DMP Query

[Notquitesureaboutthis]

Hello,

I'm after a bit of advice please.

I'm interested in setting up a DMP with Step Change.

I won't go into the boring details but can anyway let me know where I stand with getting a mortgage (first time buyer) after clearing my debt through the help of a DMP?

I've read it stays on your credit file for 6 years which would really affect getting a mortgage I presume; but then I read that's only if you miss payments or if you are paying less than the original minimum payments.

So providing I am making all payments on time and above the minimum fee then it might not touch my credit file at all? Is that right??

P.s. I know you may wonder why I want a DMP set up if I can afford over the minimum payments each month but it's really so I can have my debt grouped together iyswim and for support because I keep going into my overdraft and dipping into my credit card/store card. My debt is just building and building and I no longer have faith in myself that I can stop adding to it and eventually I fear I won't be able to afford the minimum payments. I feel a DMP will help me regain some control before it gets worse.

Thank you.

You might find more specialist advice on Money Saving Experts Forum, especially the Debt Free Wanabee Threads.

The thing to know are that if you enter into a DMP you are expected to put all of your debtors on the plan so its fair to them all.

This is where it gets tricky as some of them will log you as having defaulted on your debt, even if you hadn't missed payments and were paying them the same as you before, because your debt was now being managed through a DMP. You should be able to find out which are likely to do this on MSE.

The good news is that 5 or 6 years after the plan finishes it shouldn't touch your credit file regardless.

There is an approach with DMPs that some people take which is:-

• set up minimum payments
• build up savings then when you have about 50% of the debt amount saved contact the company to make them a full and final offer

Most people on MSE also recommend cutting up your credit card and store cards and building up an emergency savings pot.

I've just finished paying back the debt I got into, I wish you luck and I promise it is as good as you think it will be when you get there.

If you can afford the minimum payments you won’t qualify for a DMP. They are a declaration that you can no longer afford to keep up your credit commitments as per the contracts you signed up for and therefore you’re seeking to make an arrangement to pay less.

Step change will go through your finances and assess whether it’s appropriate and whether they will offer you a DMP but if you can meet the minimums and all your other priority bills (rent, council tax etc) you aren’t actually insolvent. It isn’t an easy fix “consolidation” like you’re looking for ie putting it all in the one place for your convenience.

If you do qualify for a DMP then your accounts will default and your credit file will reflect this for a few years. Unfortunately you can’t have it both ways - either you can meet the minimums or you’re seeking a debt management solutions/

It sounds as if you need to take control of your situation and use self discipline to stop your debt from building. Cut up your cards and cancel your overdraft. Examine the reasons you are spending and change your habits. Focus on repaying the debt, however slowly. MSE debt free wannabe board is a good place to start.

It seems daunting at the moment I’m sure but you can sort it out! Good luck.

I've had a DMP and been able to get a mortgage twice through a specialist mortgage provider.

I set up my DMP in 2006 and made my last payment in 2017 (finished early).

I set up a DMP as my ex ran up huge debts in joint name loans, living off credit cards in my name etc before I kicked him out. The DC were little and I only worked a few hours a week and very, very quickly the debt got out of control because my ex refused to pay anything towards them. I requested an IVA but a DMP was offered as a better solution for my circumstances.

I remortgaged with a specialist mortgage provider in 2006 to put the house in my name only and pay off my ex who was insisting on getting his share of the equity in the house and I got a joint mortgage with my new husband in 2010 (different house) with a different specialist provider.

Whether I would have been able to do any of that (DMP, remortgage, new mortgage) without already being a home owner, I don't know.

Expect to pay much higher mortgage interest rates (x3), larger mortgage provider fees (at least double), generally it will cost you a lot more than someone with "good credit".

If I could "do it all again", in hindsight I would have sold the house back in 2006 and paid off the debt in one go. I thought I was giving my DC more security but I was actually just living a miserable life, hand to mouth for years. It was an interest only remortgage so when I eventually sold the house most of the money went back to the mortgage provider and the equity went to my DMP plan. I gained nothing from the arrangement apart from a hard life lesson.

My advice to anyone in similar circumstances is please go to Step-change or a similar debt counselling service and don't try and struggle paying the debt with interest included as "it's the right thing to do". The debt will very quickly get out of control if you can only afford to pay minimum payments and you will end up paying far far more than your original debt amount.

I HATE any type of credit now, it's offered too easily and, despite best intentions, IMO you only need ONE BLIP in your plan to repay and you are fucked.