My Case - CCCS Guidlines

[ToBreakFree]

Hi,

I had my creditors meeting (which was postponed atleast 3 or 4 times) results last week. Natwest and Alliance and Leicester are demanding atleast 160 pounds more per month. I proposed 530 for 5 months and 495 for rest of the 55 months (this is due to be proposed increase in rent). My total debt is 49 K. I am sure I will not be able to afford 690 pounds (and 655 thereafter) per month.

According to this schedule, will be paying around 45K (this includes my bonus...) back out of my total 49K debt by the end of IVA. But I do not think I will be able to afford it.

So I rejected the offer. I am not taking the Bankruptcy option since I have a job. I am proposing DMP temporarily and review after a year. What is the best way to start a DMP, I was told that there are two options - paid DMP and free one. I would prefer the creditors to be benefitted. But is there any pitfalls if I go for free DMP option ?

Also proposing DMP, will the creditors still stick to CCCS guidlines for expenses (I am not sure how DMP works) ? Although it is not legally binding, I understand that creditors normally agree to DMP and they stick to it. Is there any special case where a creditor can take any legal action, even when payments are made without any arrears.

If DMP fails I have IVA, but if IVA fails, I think it will be worse for me since I work in financial domain.

thanks in advance for your suggestions.

[MelanieGiles]

Hi there and welcome to the forum

Firstly you are being very sensible in not agreeing to payments you cannot afford. If you have genruinely put forward accurate income and expenditure figures, then creditors should not push you to pay more.

I note that you are not taking the bankruptcy option as you have a job. Bankruptcy rarely affects employment, so it might be worth having an other look at this as an option. Are you a property owner?

You are correct in that there are two different types of DMP - fee paying and "free". I suggest that you contact both types of company to see which will represent you properly and who you will be most comfortable dealing with in the future. During a DMP there is nothing to stop any of the creditors taking legal action against you, but most DMP companies will actually tell you that this is rare once an arrangement has been set up.

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]

A DMP is not necessarily restricted by CCCS guidelines; a note can be made explaining why a certain expediture level is set where it is.

This is hugely important for all parties. A good DMP is about finding a proper balance for all parties:

1 - Creditors fairly expect an equitable return.
2 - Those entering DMP's want to clear their debts as fast as they can.
3 - It's of no benefit for debtor or creditor if someone entering into a DMP does so at an unsustainable contribution level. The DMP will fail to the detriment of all.

DMPs, like IVAs, are long-term commitments and anyone contemplating such a debt solution should take care to ensure they are entering an arrangement that will meet all of the three criteria above.

As per Melanie's comments there are two types of DMP representation:

1 - "Free" organisations. Whether they represent you or your creditors has been called into question on many occasions within this forum. Where you get prompt and good service, allied with a sustainable level of contribution, along with an energetic approach to negotiating the freezing of interest and charges, this route will clear debt faster.

2 - Commercial DMP companies such as ourselves (there are many others). These companies will represent you and charge for their work. There are good and bad out there; caution should go into selection if this is your preferred option.

It's very rare for legal action to result from a DMP. It only fair to say that your creditors will be asked to treat your proposal sympathetically and commercially; they will choose how they will respond.

Where an equitable proposal is put forwards a surprising number of creditors will generally offer their support.

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