Thinking of a DMP

Tracy205

Hiya, I have come across this forum and it is so helpful and reassuring. I have around £70k of credit card and personal loan debt (my husband lost his job 4 years ago). Mentally and due to some physical issues he has only been able to return to work part time and earns a third of what he did previously. Add to that the cost of living increases and my elderly dad going into a home with me travelling a lot to see him and this is where we have ended up. Until a couple of months ago I kept life going by borrowing but now we are struggling. Debt is in my name so I want to do a DMP on my own. I did put our mortgage onto interest only for 6 months and managed to do a deal with Novuna for 4 loans where I only pay half for 6 months but both of these reductions will end in December.

I am thinking of a self managed DMP because the idea of being able to build up some savings while waiting for everything to default is a huge comfort. After reading lots on here, it sounds so simple but the thought of ignoring letters while waiting for things to default and debts being sold, absolutely terrifies me and I am not sure if I can brave it out. I am worried anout bailiffs knocking on the door.

fatbelly

Nothing to be terrified about. This is nonpriority debt, as I explained to another poster earlier today. The reason you pay higher interest on this compared to say a mortgage is precisely because the lender knows this can happen.

there will be no court claim, no ccj and no enforcement of a ccj. However you do need your mortgage to be back on a repayment basis and to keep up with those payments so that your house is not at risk

The difference between you and the other poster is that they owed 25k, you owe 70k. I did not mention an IVA to them but will to you. When you get to the detail of working out how much you can actually afford to pay per month and therefore how how long the dmp will take, you may find it will take a decade or more to clear it. An IVA should work over 72 months so may be worth considering. But one step at a time.

Tracy205

Hi thank you for your reply. Unfortunately I can't do an IVA, if I do, I will lose my job due to the security I need. My mortgage being interest only for 6 months, I did via the Mortgage Charter and it will revert after another 3 months. Should I wait until it is back on repayment before I default on my other debts. Thanks

Tracy205

Sorry,another question. When I cancel DDs, in the time it takes for each debt to default, will the debt increase past my credit limits with.late payment fees, additional interest etc?

fatbelly

Then you are going to have to map your way out of this without insolvency and without risking your property. Priority and nonpriority debts are chalk and cheese so if you are in a temp lower mortgage payment for 3 months then stop paying your nonpriorities, save an emergency fund and base your calculations on paying the full monthly instalment on the mortgage in 3-6 months time

Don't worry about the balances of the nonpriority debts. They will go up but will soon be frozen. And eventually you may be in a position to clear the debts using full & final settlement. It might be useful to see if you have any other angles on any of these debts and so it would help us to see a statement of affairs

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

ManyWays

There is no reason to wait until the IO mortgage break ends, these debts are unaffordable and the sooner you stop paying, the sooner you get defaults and the sooner things start to get better.

You could revert back to paying the normal mortgage interest. i would never suggest anyone gets a IO 6 month break instead of going into a DMP. But where you are now, it may be simpler to use this to build up some emergency savings faster.

The Novuna payment arrangement is not actually helping you. I would stop paying that too as you want this to default sooner rather than later. With 4 loans that looks like a classic case for making an affordability complaint. Indeed with most of your debt accumulating in the last 4 or so years, you should think about this for most of your debts.

fatbelly

I agree. No downside to getting affordability claims in, and no reason to be giving Novuna any priority

RAS

Do you owe anything to the provider into whose account your income goes? Do you have any joint accounts?

You need your income to go into a bank account with a banking group to whom you owe nothing. You might be OK, you might need a new account with Monzo/Starling or a basic account any safe provider. Sort ASAP and get your income moved there.

You'll also move the mortgage, CT and other essential DDs, manually. Don't use the switch mechanism.

Tracy205

Thank you everyone I do appreciate your help.

I had hoped the 6 month IO switch on the mortgage and 6 month payment plan with Novuna would give me some time to try and get things better but we just can't afford this debt,most of which is in my name as the main earner.

