DMP vs non DMP advice??

worldsnooker147

Hi everyone,

I'm looking for some advice and people's thoughts on my current DMP with Payplan and if there may be more appropriate options based on my current plan and the context of my progress (explained below). I will try and explain the situation best I can (but can add any other helpful information in replies should any kind people replying have any queries).

So, I entered into a DMP with Payplan approx 15 months ago. I had no prior experience with debt management and had been drowning in my debts for years with gradual worsening over several years to the tune of 51k between 9 creditors by the time I entered into the DMP (with the plan set up to pay off my plan in approx. 53 months at time of starting this). At the time, due to lack of experience I was really anxious about facing my debt issues, so quickly entered my DMP prior to any defaults and no safety net fund at time. Payplan did their business with the income/expenditure and deemed me to have 1k disposable income on my net wage of 2.7k per month. On reflection of the process, they allocated me bare minimum for my expenditure (enough to get by basically and not for any unexpected expenditure). However all of my creditors happily accepted the offer of payment from Payplan.

Fast forward 12 months to this point, taking into account the information above, it has been quite a struggle at times to manage each month with no leeway for any quality of life as well as unexpected expenses. Of the 15 payments to date, I have made 8 full payments of 1k per month split between the 9 creditors and 7 token payments of bare minimum to each creditor, £1 to each in those months due to large unexpected expenses in those months due to my current plan not allowing me to afford these and not having any safety net fund (I wish I could roll back the clock and build a fund as others on here advise! never mind and cant change this now unfortunately).

On a positive note, it has been pleasing to see my balance in these past 15 months reduce to 43k despite the 7 reduced payments. It is worth noting that Payplan have been quite supportive with the admin with my DMP and given me advice to manage any issues with creditors (have had barely any issues to note re creditors I must add) as well as not pressuring me re me approaching them re reduced payments in those 7 months of token payments and have supported me with reassurance in managing the acute issue at hand which caused the reduced payment before worrying about my DMP. Which has been most helpful as well.

I have been reflecting on my situation in recent weeks, alongside speaking with friends who have been in similar situation and left their DMP, which has led to me writing this post for peoples thoughts. I am wondering if coming out of my DMP and self-managing it with creditors directly may be a better option. I am seeking opinions of others as to the pros and cons of both options given my current circumstances above? My job and wage are safe with no plans to change in near future.

I have been thinking about the benefits of choosing my own payments with creditors rather than Payplan's percentage payments to each creditor which I have zero control over and in this, building up a safety net fund as quick as possible to offer full settlements to creditors to pay this off quicker than my remaining time left on my Payplan set plan. I was wondering if people could suggest options for this based on my creditors and the amounts remaining? It is worth noting all accounts are now in default and interest has ceased on all accounts now also. Some have been sold off to debt collections agencies and some have not (as below).

My creditors and approx. amounts remaining now (Largest to smallest): all debt below is unsecured and i have no assets as in mortgage etc.

Natwest Loan (managed via Wescott) - £15,153

Very Catalogue (managed via Moorcroft) - £5,070

Natwest Credit Card (managed via Wescott) - £4,132

Link (previously Zopa loan) - £3,714

Lantern (previously 118 118 money loan) - £3,369

Natwest Overdraft (managed via Wescott) - £3,364

Link (previously Zopa loan) - £3,136

Link (previously Zopa loan) - £2,581

My Community Finance Loan (still with original loan company) - £1,704

What are peoples thoughts?? or any other suggestions others may have re above are also very welcome! Regarding payment settlement suggestions? DMP or No DMP etc.

Really sorry for lengthy post, trying to include as much as possible to get the most appropriate advice. If I have missed any information people may feel is helpful to expand further then please let me know and I can add further as needed.

Thanks in advance.

Paul

RAS

Just to confirm, My Community Finance Loan is with a credit union?

worldsnooker147

Hi RAS,

No its was with My Community Bank originally, a personal unsecured loan - all of my credit above is unsecured. Not sure what happened but may have merged or been bought out recently (got letter to state change but my plan was remaining same/unchanged).

I never took out loan with credit union to my knowledge or at any point has that been mentioned.

ManyWays

My community bank is a credit union.

How many of your debts now have defaults showing on your credit record? My guess is all except possible the MCB loan.

I suggest you look at affordability complaints against all the original lenders (not the current debt collectors). Winning any will get interest removed and the DMP will speed up a lot. 15 months into a DMp is a good point to do this, do not leave this too late as it becomes harder to get evidence.

