DMP questions

jellycat73

Hi I am new to the forum although have been lurking for a while. 

I am in a lot of debt and my work hours have recently reduced due to developing a heart condition which is not going to get better but that I can manage with the reduced workload and stress. 

Up until now although I have a lot of debt I have been managing to cover all payments. 

I have gone to step change and completed all the forms and the recommendation from this is a DMP.

this is because I have a mortgage and house. 

The thing that worries me is that our mortgage will be due for renewal in 2-3 years and the provider it is with is not doing any new products so basically once your product comes to an end you have to switch or remortgage. So I am worried when the time comes what will happen? Has anyone remortgaged with a dmp and defaults? 

The other question I had was with the car I have on pcp. With a dmp what happens to this? It is a golf estate so nothing fancy but practice for our family with children and dogs. Can I keep this payment and car whilst defaulting on the other debts? Or would I need to hand this back and buy another car? 

Thank you for any help. 

sourcrates

Debt management is very informal, there are no rules to follow, if you want to keep the car, you keep the car, that`s your choice, as long as you can afford the repayments.

Debts are split into "priority debt", and "non priority debt", your unsecured credit cards and loans are all non priority, the car payment would be a priority for you, so you keep up with those payments.

You only have to treat lenders equally in insolvency, not in debt management.

As debt management is about the only informal choice out there for homeowners, there will be many who needed to re-mortgage during a DMP, if in doubt get yourself a good broker.

Grumpelstiltskin

OK Do not start any DMP until your debts have defaulted, if you do start before defaults your credit report is marked with arrangement to pay, they last for 6 years  after your final payment so if it takes 5 years to pay off they last for 11 years where as a default lasts for 6 years ( 5 in Scotland ) even if you never pay another penny.

If you can't afford to make repayments then just stop, nothing terrible will happen.

jellycat73

@Grumpelstiltskin and @sourcrates thank you for the reply. 

I’m just wanting to make sure I understand everything before starting this process. As I am going to try and self manage it.

so next steps for me from what I have read. 

- Is set up a seperate bank away from creditors I have. Basic account. 

- stop all non priority debt repayments and instead any spare money put aside for emergency fund. 

- wait to default on all non priority debts and then wait to be contacted by either then or who they sell it to. 

- set up payment I can afford with them. Try and build up a savings amount to then offer settlements to each debt later down the line. 

It’s all quite daunting thinking of starting the process. 

Grumpelstiltskin

What you have got to remember you are going against everything you have been doing.

Don't contact any of your creditors. Ignore all phone calls, texts and E Mails, block numbers.

Read any letters you get by snail mail and ask us about them if you have any problems.

ManyWays

 the provider it is with is not doing any new products
can you say who this is? 

a golf estate so nothing fancy but practice for our family with children and dogs. Can I keep this payment and car whilst defaulting on the other debts?
car finance stays outside a DMP so you have to carry on paying it in full. But you will, presumbably, not be able to pay the balloon payment at the end and at that point you may have very few options, essentially HP from a bad credit lender because of the DMP defaults. Unless you have a partner who take out credit in their name,or a family member that could help cover the balloon payments or some other car option that would not require borrowing?

fatbelly

Is the mortgage term coming to an end or just the fixed period? Again, if we knew who you are with, that would be useful. Don't forget there is a mortgage board on this site too.