments, just very reduced ones. 

fatbelly

As you are paying below the contractual amounts, your lenders should mark your file appropriately. They have two options:

1. Mark it defaulted. The whole entry will disappear 6 years after this date.

2. Mark it 'arrangement to pay.' The entry will stay until the whole balance is paid, and then for 6 years after that date.

Both marks will be visible to lenders and affect the offers that you can get. Most people see 1 as preferable to 2, which is why, I suspect, Essex asked the question.

EssexHebridean

Exactly why. 

Personally, if you still have time to stop the DMP at this stage, I would consider doing so.  The other advantage to debts defaulting is that it would stop interest accruing, making it far less problematic to pay them off. 

ManekiNeko

Everyone has got the money side of things covered so I just wanted to say I relate about the fear of being homeless, and how much your mental health can affect money.

I'm sorry you were left homeless by your parents, it's such a gross failure of their duty to protect you.

When I was little my living environment wasn't safe, and I thought when I grew up I'd buy a home so I could be safe.

Life didn't exactly go to plan on that front, largely due to financial abuse by my first ex. These past couple of years I've gone through a domestic abuse refuge and mental health supported living, because I was homeless for the second time due to domestic abuse, so I can relate to how difficult and frightening being homeless is and the extent to which it affects everything in your life. I was very lucky that I wasn't street homeless. It wasn't exactly a picnic being in temporary accommodation though - it was dirty, often cramped and at times traumatic.

I finally got out of refuge and bought a home last year. It's a fixer-upper for sure, but it's mine.

I can't imagine how difficult it must have been to go through homelessness at 17. I'm so happy you got through that and by the sounds of things are safe now.

I just wanted to tell you to hold fast to your dream, even though things are tricky now I believe you'll be able to buy a home of your own one day. 🏡 And in the meantime, everyone on the DFW boards is very knowledgeable and helpful and will be able to help you with dealing with your debts. Do feel free to PM me anytime as well.