Need urgent advice about DEBT MANAGEMENT PLAN? Please...

[thatsnotmymonster]

This may be a bit long but I really need some advice.

DH and I have embarked on a process with CCCS. Initially when I told them our income, outgoings and all debts they said we could start a debt management plan. This was beginning of December but they couldn't give us an appointment with a counsellor until Jan 16th.

I just had the appointment on Friday. After discussing the budget with the lady, the money left over to pay the debts would take 18 yrs to repay. She said this was too long, the creditors wouldn't accept it and we would have to sell our house instead.

I have since spoken to an estate agent who said that at the moment we are unlikely to be able to sell our house at all and if we did manage we would be lucky to just break even. So we would be homeless, lose all our equity and still not have enough to pay all our debts off. We also have 3 children under 4 and this just seems such a desperate measure.

We can actually afford to pay more than the CCCS said because their budget includes EVERYTHING- a monthly budget for prescriptions, birthdays, Christmas- everything you can possibly think of. I know you need money for these things but I do car boot sales, we ebay stuff and I have a small irregular part-time job which gives us money from time to time.

Anyway I have reworked the budget a bit (we overestimated on petrol) and have secured another small long term monthly payment for selling some small assets which means it would bring our time taken to repay the debt down to 9 years.

We are also going to advertise a room to let in our house and I am going to try to find a part time job that fits around the children and DH's work (not an easy task).

Do you think this should be acceptable or ca they force us to sell our house?

We have no CCJ's at the moment.

Does anyone have any advice/opinions/ideas- anything?

Thank you for reading this all!

Sorry, not had time to read all the posts, I just really wanted to say that be a bit careful as I went down the CCCS route, they were very ehlpful but then they put me in touch with an agency who drew up an IVA plan, this cost me £2,000. I hadn't signed anything. It was £2,000 for admin. Sorry I really don't want to scare you, but do be careful. I hope you are moving forward with getting out of debt, it's absolutely horrible.

Have a look at this information

www.aib.gov.uk/MainNav/Services/ptd

As you are in Scotland things are very different.

Give National Debtline a ring and check out their site

www.nationaldebtline.co.uk/scotland/

This is information from the Bankruptcy Section of moneysavingxpert.com. I'm not suggesting you go bankrupt but there is some good information in the links.

forums.moneysavingexpert.com/showthread.html?t=1056083

I would strongly suggest you join the DFW board on there. There are some great supportive people there who will help support you through this.

forums.moneysavingexpert.com/forumdisplay.html?f=76

Thanks again for all the really helpful posts.

Katiekitty- the CCCS offered to put me in touch with someone who would discuss a Trust Deed which is the equivalent of an IVA in Scotland. I declined as I don't think we are at that stage.

Whinegums- CCCS do not charge but are not yet government funded. I phoned CAB today but I waited till the children had gone down for their afternoon nap and the local branch is only open in the morning! Will try tomorrow morning.

Joyfuleyes- we are in a very similar situation to you. We are in the process of changing bank accounts and making token payments (as advised by CCCS). Be careful though because we just had our 1st official appointment with them (had to wait ages for it) and they have turned round and said our surplus is not adequate (£185). Like you we would be looking to increase our income- in the next 1-3 years DH is almost certain to be promoted to Director level at his company and when our youngest starts school I will be able to get a good job. In the short term we have various ideas for increasing our income. I just can't understand why we have been told we should try to sell our house before these things?

It is hard to advise without knowing all the types of debt that you have run up, but a creditor may be able to get a charging order on your home and force a sale. Now as the creditor incurs costs in doing this, then it isn't usually worth their while, but if the amount of debt is sufficiently high, and if they have little chance of getting paid off in the short term then they may wish to do so.

Creditors will want to see a sensible and managable repayment plan. If you do have equity in the property then they know they don't have to wait 18 years, they have an earlier remedy. If you do present a budget which they view as unrealistic or unsustainable (eg no Christmas and birthday presents for anyone for the next 10 years), then they may negotiate, but they wouldn't do so a second time. Ultimately they need to look at what option for them allows the greatest recovery of the amounts owed.

