Thinking of DMP, some advice needed

Worm352

Hi Everyone!

I'm currently £33k in debt.
Some credit cards, and 3 personal loans. Credit cards repeyments are £200 and  2 of the personal loans are manageble with monthly payments of £120 and £270. The problem is with my last loan which is £580 a month. After all of my bills and repayments I'm left with around £50-£100 a month.

Is defaulting all of them is a good idea in my situation? Or should I just keep paying creditors without a DMP? I've got no savings at all at the minute.

Thank you guys

Grumpelstiltskin

OK Don't rush into a DMP until the right time and you are sure it is the correct thing to do.

RAS

Based on what you've provided, you are currently solvent.

A full statement of affairs would help us provide better advice.

But the big question is why have you (recently) taken out loan costing £580 per month?

ManyWays

Are any of your three loans ending soon?
"I'm left with around £50-£100 a month." that has to cover groceries, transport, clothes etc? Or do you include some of them in "bills"? 

Worm352

Actually is not a recent loan. Account was opened back in 2022 with around 2y left on it. I had some family issues where I needed over 25k and that was the only option. We're not going out, can't remember our last takeaway etc. Whatever we've got left each month we simply spend on kids... It's not an easy life, and my other half giving up day by day. That's why I'm thinking about DMP's

My SOA below:

[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......... 2

Number of cars owned.................... 1[b]

Monthly Income Details[/b]

Monthly income after tax................ 2900

Partners monthly income after tax....... 1100

Benefits................................ 160

Other income............................ 0[b]

Total monthly income.................... 4160[/b][b]

Monthly Expense Details[/b]

Mortgage................................ 0

Secured/HP loan repayments.............. 0

Rent.................................... 1100

Management charge (leasehold property).. 0

Council tax............................. 150

Electricity............................. 80

Gas..................................... 80

Oil..................................... 0

Water rates............................. 81

Telephone (land line)................... 0

Mobile phone............................ 15

TV Licence.............................. 15

Satellite/Cable TV...................... 33

Internet Services....................... 38

Groceries etc. ......................... 800

Clothing................................ 60

Petrol/diesel........................... 60

Road tax................................ 17

Car Insurance........................... 51

Car maintenance (including MOT)......... 30

Car parking............................. 0

Other travel............................ 0

Childcare/nursery....................... 0

Other child related expenses............ 30

Medical (prescriptions, dentist etc).... 0

Pet insurance/vet bills................. 0

Buildings insurance..................... 0

Contents insurance...................... 0

Life assurance ......................... 0

Other insurance......................... 0

Presents (birthday, christmas etc)...... 40

Haircuts................................ 0

Entertainment........................... 0

Holiday................................. 0

Emergency fund.......................... 100[b]

Total monthly expenses.................. 2780[/b]

[b]

Assets[/b]

Cash.................................... 0

House value (Gross)..................... 0

Shares and bonds........................ 0

Car(s).................................. 2000

Other assets............................ 0[b]

Total Assets............................ 2000[/b]

[b]

No Secured nor Hire Purchase Debts[/b]

[b]Unsecured Debts[/b]

Description....................Debt......Monthly...APR

Barclays loan..................10800.....580.......24.9

MBNA loan......................12300.....277.......14.9

Tesco loan.....................6700......121.......12.5

LLoyds CC......................470.......30........0

Argos Card.....................900.......150.......0

Fluid CC.......................1680......79........34.5

Vanquis CC.....................1850......77........29.9[b]

Total unsecured debts..........34700.....1314......-  [/b]

[b]

Monthly Budget Summary[/b]

Total monthly income.................... 4,160

Expenses (including HP & secured debts). 2,780

Available for debt repayments........... 1,380

Monthly UNsecured debt repayments....... 1,314[b]

Amount left after debt repayments....... 66[/b]

[b]Personal Balance Sheet Summary[/b]

Total assets (things you own)........... 2,000

Total HP & Secured debt................. -0

Total Unsecured debt.................... -34,700[b]

Net Assets.............................. -32,700[/b]

[i]Created using the SOA calculator at www.LemonFool.co.uk.

Reproduced on Moneysavingexpert with permission, using other browser.[/i][/font]

sourcrates

Your rent is horrendous, I`m guessing that`s the norm these days, the rest of your spend is reasonable, but with nothing for days out with the kids etc or the odd maccy dee`s, I can understand why you are thinking DMP.

You could default on the lot, once defaulted pay say £50 to each debt for starters, stick the best part of the grand that`s left in an emergency/settlement fund, let things take their course, debts will get sold etc, later on offers will start coming your way.

At that point you can try and settle each account for as little as possible, that`s one possible option for you.

Worm352

Thanks mate.

Do I need to default all of the accounts? or can I just go with the highest? 

Some creditors could default within 2-3 months when for others it could take much much longer. What can potentially happen if let's say Barclays send a default within 3 months and MBNA 3 months after ? Should I start paying as soon as account default or wait and do nothing until all of them default

Brie

As I understand it you should be waiting until all of them default which is difficult and normally they will want to know about all your other creditors and to be shown that you are paying them all pro rata.  So paying twice as much on the Argos credit card as to Tescos.  You could work all this out based on what you currently owe and start paying them once each defaults perhaps?  Meanwhile you'll build up your emergency fund and wait for some to give you a full and final offer to settle.  

sourcrates

Best bet is to treat them all equally, and pay each of them nothing.

You really want the debts defaulted, as at that point they will nearly always be sold on, or assigned to collectors, and no further interest will be added.

You can deal with each as and when they default, or wait until all have, decisions like that are always yours to work out, as you know how you like to do things.

Your creditors are all mainly mainstream lenders, so all will follow a similar collection process, as long as you make arrangements with whoever holds your accounts after they have defaulted, legal action won`t happen, if that`s your concern.

Debts have to default before any legal action can take place, usually they are sold on pretty quickly, not many lenders get legal with you, or manage their own bad debts these days.

ManyWays

Were the other two loans taken out before the enormous Barclays loan? What were the exact numbers, how much did you borrow, not including interest and how much have you paid so far to it in total? 

RAS

Brie said:

As I understand it you should be waiting until all of them default which is difficult and normally they will want to know about all your other creditors and to be shown that you are paying them all pro rata.

This is unwise. Some creditors might issue a default in month three, others only after 18 months. If you don't engage (start paying something) once the creditor tells you if they've sold or assigned the debt you risk CCJ, particularly if Amex is in your mix.  

You don't absolutely need to treat creditors equitably but if they feel they are not getting a fair share, they may get stroppy. Debt managers will pay pro rata.

Your budget lacks a lot of things, including contents insurance. Your grocery budget is not out of order but could be cut reasonably easily. And that diverted into ents, holiday, presents, medical and dental.

Then save for your emergency fund. In rental that means at least enough to pay the deposit on a new rental, moving costs and preferably a month's rent in case of ill-health etc. You might well be able to re-imburse much of the money once the deposit is repaid, benefits paid but having it there will reduce stress massively.