Is this a reasonable approach to a DMP?

Billy_Dandy

Good evening to all,

I have been following the DMP Mutual Support thread and I have gleaned a wealth of information.

I do believe that it is in my best interest to commence a Debt Management Plan.

I cannot carry on stressing every month as to whether we can afford to put fuel in the car.

My current debt to eight creditors is £30,000 if the interest and charges ceased now.

This is in two loans; one mail order catalogue; some credit cards and a PayPal credit balance.

I am currently paying £1200 per month to service these debts (all minimum payments) but there’s is nothing left at all. We don’t even go out for a cup of coffee.

All the debts for the DMP are my own and I will be entering into this solo.

We have a cat and dog, both are getting on in years, but we do not have pet insurance. We did have, but the premiums increased, and I could no longer afford it.

We have no savings for emergencies.

We have no life insurance, which I should be looking into.

We do not drink or smoke.

We don’t go on holiday.

My wife is disabled so we have expenses such as powered wheelchairs; adjustable bed; riser recliner chairs. All of which can break down and need either repairing or replacing.

I am retired with an occupational pension. My wife is about to receive her state pension.

There won’t be any pay rises or overtime to be worked.

Is it simplistic to think I can offer £850 per month for 36 months which would clear current balances once interest is frozen (although I'm aware that it'll take a few months for the accounts to default so I may have to adjust the length of time to pay to take that into account.)

 

What happens with a ‘Review’ of the DMP?

Does that happen if I self-manage?

 

Thank you for your time and consideration in responding to my query. 

2021rdsunshine

Hi Billy_Dandy
if you self manage your DMP you are in control of what you pay to creditors. And that means that you take into account all your priority debt including things that you can’t afford at the moment because you are servicing your non priority debts in full , like for example your pets insurance and an emergency fund are essential. 

It might take a while until creditors default the accounts and freeze interest. In my case has taken about 8 months for defaults to happen. Also I don’t know if you considered any other debt solution available like a DRO, depending on your personal circumstances obviously.

Billy_Dandy

Thanks for the reply. I did run it past Stepchange.  DMP or bankruptcy were the options after doing the online assessment but the DMP was their recommendation. 

Grumpelstiltskin

OK you are in the right place now.

First thing to do is stop paying all your unsecured debts, don't panic nothing terrible will happen.

Secondly have you read through this thread?
In Debt and Wannabe Debt Free? First Steps! — MoneySavingExpert Forum

Fill in an honest SOA and put it up here.

It is important you don't rush into any decision, Stepchange will encourage you to start a DMP ASAP that is not the best way to go, you nee to be sure you are doing what is best for you not your creditors.

A DRO may be the best way forward if it is possible or trying to get your debts written off because of your situation.

Please keep coming back for the best advice.

gwynlas

As above and you do not need to disclose SOA to creditors just tell them what you can afford to pay each month. I can understand that you want to clear debts as soon as possible but you need to create emergency fund and still have a reasonable quality of life including going out for coffee if it gives you pleasure,

I would suggest smaller monthly sum be offerred for payment and perhaps save surplus to make settlements if these are offerred

DisabledDan

Billy_Dandy said:

Good evening to all,

I have been following the DMP Mutual Support thread and I have gleaned a wealth of information.

I do believe that it is in my best interest to commence a Debt Management Plan.

I cannot carry on stressing every month as to whether we can afford to put fuel in the car.

My current debt to eight creditors is £30,000 if the interest and charges ceased now.

This is in two loans; one mail order catalogue; some credit cards and a PayPal credit balance.

I am currently paying £1200 per month to service these debts (all minimum payments) but there’s is nothing left at all. We don’t even go out for a cup of coffee.

All the debts for the DMP are my own and I will be entering into this solo.

We have a cat and dog, both are getting on in years, but we do not have pet insurance. We did have, but the premiums increased, and I could no longer afford it.

We have no savings for emergencies.

We have no life insurance, which I should be looking into.

We do not drink or smoke.

We don’t go on holiday.

My wife is disabled so we have expenses such as powered wheelchairs; adjustable bed; riser recliner chairs. All of which can break down and need either repairing or replacing.

I am retired with an occupational pension. My wife is about to receive her state pension.

There won’t be any pay rises or overtime to be worked.

Is it simplistic to think I can offer £850 per month for 36 months which would clear current balances once interest is frozen (although I'm aware that it'll take a few months for the accounts to default so I may have to adjust the length of time to pay to take that into account.)

 

What happens with a ‘Review’ of the DMP?

Does that happen if I self-manage?

 

Thank you for your time and consideration in responding to my query. 

If you have assets like a house or car of reasonable value then a DRO will not work for you, otherwise it is a good way to get rid of debt in a year if you have little or no disposable income.

The fact that you think you can afford £850 a month for 36 months does make we wonder if the IP would not think you qualified for a DRO.

For a DMP you will stop paying all your debts, I wrote to all mine and told them explicitly that I could no longer afford to make any contribution to my debts.  I had been making lower and lower fixed payments, then enough was enough.  They realised I could not contribute and they mostly issued defaults pretty quickly.

The BMP will trash your credit record (which is no bad thing as it stops you getting into the debt cycle again), so what I am wondering is whether it is worth you just not paying any of the debt.  You will need to go off radar as far as your creditors are concerned and never buy anything on credit again. 

The money never existed, it was invented as part of the Fractional Reserve Banking system, when you are defaulted the bank sells the debt for between 5p and 12p in the pound and is then allowed to take the loan off it's books.  This means it can lend the same amount to someone else, but your debt is now owned by a 3rd party, which is bad for our economy in my opinion.  If you refuse to engage with these 3rd parties for 6 years from date of default and do not make a payment or acknowledge the debts then they will become statute barred and unenforceable    This is not an easy option and it is possible that a debt is taken to Court 5 years into the 6 years but only one of my consumer credit debt went that way.

As with DRO if you have assets then this route is not an option.  It helps if you move, or can move on paper because it keeps you one step ahead and reduces the anxiety.  

Sometimes just knowing these options are available reduces pressure but you can still go down the DMP route, you will get a lot of support on this forum.

Floss

Hi @Billy_Dandy, I would recommend that you do your SOA, and stop making any more payments to your creditors.

When you've done your SOA and stopped payments, whatever figure is available for repayments should be saved in an easy-access ISA for your emergency fund, until your accounts have defaulted & you have set up payment plans with each creditor. That fund is to cover things like a new washer, any urgent repairs, vet bills, roof problems etc - emergencies that previously you would have paid for by credit card. Keep adding to this every month (there is a space for savings in the SOA) so you have something tucked away for an emergency.