Considering a DMP

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This discussion was created from comments split from: DMP mutual support thread part 13 !!.
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  • rocktron_amp
    rocktron_amp Posts: 33 Forumite
    Part of the Furniture 10 Posts Name Dropper Combo Breaker
    Hello

    I am considering a Debt Management Plan

    How does a DMP effect the credit rating?

    I have a HP car that is due December 2025. I want to move from Hyundai to some other manufacturer. I will give back the vehicle after the terms and go with another car maker. How will a DMP impact my credit rating and therefore affect the ability to get the new car from say Seat or Kia or whatever finance company that deals with things like that.

    If you want to move house (home owner) , sell / buy, how does a DMP affect your chances of getting a new mortgage?

    With a DMP,  how to handle 2 or 3 year fixed rate mortgages? How does that work?

    Cheers all any

    I could ask many more questions: getting divorced, separated and care, but  will stop right there.
  • sourcrates
    sourcrates Posts: 31,287 Ambassador
    Part of the Furniture 10,000 Posts I've been Money Tipped! Name Dropper
    Hi,
    Have moved your post to a new thread as the DMP support thread doesn't see that much traffic.

    Debt management means that you will default on your debts, defaults are bad for obtaining credit, so don`t expect to get any for at least the next 6 years.

    Mortgages are possible, with the right broker, re-mortgages with the same lender do not require a credit check normally, so will be unaffected by debt management.

    Expect to have to save an emergency fund for the things you might need that would otherwise have been funded by credit.
    I’m a Forum Ambassador and I support the Forum Team on the Debt free wannabe, Credit file and ratings, and Bankruptcy and living with it boards. If you need any help on these boards, do let me know. Please note that Ambassadors are not moderators. Any posts you spot in breach of the Forum Rules should be reported via the report button, or by emailing forumteam@moneysavingexpert.com. All views are my own and not the official line of MoneySavingExpert.For free non-judgemental debt advice, contact either Stepchange, National Debtline, or CitizensAdviceBureaux.Link to SOA Calculator- https://www.stoozing.com/soa.php The "provit letter" is here-https://forums.moneysavingexpert.com/discussion/2607247/letter-when-you-know-nothing-about-about-the-debt-aka-prove-it-letter
  • RAS
    RAS Posts: 35,181 Forumite
    Part of the Furniture 10,000 Posts Name Dropper
    A DMP affects your credit rating for 6/7 years if you allow the debts to default first. Do not expect to get a decent mortgage on a new property until towards the end of that period, go over to the Mortgage subforum and ask the mortgage advisors there.

    Renewal of a fix requires only going into the account, selecting the best deal with your current provider and confirming the new fix. Moving elsewhere is difficult.

    HP is also going to be difficult, at least in the early years. Expect to keep running the old car.
    If you've have not made a mistake, you've made nothing
  • fatbelly
    fatbelly Posts: 22,749 Forumite
    Part of the Furniture 10,000 Posts Name Dropper Cashback Cashier
    If you complete the HP, then the car becomes yours and the monthly payment is now available for other purposes like paying your debts down.

    A DMP  is for when you can't make the contractual payments. It's not an easy option to allow you to take credit elsewhere.

    Give us an soa and let us see the whole picture

    https://www.lemonfool.co.uk/financecalculators/soa.php

  • ManyWays
    ManyWays Posts: 1,164 Forumite
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    edited 31 January at 9:20AM
    I have a HP car that is due December 2025
    Is it HP so you own it, or is it PCP with a balloon payment? A DMP will make it very hard to get new finance at a cheap rate. BUT if you have a lot of other debts, this may be hard anyway without a DMP.

    If you want to move house (home owner) , sell / buy, how does a DMP affect your chances of getting a new mortgage?
    Some mortgages are portable. If you want to borrow more or change lenders, this will usually be very expensive in a DMP as you will have to go to bad credit lenders. THE SAME BUT AS FOR CARS, with a lot of other debts you may find it hard to pass any mortgage affordability checks anyway, so the problems isnt really the DMP, its the large debts.
    With a DMP,  how to handle 2 or 3 year fixed rate mortgages? How does that work?
    With the vast majority of mortgage lenders getting a new fix when in a DMP isnt a problem, who is your lender? 