Our bank account is with Halifax, now Lloyds and my husband does have a Halifax CC but due to his mental health since losing his job, I was going to just default on my debt and keep his payments going from his salary.

I have heard that Novuna won't halt interest even on a DMP which is a worry. Is it best to do the affordability claims now or after I have cancelled the DDs?

Tracy205

Household Information[/b]
Number of adults in household........... 3
Number of children in household.........
Number of cars owned.................... 2[b]

Monthly Income Details[/b]
Monthly income after tax................ 3530
Partners monthly income after tax....... 1160
Benefits................................ 0
Other income............................ 150[b]
Total monthly income.................... 4840[/b][b]

Monthly Expense Details[/b]
Mortgage................................ 1216
Secured/HP loan repayments.............. 0
Rent.................................... 0
Management charge (leasehold property).. 0
Council tax............................. 181
Electricity............................. 100
Gas..................................... 70
Oil..................................... 0
Water rates............................. 134
Telephone (land line)................... 0
Mobile phone............................ 45
TV Licence.............................. 15
Satellite/Cable TV...................... 86
Internet Services....................... 0
Groceries etc. ......................... 400
Clothing................................ 50
Petrol/diesel........................... 320
Road tax................................ 32.92
Car Insurance........................... 121.24
Car maintenance (including MOT)......... 60
Car parking............................. 0
Other travel............................ 0
Childcare/nursery....................... 0
Other child related expenses............ 0
Medical (prescriptions, dentist etc).... 44.67
Pet insurance/vet bills................. 112.98
Buildings insurance..................... 38
Contents insurance...................... 0
Life assurance ......................... 45.87
Other insurance......................... 0
Presents (birthday, christmas etc)...... 50
Haircuts................................ 40
Entertainment........................... 60
Holiday................................. 0
Emergency fund.......................... 50[b]
Total monthly expenses.................. 3272.68[/b]
[b]

Assets[/b]
Cash.................................... 0
House value (Gross)..................... 320000
Shares and bonds........................ 0
Car(s).................................. 5000
Other assets............................ 0[b]
Total Assets............................ 325000[/b]
[b]

Secured & HP Debts[/b]
Description....................Debt......Monthly...APR
Mortgage...................... 67000....(1216).....0[b]
Total secured & HP debts...... 67000.....-.........- [/b]

[b]Unsecured Debts[/b]
Description....................Debt......Monthly...APR
My CCs.........................24961.....739.......0
Husband's CCs..................42476.....859.......0
My Novuna loans................34000.....1083......0
Husbands Admiral loan..........6500......162.......0[b]
Total unsecured debts..........107937....2843......- [/b]

[b]
Monthly Budget Summary[/b]
Total monthly income.................... 4,840
Expenses (including HP & secured debts). 3,272.68
Available for debt repayments........... 1,567.32
Monthly UNsecured debt repayments....... 2,843[b]
Amount short for making debt repayments. -1,275.68[/b]

[b]Personal Balance Sheet Summary[/b]
Total assets (things you own)........... 325,000
Total HP & Secured debt................. -67,000
Total Unsecured debt.................... -107,937[b]
Net Assets.............................. 150,063[/b]

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

sourcrates

No, don`t look at anything to do with your debt as "a worry", no debt situation is insurmountable, there are ways and means to get what you want, however, stopping interest in debt management is always at the discretion of the lender, but don`t allow scare stories to put you off, if that is the case with this particular lender, then there are ways to counteract that.

Non payment until default for example, when a debt defaults, the agreement essentially ends, and all balances are frozen with no further interest or charges added, in accordance with the agreement you signed, or you wait until the debts get sold, debt purchasing companies do not charge interest, mainly because the debts they buy are already defaulted, but also because most consumer credit agreements do not allow the charging of interest by 3rd parties.

And another thing, the world of debt collection moves very slowly, nothing happens fast, cancelling the direct debts takes seconds, making affordability complaints can take many months, and I would advise you get them sent sooner, rather than later, as strict time limits apply.