Scared of starting a DMP
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missymish
Posts: 35 Forumite
Hi All,
Just recently I have realised that the level of debt I have has gotten out of control and I need to do something about it. I pay all my minimum payments each month and I am not behind on anything but I have no disposable income so I use the little credit I have left after I have made minimum payments to live.
Last year I had to move and the only property I could find that would accept housing benefit cost more than my local monthly housing allowance so I have to find this little bit extra plus the amount I have to make up as I work. This did hit my monthly expenditure, but not too hard at first, but 6 months into my tenancy the amount of HB I was entitled too dropped by about £100 per month as my income had changed I thought I had given wage slips to them when I moved but according to my HB department they were not required when I moved so they went off historic earnings. This was the start of the spiral.
Around September time I began to have problems with my car and two months in a row I had to shell out about £300 each time so again I was living on credit and from this point I have found it hard to climb out of it. I had a couple of set backs last year which may seem minor but financially the impact has been major.
By credit rating has gone from excellent to poor I think this is due to the amount of credit I have and have used, also one of my credit cards in December put me on a payment plan for 3 months.
I have been advised a DMP will be the best solution going forward but I am so anxious that I will never have a chance to repair my credit. I have a few questions and I was wondering if anyone would be able to help.
Will all creditors apply a default as soon as the DMP is in place?
Will these defaults drop six years from the day they are issued, or six years from the the DMP finishes?
When contacting stepchange (did a budget online) I put that I owned 2 vehicles which is true kind of, my son had his driving test in December and prior to this bought a car but I put it in my name for the time being until he passed also because of the problems I had been having with my car I was using his in the interim. My son failed the test, my car is still off the road as SORN so I am driving his car. What I am worried about is will people come chasing me for the car as it is an asset eventhough its not mine although logbook suggests otherwise (I do have receipt of deposit which my son paid and signed but I collected the car and paid the balance but he gave me the cash) would I be better of transferring the car to him?
I think a DMP is the only way forward but I am so scared, I worked so hard to get my credit rating to where it was and its all ruined and I feel so disappointed and like a failure and so embarrassed:(
Any help would be greatly appreciated
Just recently I have realised that the level of debt I have has gotten out of control and I need to do something about it. I pay all my minimum payments each month and I am not behind on anything but I have no disposable income so I use the little credit I have left after I have made minimum payments to live.
Last year I had to move and the only property I could find that would accept housing benefit cost more than my local monthly housing allowance so I have to find this little bit extra plus the amount I have to make up as I work. This did hit my monthly expenditure, but not too hard at first, but 6 months into my tenancy the amount of HB I was entitled too dropped by about £100 per month as my income had changed I thought I had given wage slips to them when I moved but according to my HB department they were not required when I moved so they went off historic earnings. This was the start of the spiral.
Around September time I began to have problems with my car and two months in a row I had to shell out about £300 each time so again I was living on credit and from this point I have found it hard to climb out of it. I had a couple of set backs last year which may seem minor but financially the impact has been major.
By credit rating has gone from excellent to poor I think this is due to the amount of credit I have and have used, also one of my credit cards in December put me on a payment plan for 3 months.
I have been advised a DMP will be the best solution going forward but I am so anxious that I will never have a chance to repair my credit. I have a few questions and I was wondering if anyone would be able to help.
Will all creditors apply a default as soon as the DMP is in place?
Will these defaults drop six years from the day they are issued, or six years from the the DMP finishes?
When contacting stepchange (did a budget online) I put that I owned 2 vehicles which is true kind of, my son had his driving test in December and prior to this bought a car but I put it in my name for the time being until he passed also because of the problems I had been having with my car I was using his in the interim. My son failed the test, my car is still off the road as SORN so I am driving his car. What I am worried about is will people come chasing me for the car as it is an asset eventhough its not mine although logbook suggests otherwise (I do have receipt of deposit which my son paid and signed but I collected the car and paid the balance but he gave me the cash) would I be better of transferring the car to him?