    A Statement of Affairs will help to give more specific advice.
  • rocktron_amp
    rocktron_amp Posts: 33 Forumite
    Part of the Furniture 10 Posts Name Dropper Combo Breaker
    edited 31 January at 1:32PM
    Well I don't think a DMP will work for me then. I don't want bad credit.
    The other options are 1) Equity Release  2) Snowball belt and braces  3) Breathing Space 4) Ostrich

    With Option 3 -Breathing Space -  I'd only do that, if I lost my job. I'd have no choice but to pull the plug.

    I had Halifax mortgage, moved to Clydesdale. I don't think the mortgage provider is the issue or will be. Because I worked as a bonifide contractor before the pandemic, I found an independent mortgage broker who specialised in contractors / self-employment. But now since 2021, I went full time permanent. I stayed with her because she helped in the past, got access to better rates at the time for 2 year fix, great track record. If I told her that I had a DMP in January 2026, she'd be shocked.

    What I need is a side hustle quick in order to reduce the debt in the short term in order to bring down the ratio of debt to salary. I think that is better strategy.

    I have put my CV up on the TotalJobs. If I can find a higher paying, then I will do it.
    I offered to consult on the couple of evening per week, so far take up is lean. I won't give up, there have to be starrtup founders willing to take a bet on me / with me. 
     



  • rocktron_amp
    rocktron_amp Posts: 33 Forumite
    Part of the Furniture 10 Posts Name Dropper Combo Breaker
    edited 31 January at 1:34PM
    SOA here

    I am 50 something years young, I love my information technology. I will retire probably 67/68 or even 69


    [font=courier new][b]Statement of Affairs and Personal Balance Sheet[/b][b]

    Household Information[/b]
    Number of adults in household........... 2
    Number of children in household......... 0
    Number of cars owned.................... 2[b]

    Monthly Income Details[/b]
    Monthly income after tax................ 4966.62
    Partners monthly income after tax....... 0
    Benefits................................ 0
    Other income............................ 0[b]
    Total monthly income.................... 4966.62[/b][b]

    Monthly Expense Details[/b]
    Mortgage................................ 1160
    Secured/HP loan repayments.............. 265.0999999999999
    Rent.................................... 0
    Management charge (leasehold property).. 0
    Council tax............................. 235
    Electricity............................. 100
    Gas..................................... 90
    Oil..................................... 0
    Water rates............................. 71
    Telephone (land line)................... 12
    Mobile phone............................ 0
    TV Licence.............................. 20.5
    Satellite/Cable TV...................... 0
    Internet Services....................... 20
    Groceries etc. ......................... 500
    Clothing................................ 0
    Petrol/diesel........................... 200
    Road tax................................ 15
    Car Insurance........................... 28.83
    Car maintenance (including MOT)......... 33.33
    Car parking............................. 0
    Other travel............................ 0
    Childcare/nursery....................... 0
    Other child related expenses............ 0
    Medical (prescriptions, dentist etc).... 0
    Pet insurance/vet bills................. 25
    Buildings insurance..................... 89
    Contents insurance...................... 0
    Life assurance ......................... 28.78
    Other insurance......................... 0
    Presents (birthday, christmas etc)...... 133.33
    Haircuts................................ 0
    Entertainment........................... 240
    Holiday................................. 100
    Emergency fund.......................... 0
    Netflix................................. 10.99
    Spotify................................. 20.99
    Wren Kitchen Finance.................... 235.83
    (Unnamed monthly expense)............... 0
    Homserve................................ 25.69[b]
    Total monthly expenses.................. 3660.37[/b]
    [b]

    Assets[/b]
    Cash.................................... 100
    House value (Gross)..................... 550000
    Shares and bonds........................ 0
    Car(s).................................. 26000
    Other assets............................ 0[b]
    Total Assets............................ 576100[/b]
    [b]

    Secured & HP Debts[/b]
    Description....................Debt......Monthly...APR
    Mortgage...................... 100000...(1160).....4.25
    Hire Purchase (HP) debt ...... 25000....(265.1)....4.5[b]
    Total secured & HP debts...... 125000....-.........-   [/b]

