A reader asked about applying for a mortgage when she is in a Debt Management Plan (DMP): "I have been in a DMP for 8 years and still have 6 to go as I still owe £16,000. With hindsight, I should have gone bankrupt! My parents will give us a 20% deposit in 2021, but they don't know about my debts so I can't use their money to end the DMP. Will I be able to get a mortgage?" I've written before … [Read more...]
You may prefer to look at Debt Camel's Guide to DMPs. That has links to the most important articles, covering DMP advantages and disadvantages, the different ways you can set one up, things that can happen in a DMP and how to decide if one is the right option for you.
DMPs can be useful if you have a temporary financial problem for a few months or a year or two, or as a long term way of clearing you debts, but you need to be wary of DMPs that will go on for too long.
A reader said she was scared about starting a Debt Management Plan (DMP). Her worries were that her husband's credit rating would be affected and that she would get lots of phone calls from creditors. A DMP is supposed to help with your debt problems, not increase them, so I thought it would be useful to look at the common concerns people have before they start DMPs. It doesn't make any … [Read more...]
A reader asked if it is OK to reduce your debt management payments when you need to? This is a common problem in Debt Management Plans (DMPs). Sometimes your income falls. Sometimes your expenses go up faster than your pay does. These money troubles hit people with large debts particularly hard. Debt management firms and IVA companies are reporting that disposable income - the amount of … [Read more...]
Do you have to keep making payments to old debts? It can be easy to get stuck in a long-term Debt Management Plan (DMP) or payment arrangements. If you are paying little each month, your debts will take a very long while to be gone. This article looks at the questions people often ask about old debts where they have been making monthly payments to the debts. If you haven't been making … [Read more...]
You both have debts, you both know it's time to tackle them and you want to do this together. But if one of you has a lot more debt, or a much larger income, or you own different assets, you don't have to have the same debt solution. A good debt adviser will help you look at what option each of you needs to get the best result for your family going forward. This article looks at some of … [Read more...]
Most people use a firm to run their Debt Management Plan (DMP). In this case you make one monthly payment to the firm, who then divides it between your creditors. This is free if you go to StepChange, Payplan or CAP - other firms do exactly the same but charge you a fee each month. But you can do all this yourself, not using a DMP firm. The advantages of this are: you are in control; … [Read more...]
A reader asked: I have a Debt Management Plan where I still owe 17k to 10 creditors. I have been paying for ten years at £150 a month, so it will end in about 8 years. Most of the debts have gone from my credit record but a few are marked as “on a DMP”. I want to pay off the debts and improve my credit rating. I have been offered about 7k by a relative, so I could offer all my DMP creditors … [Read more...]
A typical payment arrangement is an agreement to repay a credit card, catalogue or loan in affordable monthly amounts. This is also called an arrangement to pay. You can ask for an arrangement to pay from the original lender or a debt collector. The key points are: an arrangement is needed if you can't afford the normal debt repayments; do not offer more than you can afford; ask … [Read more...]
If interest is frozen on your debts, you will be able to pay them off much more quickly. But what if a creditor refuses to do this? Or has been adding interest and charges for years, even though you are in a DMP or they know you are in financial difficulty? This article has template letters you can use to ask the creditor to change their mind and stop adding interest and charges. And to ask … [Read more...]
When you have payday loans and other high cost debts in your DMP, can you make affordability complaints and ask for refunds? Your DMP may have been a lifeline and so you don't want to put your DMP at risk, but you could get a lot of money back... How do I make an affordability complaint? Here are the main Affordability articles for the different sorts of loans. They explain in detail … [Read more...]