Debt Management plan

gerrard88

Sorry for the bump on this

my psp car finance up for renew in July. Will a dmp affect this?

sourcrates

gerrard88 said:

Sorry for the bump on this

my psp car finance up for renew in July. Will a dmp affect this?

As has been explained, once you enter debt management, you are effectively breaking the terms of your credit agreements, so all will eventually default, prior to that your file will be littered with late payments as well, so any form of credit will be extremely difficult or nigh on impossible to obtain.

This is where forward thinking comes to the fore, you must adapt to live without credit, and take the necessary steps to make certain you are prepared for this.

Never just rush into something on the spur of the moment, think things through, in most cases cars will have to be saved for, or downgraded to runabouts, its thinking outside the box.

gerrard88

Thanks for all advice here
It really is appreciated
i have looked at options

i have spoken to halifax our mortgage provider. They have said we can borrow 30k and add to the mortgage so our payments would be an extra 300 a month

does this seem better than a debt management plan where credit file would be impacted heavily etc?

RAS

No. Because you will be paying that £30k back for as long as you have a mortgage. So it will cost you a lot more in the long run.

No. Because if you can't pay and default on the consumer credit, it wrecks you credit record for 6 years. If you can't pay your mortgage you could lose your home.

No. Because unless you address the root cause of your debt, learn to live within budget and have a healthy emergency back up, you'll be back here in a few years with a bigger mortgage and more debt.

We had one couple on here who had re-mortgaged time and again, running up more debt every few years and stripping out the equity to cover it. Actually it was their child asking for advice as they were retiring with less income to cover an impossible mortgage debt. The only option was sell and rent.

You've failed to live within your current income for some time. And you are suggesting living for decades with increased secured costs, so reduced disposable income, without changing your lifestyle?

You really would do well to put up a joint SOA here and look carefully at how you can live within your means. Life will be a lot nicer if you tackle this now, rather than in a decade.

sourcrates

RAS sums things up nicely above, as to why you should reject the banks kind offer.

You see, we get posts like this quite frequently, from homeowners with silly amounts of debt, wanting to consolidate them into their mortgage, and asking for "advice" on what to do.

Most will go ahead and do it anyway, as its the easy option, but they fail to change there spending habits, once the debt is transferred to their mortgage, they see that veil descend again, and all that available credit proves to be too tempting, and within a year or so, they have wracked up another 30k of silly spending, only now they can`t service it, and the mortgage as well, so they are back for advice again.

Unfortunately the advice this time won`t be what they want to hear.

Please, please think very carefully before you commit to this, this is your one and only chance to step back from the edge, yes debt management is not going to be kind to your credit file, but you will be paying the debt off with your own money, not the banks, as the debt falls, so do your worries, and your house will be safe, with no extra inflated mortgage payments, 30 years is a very long time to repay consumer credit debt, a very long time.

gerrard88

Thanks all

what is a SOA? Sorry if I sound stupid and have asked lots of questions

also I am sure Halifax told me it would he 10 years for the extra borrowing to be paid off and I would assume the payments would then be dropped.  Didnt know it would be foe the whole mortgage

sourcrates

gerrard88 said:

Thanks all

what is a SOA? Sorry if I sound stupid and have asked lots of questions

also I am sure Halifax told me it would he 10 years for the extra borrowing to be paid off and I would assume the payments would then be dropped.  Didnt know it would be foe the whole mortgage

SOA- Statement of affairs, a budgeting tool in layman's terms.

SOA Calculator (stoozing.com)

EssexHebridean

It could possibly have been a secured loan that the bank were offering you - same thing though, it will be secured against your home (so “like a mortgage”) and of you find yourself unable to pay, it puts the roof over your head at risk. Don’t do it. 

The SOA is a great starting point because it will really set out all your outgoings in one place so you will be able to see exactly how much you should have left after your priority bills, plus things like car costs, budgeted savings for things like presents and clothing and whatever else needs accounting for. For a lot of people arriving on here, the first time they’ve ever really had a household budget has been when they’ve drawn up their SOA for posting here, and for others, it’s give them a “reset” and made them focus back on a proper budget again. 

You’re evidently very anxious about the idea of a DMP - do you think you could set out what some of your fears are so we might be able to help set your mind at rest?

gerrard88

If i go with a DMP. I am happy to have no credir cards

I just worry about renewing any utility bills etc as gas and electrict is in my name

My partner earns 46 a year. I earn 28

my pros of a DMP are low monthly payments. But happy I can build up my finances again

RAS

Why would you need to renew your gas and electricity?