    [b]Unsecured Debts[/b]
    Description....................Debt......Monthly...APR
    Barclaycard....................10189.8...279.8.....23.02
    RBS............................10156.1...204.......12.9
    HSBC Gold......................10451.7...261.2.....20.9
    Lloydsbank.....................93.1......5.........25.5
    Tescobank......................5776.09...57........25.4
    Halifax........................5791.72...171.......24.97
    Virgin.........................10124.4...203.3.....20.01
    MBNA...........................2043.72...92........20.93[b]
    Total unsecured debts..........54626.63..1273.3....-  [/b]

    [b]
    Monthly Budget Summary[/b]
    Total monthly income.................... 4,966.62
    Expenses (including HP & secured debts). 3,660.37
    Available for debt repayments........... 1,306.25
    Monthly UNsecured debt repayments....... 1,273.3[b]
    Amount left after debt repayments....... 32.95[/b]

    [b]Personal Balance Sheet Summary[/b]
    Total assets (things you own)........... 576,100
    Total HP & Secured debt................. -125,000
    Total Unsecured debt.................... -54,626.63[b]
    Net Assets.............................. 396,473.37[/b]

    [i]Created using the SOA calculator at www.LemonFool.co.uk.
    Reproduced on Moneysavingexpert with permission, using Firefox browser.[/i][/font]


    Please please in my dreams give me the chance to go contracting again like I did in 2019 at £550 to £650 per day Outside of IR35. I'd commute daily on the Virgin Trains, if necessary, for 12 months, with crystal ball of working 220 days guaranteed, then this sodding debt would have been sorted. Suddenly, I wake up from my reverie, the blasted UK tax authorities changed the rules for UK IT Contractors Off-Payroll Worker Rules 2020/2021. Oh I can only dream. We can only dream. But that is another website, I will stop my baWLING. ReAlly.



  • Grumpelstiltskin
    Grumpelstiltskin Posts: 5,362 Forumite
    Part of the Furniture 1,000 Posts Name Dropper
    Buildings Insurance £89 monthly, why?
    Presents £133 monthly why? You can't afford that.
    Groceries £500 monthly for 2 adults? Way too much.

    You could easily cut back on your spending
    If you go down to the woods today you better not go alone.
  • rocktron_amp
    rocktron_amp Posts: 33 Forumite
    Part of the Furniture 10 Posts Name Dropper Combo Breaker
    Buildings Insurance £89 monthly, why?
    Presents £133 monthly why? You can't afford that.
    Groceries £500 monthly for 2 adults? Way too much.

    You could easily cut back on your spending

    Building insurance £89 that is an entry mistake. It is the sodding AVIVA life plan assurance not annual building and content. I supposed I can get that cheaper or negotiate, go MSE or Uswitch something
    I factored in the recent Xmas £133 * 12 = 1600, recently replaced an old computer with a new one, plus added presents for birthdays over 2024. Her iMac is now really old now, it needs replacing. Now I feel like my Dad did, when I badgered him to buy my first ever BBC Micro computer to learn programming. My Dad loved me, wanted me to go to higher education. So he invested. I get it. I understand.  I just feel bad that I had confess to him that I ******** up with this sodding debt.
    Groceries at £500 true I even used rewards Nectarr Card, Morisson's rewards, and Asda to get the discounts. It's the Cost of Living, I probably can get it down further without alcohol, give up chocolates, expensive puddings and the rest. I started to shop more at Asda, I might go to Lidl Aldi, but I don't like it. Probably can knock off £100 further. Suck it up., I will. I will cut down the entertainment for sure £240 down £100 or so.

  • Grumpelstiltskin
    Grumpelstiltskin Posts: 5,362 Forumite
    Part of the Furniture 1,000 Posts Name Dropper
    Why don't you like Lidl? If you use their app then you get small freebies through the month.

    Also find out when the supermarkets reduce prices.

    Oh and the world won't come to an end if the iMac packs up.
    If you go down to the woods today you better not go alone.
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