DMP or IVA and future mortgages

[gheckomania]

Hi there

I'm after some advice having recently faced up to the fact that I have debts that are completely out of control and need to be addressed before things get way out of hand.I have been to CCCS and Payplan as well as Churchwood Financial to determine what the best course ofa ction is for me owing around £15,000 in credit card and loan debts and having three defaults on my file.I was jsut about keeoing my head above water but having moved into a new flat and my partner being self emloyed it has been up to me to pay my bills and all the household bills due to his business being so bad. I also wrote my car off recently and to pay out for a new car and insurance as well as several other emergency unexpected elements that have mean't I;ve fallen further into a mess. What I want to know is whether a DMP is the best option as i have worked out I can be debt free in 3 years paying £399 a month.How will this affect my ability to get a mortgage in the next couple of years and how long will it take once the DMP finshes before my credit rating returns to normal?

My partner is not aware of my additional outgoings and although it is clear we have little money this debt is my responsability not his and therefore I am trying to resolve it myself.

I'd really appreciate some advice as I want to make sure that in entering a DMP I'm not creating further problems for my future.

Any advice would be most welcome


[:)]

[MelanieGiles]

If you can be debt free within three years, your best option is to negotiate reduced payments with creditors now and try and manage your affairs directly. Paying professional fees to a debt management company will merely delay your eventual repayment.

Regards, Melanie Giles, Insolvency Practitioner for over 20 years.

To have me propose an IVA for you, please visit:
http://www.melaniegiles.com/ivaEnquiry.asp

See customer feedback at:
http://www.iva.com/iva_companies/IVA_Advice_Bureau.asp

[Andrew Graveson]

Hi gheckomania,

Firstly I'll wear my debt management hat. If you can clear your debts in three years via a DMP then this will be two years less than an IVA would usually take (presuming you cannot access a lump sum?). As such a DMP could be the way forwards for you. Make sure the DMP company that represents you is allowing you enough money to reasonably live during the duration of the DMP.

Wearing my mortgage broker hat I would not be overly concerned about the defaults that you have. Some lenders choose to ignore them. The most important thing to a lender is generally that you can afford the mortgage that you are taking on. For this reason dealing with your debts to make your monthly payments affordable and to clear the balances as soon as possible will be in your interests. Action now will also reduce the risk of getting County Court Judgments which will make getting a mortgage more difficult and/or more expensive in the future.

Andrew Graveson
Mortgage Broker & Bright Oak Debt Management
andrew@brightoak.co.uk
www.brightoak.co.uk

[MelanieGiles]

The benefits of having "dual-hatted" advisors is so helpful!

Regards, Melanie Giles, Insolvency Practitioner for over 20 years.

To have me propose an IVA for you, please visit:
http://www.melaniegiles.com/ivaEnquiry.asp

See customer feedback at:
http://www.iva.com/iva_companies/IVA_Advice_Bureau.asp

[mikebdomain]

If an unsecured debt has been defaulted, sub prime lenders will normally;

a) ignore the default for credit scoring purposes and
b) disregard the debt for affordability purposes.

For example; a sub prime lender may offer a prime product to somebody who has defaulted, whereas both a prime and sub prime lender may not be able to offer any product if the unsecured debt is being serviced, due to their affordability calculations.

The above being said this is not in any way a recommendation to anybody not to pay their unsecured debts.


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LEYBRIDGE LIMITED
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[gheckomania]

Thanks for your advice this has made put my mind a little more at ease regarding DMP's and the ability to obtain a future mortgage. I have contacted Payplan however the advisor that I went to was must unhelpful and seemed to think that Bankcrupcy would be the best option. I don;t think that this suitable at all and was alarmed this was even suggested. I think I will try and negoiate a DMP myself first and then think about approaching a company most seem to charge and Payplan has not impressed me at all. Are there standard letters that can be used?



Jinks

[Andrew Graveson]

Hi Jinks,

I do not know the whereabouts of standard letters that could be used but your letters should include:

1 - An income and expenditure statement demonstrating that you are offering to repay each month what you can reasonably afford.

2 - A list of creditors and the amount owed to each.

3 - An offer of payment to each creditor that treats each fairly with pro rata payments based on the size of your debt to them (unless there a pressing reasons to favour one such as huge interest rates or a threat to essential services that you need).

4 - The date that you will pay each month and by what method.

5 - A request that interest and charges are frozen as you are experiencing financial difficulties and are attempting to repay your debts as quickly as possible.

If you are unimpressed with Payplan and want a "free" company to help you then you could contact CCCS. They are a charity funded, at least in part, by the credit industry.

Alternatively as you point out there are fee-charging companies (ourselves included) who charge a fee for the negotiations as mentioned above, the issue of payments each month, and regular reviews at the request of your creditors in the future.

Andrew Graveson
Mortgage Broker & Bright Oak Debt Management
andrew@brightoak.co.uk
www.brightoak.co.uk