25 Feb 2015

A question about : DEBT REPAYMENT ADVICE NEEDED!

Over the last few years I managed to really make a mess of my financial affairs and ended up in debt.

Around 12 to 18 months ago I ended up goind to a Debt Management company, who helped get things sorted (initially) and I ended up making reqular payments to them who in turn were paying towards the debts. Unfortuntely, over the last couple of months they've been late making their payments even though I've been paying them in full and on time. Consequently the Creditors have been on my back about it. When I phoned the DM company to see what was going on, I was told that the person dealing with my case was on holiday and they couldn't do anything about it until that person got back! To add insult to injury, I got a letter from them last week to say that they wanted a further Ј10 pm on top of their management fee (currently around Ј35 pm) to cover their administration costs etc.!

They are a local company, which was handy initially, but recently they seem to be not as "switched on" as they used to be and worry me a bit with their seemingly too laid back attitude to things.

After a call from a Creditor, I contacted the CCCS but after talking to them and explaining that I have been self-employed since last February, they said that as I didn't have a regular amount coming in on a regular basis that they could provide me with information only and that they wouldn't be able to act on my behalf with regards to dealing with Creditors. They were basically saying that my budget would have to be reviewed on a monthly basis and that I would have to vary my payments depending on my income.

Since then another Creditor has recommended PAYPLAN and as I was discussing my dealings with CCCS with the Creditor, they suggested that I "bend the truth" a little when I get 'round to calling PAYPLAN.

The bottom line is that I owe :-

1. Ј6800 to Building Society (following reposession few years ago)
2. Ј6300 to 2 Credit Cards.
3. Ј550 to 2 Store Cards.
4. Ј1000 to Personal Loan - paying back Ј35 pm.

All accounts had interest frozen and I was paying Ј170 pm which was to cover payments and DM fee.

Although I'm self-employed, I do make quite decent money although I can't say that it comes in on a weekly or really "regular" basis. I also have a little "sideline" job where I get around Ј150 pw cash. I use this money to cover my mortgage, healthcare, insurances, DM payment etc. This is quite a consistent job and on some weeks can make a bit more.

If possible I'd like some advice on :-

1. If PAYPLAN can help, what exactly should I tell them about my "regular" money coming in?
2. Will they deal directly with the Creditors or will I still have to approach them?
3. Is there a general rule of thumb to how much I should be paying back to any particular debt?

If it comes off (everything's crossed!) I might land a nice job that may give me a few grand in my pocket. If this is the case, I'd like to plough some of that money into my debts and hopefully take a chunk out of them; maybe pay off the Store Card and Loan and possibly a bit of one of the others.

When it comes to paying off debts, do the Creditors insist that you pay everything off in full or are they "open to offers"and possibly settle on a reduced amount? If they were willing to negotiate, again is there a rule of thumb to how much they'll accept and write the debt off?

Once (one day!) my debts are paid off, how long after am I likely to remain blacklisted? Not that I want a credit card or anything, but it always seems to rear it's ugly head up. Is there anything I can do afterwards to improve my credit score?

Don't know if anyone can advise me on anything, but all help would be gratefully received.

Thanks.

Best answers:

  • Is there anything in writing that restricts you from dumping your debt management company? If not, I would dump them -- they've increased your fees and lowered their service.
    Why should you give them Ј35-45 / month? I would contact each creditor and ask them if you can deal direct on the same terms agreed but pay them (by direct debit) an additional Ј5 / month off your debt, since your debt management company hasn't been doing its job.
    Anything extra you can do use to clear one of your store cards, then use the money you were paying on that store card as extra to clear the other. It will be a great feeling to see those debts go away. Then, use those payments to start on one of the credit cards.
    If you get some extra money, they might settle for less the amount due, but it will do more damage to your credit record than if you pay it off in full. And really, it isn't their fault you borrowed the money, you do owe it. So really, it is better to pay it off -- you will find your conscience easier if you do. And while this is a lot of debt, it isn't impossible -- others have had it far worse.
    Do everything you can to reduce your spending, and if you can find any way to increase your income by working more, it will make a big difference to your debt quickly (as long as you don't just go spend the extra money!).
  • I'll have to double-check, but I'm pretty sure that I'm no longer tied into any contract or similar. As I recall, I paid an up-front fee when I went with the DM Company first and they just took their cut each month. As you quite rightly point out, they seem to be doing very little for a lot of money.
    Would you recommend dealing with the Creditors directly or is it best to go through a company such as PAYPLAN?
    Do you know what kind of information they require with regards to proof of earnings, expenditure etc.? Do I have to be able to account for every penny in and out, or do they trust you to be honest with them? I've got nothing really to hide (except from Mr. Taxman!).
    I'm with you on the paying off the debts in full issue, but just out of interest if you settled for a lesser amount, does that mean that the Creditors penalise you by screwing your credit rating even further?
  • We went to a debt management agency because creditors wouldn't listen to us, as soon as they had a letter from the agency they started listening : Anyway as soon as payment amounts were agreed we dumped the agency. We had the same problems as you (I wonder if it's the same agency lol). I rang the creditors and said we'd be paying them direct from now on, they said that was fine. I upped the monthly payments to each of them as I wasn't paying fees anymore, they didn't ask for expenditure sheets.
    Would just like to say, we should have gone to CAB in the first place but we panicked.
  • How much money does PayPlan want? If you can get the same deal directly, why pay them? I don't know anything about them.
    CAB is a charity, costs you nothing to use them. But it seems if something was already set up that you could handle and they were happy to accept, if you contact them directly and offer to continue it plus Ј5 / month, they should have little objection and you are ahead of the game.
    I'm not an expert on credit ratings, but I think paid in full (but late) shows up differently on credit reports than a partial payment settlement.
    It is a very bad idea to be hiding things from the taxman. He has ways of finding out, and the consequences are significant.
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