What is the reality of living with a Debt Management Plan?

[2ducks2ducklings]

I know this is a sensitive subject and I don't want to know any financial figures as such, just, I suppose, a review of life on a DMP.
Our house renovation and the birth of our third child has meant we have relied on credit to 'manage' more than we wanted to. We have never missed any payments to our creditors up to now but are at the point now where we may as the bigger bill we pay each month will be taken before we get paid. This hasn't normally been a problem before as we had a substantial overdraft limit. However we were always in the overdraft and we're getting charged a high amount of interest etc, so paid it off using a 0% offer on a 0 balance credit card and then reduced the overdraft right down.
I'm at the point where I can't see this ever improving. Neither my husband or myself are in the position to earn more money in our current jobs. I'm actually on the threshold for the tax allowance so I would have to be careful that any extra job I potentially got wouldn't push me into paying tax and therefore making it less useful for me to work extra. My husband has a decent wage but not massive by any means. What it does mean is that we don't qualify for any tax credits by a very small margin (I don't actually kind this, we decided to have the kids, we are responsible for paying for them) but included it so to give a rough idea of his earnings.
In my head, and according to StepChange.org a DMP is most suitable for our situation. But I'm worried incase I have built it up to be a magical cure whereby the pressure is reduced by is paying considerably less each month (obviously for a longer period).
I really would love someone who is currently on a DMP to give me some realities of life on one. Particularly the restrictions it can place on your lifestyle. What are the cons of them because at the minute all I see are positives. I don't necessarily care about my credit rating as such as I never really want to end up in this position again but I do have a mortgage so would it restrict the types of mortgage rates I could get?
Many thanks in advance.

I'm actually on the threshold for the tax allowance so I would have to be careful that any extra job I potentially got wouldn't push me into paying tax and therefore making it less useful for me to work extra

You'd still get your tax free allowance, just pay tax on the extra. You're surely not going to limit your lifelong earning potential in order not to pay tax?

DMP is a potential waste of time. The creditors don't have to agree to it and can still add Interest and fees and can still give you 1 or 10 CCJS

I can't help with dmp but I can share that I was made bankrupt several years ago. With that I had to pay a large portion of my salary to the insolvency people. They decided the value after a call where we discussed my outgoings. Those 3 years were tough but I managed. No holidays, treats, minimal money for birthday gifts etc but I survived and today I'm in a good place financially. Look on the martin lewis debt forums.there is loads of advice and people in the same position as you. Good luck

I’m just wondering why you are having a third child when you are struggling financially. You also won’t get any child benefits for a third child now.

I am nearing the end of a dmp and for me it was a life saver. I accumulated the usual debts over a couple of years (car, credit card, overdraft, store cards) but after becoming a single parent the repayments all together became crippling.

I was paying nearly £600 to “maintain” the debt, those were contracted or minimum payments and interest continued to be added

After my dmp all creditors agreed to freeze interest and accepted reduced payments, I have been paying £175 pcm for 4 years and will be debt free in two months.

No, they don’t have to accept the new amounts or freeze interest, if you are genuinely struggling to pay most prefer to get a regular reduced payment than have to deal with you defaulting.

Personally it was a massive weight off my shoulders, plus I have been unable to create any further debt. However, if you will rely on new debt in the near future such as a new car etc it would be risky as your credit rating will take a little dive

I’m just wondering why you are having a third child when you are struggling financially. You also won’t get any child benefits for a third child now.

Ah yes op, the perfect solution, please just rewind time and don't conceive your third child. not always that simple is it?

No real advice except go to a debt advice centre cab or several local churches run them round here. Have a good chat with them and see what your options are. Good luck

I did it. It was brilliant.

DMP working very well for a close friend of mine.

Yes it does place restrictions but they do have some discretionary money and they have the satisfaction of knowing that they will shift the debt. And in the meantime they have learnt to live within their means.

As for the restrictions op, I find the amounts manageable. We have a food and household budget of £60 per week for just myself and Ds and that is enough by using Aldi. We still eat out occasionally at Nandos with careful budgeting I use a Kidspass as well to get discount days out.

When you fill out the budget form for the dmp it does suggest amounts that are suitable for your family size for each selection, I would recommend going to the highest amount for all even if not required. For example mine allows £30 for hairdressing but I don’t use it as my friend is a hairdresser and does ours for free in exchange for having my otherwise unused garage to store lots of furniture and equipment.

I use the difference to offset against our car budget as my petrol costs are much higher than the dmp “allowed” due to my distance from work.

Our quality of life is much better now than it was when I was robbing Peter to pay Paul and stressing over whether I would have enough for the food left over from bills

I understand the question regarding us having a third child whilst not being in the best situation financially however we had moved house (I literally had the BFN three days before we had the keys to our house) to a renovation project. It was a commercial property which we are still in the process of converting into a residential house. Due to the unusual nature of the works we had to pay out for things we hadn't budgeted for and as a result, went quite a bit over budget. Some things we left and will do as and when we can afford to but some things such as windows, kitchen boiler and creating bedrooms obviously couldn't wait and there for were, in part, funded by credit cards.

DMPs can be very positive as long as the term is reasonable (no more than about 5/6 years) and the interest and charges are stopped.

Stepchange are a reputable organisation so should recommend the most suitable solution for your circumstances.

As proud says, the allowed amounts are reasonably generous (not luxurious, but the groceries amount will allow some spare money for treats if you are fairly careful for example).

You will also be forced to learn to budget and live without credit, so once you get through the other side your finances should work much better as you should be used to saving money for irregular expenses for example and only spending on luxuries once basic expenses have been covered.