Can anyone talk to me about their DMP (Debt Management Plan)

[SeasideSoul]

Hi

I am obviously not asking for personal info etc. !
It is just looking increasingly like I am going to have to enter into a DMP. Have filled in the form with StepChange debt charity and that is what they have recommended. All in all I am in debt to the tune of £10,000 on credit cards, store cards, catalogues etc. Credit card debt mainly built up with living expenses, then I pay some off, then I have no money left and the cycle carries on etc. etc. I don't own a car, I don't own a house (I rent). Is this the answer? Or am I going to ruin my life for the next god knows how many years. Does a DMP mean that someone else controls your bank account and can see what you are spending? I know I should ring StepChange and speak to an advisor but at the minute, I am too embarrassed. For context, i do work full time and do all the overtime that is offered (not much as it is an office job).

I would be grateful to hear any experiences.

I have one, also with stepchange.
I found them to be very supportive. When they worked with me to create a budget they were very encouraging to make sure I’d given myself enough to have a life as they said if it was too restrictive it wouldn’t work.
As for looking at what I spend they don’t go through your bank accounts, they take down what you say and give guidance / recommendations,

It’s been a lifesaver for me, it really has taken the pressure off and I can see the debt reducing and know my debt free date.

Your life won't be ruined but your credit rating probably will, but that's often not a bad thing, because it acts as a reset,reducing debt payments to what you can afford after paying your normal expenses and forcing you to budget. People often come through the other side in a much stronger position and more able to cope with fluctuations in income and expenses.

If you have no spare money and no assets a debt relief order might be more appropriate. There is little point plugging away with a DMP for years on end.

Best place to start is probably the moneysavingexpert money makeover as you can get advice on increasing income, reducing expenses, the right debt solution and maximising your disposable income, which is the bit that is directly related to quality of life because it's where you have money to spend on nice things.

www.moneysavingexpert.com/family/money-help/

Stepchange are very good. I'm a debt counsellor and I deal with them regularly and refer clients to them.

A dmp is a positive solution. Depending on who you bank with it can impact your facilities there.

You might want to consider opening a new basic bank account so you can start afresh.

Your dmp will affect your credit file and info will stay in there for 6 years.

Have you considered a DRO. This is ideal if you won't have any assets.

Stepchange would help you apply for one if they felt if was a good solution for you.

If you qualify, all your debt is written off after a year.

I know this might sound really stupid but how can it change how fast your debt is paid down? It isn't written off and I can't magic money up from nowhere to make additional payments. I know I sound really dense.

With a debt management plan, you aim to pay all your debt, but the interest and charges are frozen. If you can afford £10 a month and your debt is £1000, then you pay £10 a month for 100 months, which is over 8 years.

Unless you foresee significant changes in circumstance like a better job, paying off a mortgage, DC going to full time school so childcare costs reducing, it is not recommended to do this and most creditors wouldn't want to wait for their money like this anyway.

If you don't foresee any changes in circumstances and you have little or no disposable income (I think the limit is £50 pm) after all normal household costs like rent, food, travel, utilities, insurance, medical etc are paid, then a Debt Relieft Order is probably the way to go.

I don't know if you make any payments during the year, but if after a year, you are still in a similar financial position, then the debt is written off and you have a debt free fresh start, albeit with an effective five year credit ban while the DRO remains on your credit file.

But hopefully you will have had a year of living within your means without credit and can stick to a budget, if you have sufficient means to start with of course.