DMP - can I keep my current bank account? And am I doing the right thing?

bells_on_it · 6 September 2017 at 2:16AM

Hi I'm after some advice?
Myself and my husband have decided that we should enter into a DMP with step change as we have been battling with significant debt for many years. We had been getting into a better position with it but then had to get extensive work done to our house meaning we ended up in loads more debt. Most is on a decent APR (mostly under 8%) but I was made redundant and am now on significantly less money and struggling to find a better paid job so we've been living on 198 after all bills / debt and are finding we end up putting on cards because we can't survive on that (have 2 kids under 5 too). We need to drastically reduce our debt repayment because we cannot afford the amount and think a DMP is the best way forward, and if the creditors agree we could be debt free in 6 years (or less if I get a better paid job) and being unable to get credit might be a good thing??
I just want to know are we being naive?
Also I have a packaged bank account which actually has great benefits, it covers the phone insurance for both mine and my husbands mobiles and also a great travel insurance and roadside recovery etc. I have an overdraft with this bank but no other debt. My husband has declared the overdraft but we don't know whether that will force us to get new bank accounts? Are we better off taking the overdraft off or will the bank still let me continue?
Any help and advice will be really appreciated

bells_on_it · 6 September 2017 at 2:17AM

I should add we absolutely don't want to sell our house, and all of our debt is unsecured

StokieBecks · 6 September 2017 at 7:37AM

You need a new bank account that is separate from any of your debts as on a DMP your overdraft will become a debt. You have to include everything you owe

You just need a basic account, not one you pay for and one without an overdraft

Have you been meeting all your contractual payments so far?

I am sure more knowledgeable folks will help you out more but you need to post a statement of affairs showing your incomings and outgoings so people can advise if there is any scope to reduce your spending too

zenshi · 6 September 2017 at 8:08AM

To start with, I had credit card debt alone with mortgage arrears and and overdraft.

I went straight with self managed onto token payments but prioritised my arrears and OD, so they were paid off first

If you use a free company for a DMP, then they will want you to include your OD and then you should definitely get new account

A list of debts and an SOA will help us give a more helpful answer

bells_on_it · 6 September 2017 at 8:48AM

We currently owe 57k. All unsecured. We run a very tight shop, basically once all mortgage, utilities, insurances, childcare and debts are paid we have 198 left for anything else, is food, clothing, entertainment etc. There is no scope to reduce anything else as all our bills are essential and debt. We've over the years reduced any spends, I always negotiate my sky package so we've got a very good deal on broadband, line rental and tv, pat less than 70 for the lot and it includes sport, and hubby is a sport fanatic so we really need sport. So there is nothing left to reduce.

We've managed for years living very tight and we're chipping away at it very slowly.

I was made redundant earlier this year, the little I got had to buy a car as I had a fleet car with my job.

I ended up taking a job with a significant pay cut (14k less per year) and have spent the last 6 months struggling to find a job and have been robbing peter to pay Paul. So the cards have gone up in order to be able to feed ourselves. I defaulted for 2 months with one card but other than that we've been committed to paying our debts but they're only increasing and we can't survive on 198 a month.

zenshi · 6 September 2017 at 9:30AM

A DMP, either self managed or with the likes of Stepchange is needed. I don't know about IVAs so can't comment. I assume bankruptcy out of the question as you're a homeowner!

As you say, this is unsustainable so you're credit rating will be trashed sooner rather than later

With a DMP, you can usually get interest and charges frozen, so then you can start to make some headway

It will be tough and it will take time but many of us on here are in the same position and it will get easier

bells_on_it · 6 September 2017 at 12:32PM

Yeah as we're a home owner we don't want to go down the bankruptcy route, and we feel like an iva would be a bad thing too as we've read that they can insist you release equity in your house and we feel that as we haven't a huge deal of equity that this would be harmful. Technically we have a 75% LTV but when we bought the house 4 years ago we only had 10% and the majority of the equity we have is down to house price increase and not us clearing a substantial amount so if they crash we'll be in a bigger hole!

We want to pay our debts off, we just need a more manageable payment and if we could freeze the interest even better. It means we could be free of debt in 6 years? But we know this time we have to be disciplined with saving for things as we won't be able to put emergency purchases on credit etc.

My worry is that if I have to get a new bank account then the benefits of my packaged account will go which means we have to pay separately for the benefits I get from it and that that will be more??

My overdraft is the only debt I have with my bank account provider and I don't understand how they work with step change?? Does the overdraft get paid back or what ??

glentoran99 · 6 September 2017 at 12:43PM

I kept my bank account (with overdraft) when I did my DMP, just kept it outside the DMP

glentoran99 · 6 September 2017 at 1:12PM

bells_on_it wrote: »

We currently owe 57k. All unsecured. We run a very tight shop, basically once all mortgage, utilities, insurances, childcare and debts are paid we have 198 left for anything else, is food, clothing, entertainment etc. There is no scope to reduce anything else as all our bills are essential and debt. We've over the years reduced any spends, I always negotiate my sky package so we've got a very good deal on broadband, line rental and tv, pat less than 70 for the lot and it includes sport, and hubby is a sport fanatic so we really need sport. So there is nothing left to reduce.

We've managed for years living very tight and we're chipping away at it very slowly.

I was made redundant earlier this year, the little I got had to buy a car as I had a fleet car with my job.

I ended up taking a job with a significant pay cut (14k less per year) and have spent the last 6 months struggling to find a job and have been robbing peter to pay Paul. So the cards have gone up in order to be able to feed ourselves. I defaulted for 2 months with one card but other than that we've been committed to paying our debts but they're only increasing and we can't survive on 198 a month.

its a luxury, you don't NEED you are living beyond your means you have to cut out luxuries I guarantee if you posted a SOA the good folks here could save you money

WorriedFriend2017 · 6 September 2017 at 1:18PM

As above. Also, you had debts already but then did work to the house - that probably hasn't helped you at all? The £70/m for Sky could be used to pay some of the food bill. If you post an SOA we can take a look.

lynz68 · 6 September 2017 at 1:45PM

You need to post an SOA people can't really provide much advice without it and will possibly spot areas where you can cut back that you haven't picked up on yourself.

£70 a month for Sky is ridiculous when you have £57k of debt. Paying for a bank account when you don't have enough money for food also ridiculous. While you think the benefits are good how many times have you actually used them. I use to have an account like that but never used the benefits all I was doing was paying the bank money.

Going into a DMP is about cutting back and focusing on the debt not about trying to maintain a certain lifestyle.

Apologies if that sounds really harsh I don't mean it to be.

Get SOA done and you will get lots of helpful advice.

DMP - can I keep my current bank account? And am I doing the right thing?

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