When you view that you can repay in 9 years, is that assuming that all interest charges are frozen?

Thanks LadyMuck. Thing is we wouldn't just keep paying that for 18yrs. We would take measures to increase our monthly income and sell the house within 5 years (when the market is better and we have repayed some of the debt). What I'm really asking is why should this not be acceptable rather than selling the house now when the equity is very low and chances of even selling are minimal. We would definitely not make enough to pay off all the debt, rent would not be less than £600/month and we would be off the property market.

I think the advice given by cccs is wrong.

You need to look at a few options.

1. The equivalent of an IVA (trust deed). This is normally used if the debtor has assets they need to protect such as a house/car etc. If you decided to go bankrupt you would lose the car if it were worth over 2k and normally your home as well. You've said you are not at that stage yet but if you cannot get a debt management plan approved by your creditors this may be the only route.

1. Self managed DMP. You would negotiate with all your creditors. It's easier than it sounds. YOu work out a reasonable budget and then pro rata the surplus into payments to each of your creditors. This would be reviewed every 6-12 months so that you can increase payments etc.

This would also give you the flexibility to put extra income away for savings towards full and final payments. For example, say you have a credit card with a debt of 2k on it. YOu can make the normal pro rata payments to all of your creditors whilst saving any extra cash you may get through boot sales etc. When you have say 75p in every pound of the debt saved up you can make a full and final settlement offer to the credit card company. If that is accepted you would then up your pro rata payments to the remaining creditors accordingly. It's a good way to pay back debt faster.

1. Managed DMP administered by someone like Payplan or cccs. If you went this route you need to make sure that you are in constant contact with the administrators as mistakes can be made. Also, if they do not get your offer letters sorted quickly you can find that you end up with extra charges from your creditors on top of the current debt.

1. Bankruptcy - a last resort really only to be used if there is no realistic chance of being able to repay the debt.

Don't sell your house in my opinion. There is no need.

Well, when CCCS/CAB/whoever are advising, they have to look at how your financial statement would be received by the creditors. Some creditors will take the view that "a bird in the hand.." and that by forcing a sale they might get half their debt paid back, whereas otherwise they too are left hoping for your dh's promotion, and for you to find a wellpaid job as we head into a recession etc.

There is a risk that if the CCCS were to in fact spell out your situation to creditors by sending them a financial statement then it would cause the creditors to take more drastic action now as they may view that to have some equity is better than having none. If you have no equity in the house, then creditors are unlikely to head for a charging order.

You obviously believe that you do have a workable plan to repay the debt, assuming that your creditors agree (I'm assuming that you're not able to meet whatever the current repayment schedule is?). Again without details of what the debts are it is hard to advise. But creditors are usually unlikely to write-off either interest or balances if there is an asset which could be sold. Does your 9 year repayment plan assume interest will be frozen?

Oh sorry, I see that you are in Scotland. Not sure about the law there. In England for example creditors don't have to agree to an IVA, especially if there is equity available.

Thatsnotmymonster - why don't you think you're at the stage for a protected trust deed? I can't say if £185 is a realistic amount for the payments on that without knowing your total debt, but it's likely it would be. You would be able to keep your house, car, etc, and most importantly, you would be debt free within 3 years. It doesn't carry the 'stigma' of bankruptcy, which may affect your DH's employment - in many professions, he would not be able to become a director if he was insolvent/had CCJs, etc.

Hopefully you will get the right advice for your situation from the CCCS.

Just to update everyone. I finally managed to speak to someone at Nationa Debtline as I have been unable to get through to my local CAB. I told her the exact situation we are in with CCCS and she confirmed that advising to sell house should only be a LAST resort and not adviseable at the moment. She also said that our payment and plan should be accepted even if it does take 18yrs to pay off so the fact we can improve on that, she said, is certainly not unreasonable and should be accepted!

So I will go back to CCCS tomorrow!

that seems more positive TNMM , hope you can sort something.

Thanks- I hope so too! I have been trying to get in touch with CCCS all day. These places are all so busy just now.

For that reason i think it would make more sense for creditors to work with you as am sure they are inundated unfortunately.