Later stage of DMP - next steps?

MisterTubbyBear

Hi all, I'm hoping to get some sage advice from the hive mind - I'm a newbie here so apologies if I'm posting this in the wrong forum.

I've been in a DMP for the best part of 15 years after managing to face up to the damage done by gambling addiction. At the point it started I was working full time and my wife was looking after our kids full time - I was able to keep our mortgage ticking along (interest only) while slowly chipping at the various debts.

It's now at the stage where we can see the end (almost) in sight and we're trying to work out what would be the best next step to take. My wife is working full time now, but the mortgage only has 3 years left on it and we've been interest only for a long time so there's going to be a big chunk to deal with when that comes to an end.

Meanwhile the DMP has two loans left on it which currently has about 15 months left on it. In addition we have a couple of credit card debts in my wife's name and one small credit card debt in my name (the DMP is in my name) which I took out with a view to credit-building but I'm not sure if that was a sensible idea or not.

So.. in an ideal world we'd be able to look ahead and consider maybe even moving house. Our kids are teenagers now but we've not had the option of moving anywhere bigger because we've been constrained by the financial hole I dug for us. At a bare minimum I need to make sure that we can at the very least get a new mortgage on our current place so we don't get it repossessed when the mortgage ends.

My quest for advice is.. what are our realistic options for this year mortgage-wise? If, say, we could get a loan in my wife's name that could potentially consolidate what's left on the DMP plus the credit cards, would that potentially mean that in 6-12 months we'd be candidates for a new mortgage application? Or does the presence of StepChange payments on a bank statement mean that I'm basically a lost cause mortgage-wise for the next few years? I really have no idea how long it takes for credit ratings to heal or to what extent paying a DMP off has any kind of stigma attached to it as far as mortgage lenders are concerned. As a result I don't know if it's best to consolidate now that the numbers make it feasible just so we can get the DMP gone from our bank statements. Or if it's best just to keep my head down for the next 15 months, get the thing cleared off and start with a clean slate in the middle of next year.

Sorry for the rambling post but hopefully it makes sense. If anyone can offer any thoughts or advice I'd be hugely grateful. Thank you.

Grumpelstiltskin

Hold on, forget the mortgage at this moment and concentrate on the debts.

How much is left on the DMP?

Do the debts show up on your credit report, if so what does it say?

The credit card to build up credit rating is only a good idea if it is paid off in full every month.

Do not think about consolidation at the moment.

ManyWays

Never consolidate debt that is at 0%, ie the DMP debts.

The two loans left, what balance remains, who was the original lender and have they been sold to debt collectors? If the current creditor cannot produce the CCA agreement for the debt, it is unenforceable in court and you can simply stop paying. 

How large is the mortgage and have you worked out what you would have to repay a month in a repayment mortgage, ignoring your credit file problems for the moment?

MisterTubbyBear

Thanks for the comments.

I think that gets to the heart of the issue - I'm trying to work out if paying a "respectable" loan at 7% looks better on our bank statements (in the eyes of mortgage lenders) compared to having a payment going out to StepChange every month, even if the interest is 0%.

The total debts (DMP loans at approx 15k) and wife's credit cards (approx 6k) are theoretically going to be paid off in about 15 months at the current rate we're able to repay. The mortgage still has around 100k left on it and about 2.5 years left so switching to repayment at this stage wouldn't be affordable. The house is probably only worth about 140k so there's not a lot of equity there to help matters.

We're both 47 so we're thinking that we're still young enough to get a mortgage of reasonable length but I'm concerned that if I let the DMP run until early to mid 2026 (when it's due to end) then by the time we get to the end of the mortgage in 2027 we might be in a position where no mortgage lender wants to lend us any money (either to get a new mortgage on this place or somewhere else entirely) because the DMP is still too recent as far as bank statements and credit history are concerned.

P.S. My credit-building card is only ever used once a month for one of our weekly shops and then repaid immediately in the (possibly naive) hope that it makes a positive difference to my credit score. And, to be fair, my credit score has crept up from around 500 to almost 600 in the last couple of years.

MisterTubbyBear

Forgot to add, the two remaining loans are still with the original lenders as far as I can tell, HBOS, and some sort of subsidiary of Virgin and both are now receiving quite substantial payments per month as they're now the only two left on the plan (which had 19 different lenders on there at the beginning)

Grumpelstiltskin

MisterTubbyBear said:

Forgot to add, the two remaining loans are still with the original lenders as far as I can tell, HBOS, and some sort of subsidiary of Virgin and both are now receiving quite substantial payments per month as they're now the only two left on the plan (which had 19 different lenders on there at the beginning)

What des your credit report say about the loans?

OK you have done the right thing with the credit card.

MisterTubbyBear

Grumpelstiltskin said:

MisterTubbyBear said:

Forgot to add, the two remaining loans are still with the original lenders as far as I can tell, HBOS, and some sort of subsidiary of Virgin and both are now receiving quite substantial payments per month as they're now the only two left on the plan (which had 19 different lenders on there at the beginning)

What des your credit report say about the loans?

OK you have done the right thing with the credit card.

They were both reporting me as defaulting for a few years but that stopped a little while ago so as far as I can tell now the only indication of the debts being outstanding is the monthly presence of the DMP repayment on my bank statement.

Grumpelstiltskin

OK You have a number of choices.

Cancel Stepchange and pay the creditors directly yourself. That will remove Stepchange fro your bank statement it will just show monthly payments to X & Y.

Seeing as the loans are old have you ever requested CCAs?

National Debtline | Sample letters - Information about your agreement under the Consumer Credit Act | National Debtline

If who ever is collecting the payments now can't produce the loan agreements then you can just stop paying them, they can't take you to court for agreements they can't produce.

If you decide to go down this route you can stop payments as soon as you send the CCA requests and you could use the spare money to pay down your wife's credit card.

Have a think about this.

MisterTubbyBear

Thank you - I'll look into that and see if that might end up giving us another option. 

Really appreciate you taking the time to offer advice.