DMPs

[janderson]

Hi all

We are in the process of setting up a DMP after our IVA application was turned down, I am sending correspondence we receive to our caseworker, but am confused over the issue of interest and charges. We are been told it is a good will gesture on their behalf and they like to see at least two months payments before considering this. My point is if they add two months interest to the debt, the payment we make will not come any way near to what the charges will be. it will in effect be wasted money. have any of you out there experience of DMPs and the interest issue, is it likely to be frozen or not.


Thanks


John

[Moneystinks]

Hi John, Not sure about the whole DMP thing. I'll put you back to the top.X

[MelanieGiles]

The problem with a DMP is there is never any certainty about the onging charging of interest and collections. Whilst most lenders appear to eventually cease charges, it can be an uphill struggle in a number of cases.

[mateus]

Hi John. I've had some experience of DMP as have been on one for 2 years, but i'm happy to be corrected if I give the wrong info.

It's actually because some of my creditors refused to cease the interest that i'm trying to get an IVA.

As I said it's been two years since I started my DMP and neither Lloyds or Bank of Scotland have stopped interest, so like you said i'm not paying off any of the debt that I owe them. With the other creditors I had to wait until the sent me a default notice, at which point it was passed onto a collection agency. These guys don't charge interest, they just take the balance as it stands.

Don't really know what to advise, just thought i'd let you know i'm in a similar position. Do you mind me asking what your IVA failed on?

Regards. Lee

[Andrew Graveson]

Hi John,

I do think a lot of this is to do with how hard the DMP company are working to get agreements in place.

The comment about creditors (in general) wanting to see payments for a couple of months isn't necessarily true. Every creditor has different procedures and policies and that sort of generalisation simply isn't possible.

There always will be a period between a DMP starting and interest being frozen. The debts may not reduce during this period and could even increase depending on contributions versus interest rates. I think this needs to be seen in a medium or long-term context; this will be worthwhile if you benefit for months or years afterwards with no interest being applied while you work to clear your debts.

The other way of looking at it is that if you do not act at all the interest would stack up anyway without much prospect of ending.

In terms of certainty about the freezing of interest and charges it would be fair to say that an IVA offers more certainty than a DMP. The issue however is that for many people for many reasons an IVA simply isn't an available or suitable option. Other people would rather avoid a formal insolvency and for that reason select debt mnagement rather than IVA's.

Most creditors are pretty supportive in cases where they see DMP clients making a good and fair effort to repay their debts. Surprised to see Bank of Scotland and Lloyds mentioned below as many of our clients have benefited from their support.

[kal]

We were in a DMP for approx 18 months prior to our IVA.
Although they did freeze our interest for the majority of the time - we did find a few of them added it back on when we checked the statements they sent us.
The company we used were very good, and always contacted the creditors on our behalf and sorted out any problems for us.
However we ended up going the IVA route because of the length of time a DMP would have taken (this is due to our high level of debt), and also a couple of creditors started to take the route of taking us to court.
If you can get a decent company to set a DMP up and monitor it, then hopefully it should work ok.
k.

[mateus]

Good advice given. I would have been quite happy to continue with my DMP if the creditors could have just frozen the interest, but I paid it for two years (hence paid nothing of what i owed them off, just increased what I owe them) so i'm trying for IVA. I personally wish i'd have done IVA from the start as could possibly have been 2 years into it by now.

But i'm not trying to put you off John. And as Andrew said, in the long term it could be worth your while putting up with paying interest for a bit.
Lee

[plasticdaft]

We worked out that our debt would take 14 years 6 months in a dmp,if all interest stopped immediately,which was never going to happen and thats the reason we went for a trust deed(IVA with a kilt on!!)
Having said that if the trust deed fails to become protected we may have to go down the dmp route which would just be plain nasty!!!

[Andrew Graveson]

I think these stories all go to prove once again that it's worth taking a wide variety of advice. Different solutions will be best-advice depending on each individuals unique personal circumstances and attitudes.

Certainly three years in a Trust Deed seems a much better prospect than fourteen years in a DMP.

[kallis3]

kal, you have gone the same route as us (apart from court, we never got threatened with that). We were in a DMP for about 18 months.

All of ours froze the interest, but the company we used, who were very good, charged us for the privilege of doing so. We reckoned that we should try Payplan, who my stepson is with, as they don't charge for DMP so more money could go to the creditors.

It was them who suggested the IVA as we had previously been told we didn't qualify for one.

We haven't looked back.

[daffodilly]

Hi John
I am in a DMP with payplan, who i must say have been great, 2 of my creditors are still charging interest albeit at a lower rate, i have mentioed it to payplan and they are going to contact them. They say they keep contacting them until they get a response, and as they dont charge me for the privelege thats even better. However the IVA route may be my next step, just holding off as you do have more control in a DMP and i hate giving that up, also dont like the idea of being on the register. But if i were you id give payplan a call, cant hurt and they are one of very few who dont charge.

I also have to say again this site is fantastic and so supportive.

[kallis3]

DMP is great, but it takes such a long time to pay it off. At least with IVA you can see the light at the end of the tunnel. OK it is tough but if you put your mind to it, you can do it.

As for the register, I don't think about it most of the time.

[kal]

Kallis - the company i used also charged, but i felt it was money well spent as they kept the creditors away for most of the time.
I do wish that we had been told sooner about the IVA (our DMP advised us), as i felt we paid 18months into this DMP, and we could now be nearly 2 years into an IVA.
A DMP is a good idea, but yes it can take ages to pay off, and you can still get credit (sometimes the temptation is too much), also it is how long the creditors will freeze the interest for.
k