I think a DMP is the only way forward but I am so scared, I worked so hard to get my credit rating to where it was and its all ruined and I feel so disappointed and like a failure and so embarrassed:(
Any help would be greatly appreciated
0
Comments
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Hi and welcome missymish,
Your story is so typical of many on here, don't be embarrassed about it, it can happen to anyone.
Right, there`s nothing to be scared of, lets get rid of some common mis-conceptions first shall we, a Debt Management Plan or DMP, is an unregulated, gentlemen`s agreement, if you like, between you and your creditors, is an informal arrangement, so there are no real rules to follow.
Assets, such as you describe, can (A) only be seized in insolvency, or (B) seized by a bailiff for non payment of a county court judgement (CCJ).
Neither of these scenario`s apply to you, so forget that.
A DMP sounds like the best way forward, if that`s what stepchange have recommended, creditors tend to be hit and miss, where defaults are concerned, they are supposed to default after between 3-6 missed contractual payments, some follow the guidelines, other`s need reminding.
More often your file will be marker "AP" (arrangement to pay) these markers stay on your file for 6 years after you have repaid the debts, so potentially a long time, to get around this, its recommended you only make token, or no payments at all, until you are defaulted, but this goes against the advice of SC who basically want to get you repaying your debts regardless of the effect on your credit file.
In the end the choice is down to you, you can always bombard the creditors with complaint letters if they don't default you quickly, there are many, many people on DMP`s who post on this forum, best to take the advice you are given.I’m a Forum Ambassador and I support the Forum Team on the Debt free wannabe, Credit file and ratings, and Bankruptcy and living with it boards. If you need any help on these boards, do let me know. Please note that Ambassadors are not moderators. Any posts you spot in breach of the Forum Rules should be reported via the report button, or by emailing forumteam@moneysavingexpert.com. All views are my own and not the official line of MoneySavingExpert.For free non-judgemental debt advice, contact either Stepchange, National Debtline, or CitizensAdviceBureaux.Link to SOA Calculator- https://www.stoozing.com/soa.php The "provit letter" is here-https://forums.moneysavingexpert.com/discussion/2607247/letter-when-you-know-nothing-about-about-the-debt-aka-prove-it-letter0 -
sourcrates wrote: »
More often your file will be marker "AP" (arrangement to pay) these markers stay on your file for 6 years after you have repaid the debts, so potentially a long time, to get around this, its recommended you only make token, or no payments at all, until you are defaulted, but this goes against the advice of SC who basically want to get you repaying your debts regardless of the effect on your credit file.
Thank you for your reply, I wasn't aware of this I thought that all the creditors would automatically default, although SC did say some would and some wouldn't and I believed if they didn't that would be a good thing!
After a sleepless night I have decided to go with DMP and have completed all the paperwork today ready to send back. To date I have no missed payments or defaults, although I am on a payment arrangement with one creditor until the end of March so I know my credit is shot to pieces anyway. Should I hold off submitting the DMP to SC?0 -
Hi missymish
Whether you apply for a DMP now or wait a while is really your choice. Bear in mind if you wait and only pay your creditors a token amount until they register a default against you (and you can afford to pay more) it's unlikely they're going to freeze interest and you could see the debt rise. StepChange will ask your creditors to freeze interest as part of the DMP, which if they agree will stop your debts increasing.
Creditors registering a default now can be better in the long run as it means your debt must be removed from your credit file 6 years later. Without a default the debt will drop off 6 years after the last payment. Hopefully you will find most creditors do register the default (if that is your preferred option), and for those who don't you could try asking them if they will. Good luck with the DMP.
Susie
@natdebtlineWe work as money advisers for National Debtline and have specific permission from MSE to post to try to help those in debt. Read more information on National Debtline in MSE's Debt Problems: What to do and where to get help guide. If you find you're struggling with debt and need further help try our online advice tool My Money Steps0
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