How much are you paying Payplan a month at the moment? Have you discussed with them reducing this so you have fewer problems in future, also petrol! higher bills!

worldsnooker147

Hi ManyWays,

Thanks for the reply.

I have checked my credit record just there. The MCB comes under Brent Shine Credit Union and says it is in default. All of my accounts are in default now.

I am paying Payplan 1k per month at present.

Please can you direct me/advise re affordability complaints? Its not something I have done before or have any knowledge over? Would I be in touch with the original lenders of those now with DCAs? As they have now sold the debt on?

Thanks in advance

Paul

sourcrates

Why not go it alone and self manage instead?

That way you decide who gets what, when, and how much, Its so easy to do.

Another strategy is to stop paying all of them, and only restart if court action is immanent.

Eventually all will go statute barred, there`s maybe a 12/15% chance of legal action being taken with at least one account, you will find collection activity tends to go in fits and starts, you may get long periods where nothing happens, as they like easy targets that respond to them.

Just some ideas you could employ if things get too strained or you find yourself short of money.

Sunbakedscobble

I have one payment left of my 34k debts that I have cleared through payplan. Payplan saved my life. they could not be more helpful. My intial review with them on how much I could afford each month I soon realised I had vastly underestimated the cost I spend on things, and that my DMP payments were too high. I phoned payplan and we had a really intense review of how much I do need each month. this made my DMP much more manageable and allowed scope for unexpected expenses, even holidays. They did all the leg work re contacting eveyone and I never looked back. Just give them a call.

WobblyPouch

Hey! Usually with DMPs you have a review every year, to make sure your budget and payments still work for you - have you done one of these? Pretty sure with most places that do DMPs, you don’t even have to wait for that review, you can just contact them to review your budget and change it, so you’re not struggling through until the next review!

I’m in a DMP, and it’s just such a weight off with it being 1 payment each month instead of multiple!

Rob5342

The whole point of a dmp is that you pay what you can afford, so I'd you can't afford the current payments then something is wrong. One of the problems with Payplan and Stepchamge is that they tend to rush people into starting DMPs without waiting for defaults or building up an emergency fund first.

As suggested why not move to managing the DMPs yourself, it's very simple and means you can arrange the payments in anyway you like without having the complication having to keep a middleman happy. I would suggest paying less than you can afford and saving the difference into an emergency fund and when that's at a level you are happy with save into a settlement offer fund too.

It would be worth making cca requests for the ones that have been sold on, if they can't produce the cca then the debt can't be enforced and you can simply stop paying it. Making affordability complaints might be a good idea too. I have a £7000 debt that I can simply ignore now as they can't produce the cca, and I used to have an £11000 debt that was cleared with £5000 left over for me following an affordability complaint.

RAS

To DMP or not?

Well a DMP has no legal status in England and Wales, an in Scotland is sometimes used by people who don't want a legally defined DAS.

It is simply the term recognised by debt solution providers and creditors to refer to any arrangement to repay pay debts by making payments lower than creditors' minimum requirement.

So everything is up for negotiation. Although in practice as long as you are making an affordable payment few creditors are going to use legal action. It just happens that the debt charities have deals in which they agree to divi up what the client can afford pro rata.

Unlike the wilder days of the noughties, affordability is key. It's not unreasonable for creditors to ask for a review every year or so but they are no longer trying to get more than their fair share from the debtor. And they can ask for a Statement of Affairs but have no right to ask for evidence to support anything you provide or insist you provide anything.

The biggest issue some people have with the debt charities is that they encourage people to start without an emergency fund.

I saw a Dave Ramsay Q&A recently when someone asked if the $1k emergency fund he recommends before debtors start making payments was adequate or needed increasing in view of inflation? A Christian expletive was followed by the explanation that $1k wasn't no where near adequate when he first recommended it! But it was the lowest that people could accept, without which people just dropped out in droves.

The amount you need depends on your circumstances. Living with parents and very low contributions, then enough to cope any personal bills and with a month off sick? Low LTV mortgage with excellent work benefits, a lot less than self employed and a large mortgage.

worldsnooker147

Hi all thank you for the replies, they are most helpful.

I have completed the Affordability and Irresponsible lending letters today and sent to each creditor via email. Its amazing how they kept borrowing to me in the trail of debt I was in, really does scream irresponsible from them. Will wait to see how they respond.

https://forums.moneysavingexpert.com/discussion/comment/82016006#Comment_82016006

Rob, in relation to the CCA request, I have x4 with DCAs now. I intend to ask them for the copy of the CCA. Can I ask, can this be done by email? or does it have to be done by post?