Author Topic: Consequences of breaking a DMP.  (Read 2769 times)

mikkilaw

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Consequences of breaking a DMP.
« on: Dec 27, 2011, 09:24:06 PM »
Hi everyone,
Looking for a bit of help. I started a DMP about eighteen months ago and, on the whole, have kept up with all the payments (there have been a couple of minor exceptions when I haven't been able to negotiate a payment for a while with one or more of  the creditors when the debt ownership has "changed hands"). Now, unfortunately, due to totally unforeseen circumstances, I am unable to make any payment for two months. How long do you think it will be before the bailiffs come knocking?

mikkilaw

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Re: Consequences of breaking a DMP.
« Reply #1 on: Dec 29, 2011, 07:51:48 PM »
To elaborate a little:
I realised about eighteen months ago that my debts were becoming an issue and, after trying various other solutions, I decided to set up a DMP. Although I initially sought the advice of the CCCS and posted on this forum, my agreement was largely self-administrated. The amount I agreed to pay back was challenging for me, but it felt good to finally see the balances of my debts decreasing rather than increasing! Unfortunately I am now in a situation where I have to find somewhere else to live, the cost of which could be anything between a months' rent (I am currently paying in arrears) and about a thousand pounds (allowing for the cost of a deposit and moving all my stuff etc.) So as such I have had no choice but to stop the payments, all of which will be due by early next month. I have not spoked to any of my creditors as yet about the situation, I really was hoping to get some advice from the folks on this forum regarding how to play it! And advice will be very gratefully received and definitely considered seriously.

James Falla

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Re: Consequences of breaking a DMP.
« Reply #2 on: Jan 04, 2012, 12:19:48 PM »
Hi Mikkilaw
 
Good to hear from you. Once you have moved and got your self straight do you think you will be able to continue making your DMP payments once again? If so the best thing to do is speak to each of your creditors. Explain the situation and ask each of them for a payment holiday. Some will be accommodating and some will complain and even start adding interest and charges to your balances again if they had previously frozen them. However if you simply cannot afford to pay for the time being there is nothing you can do.
 
Once you are straight start making your agreed DMP payments again - some may need to be re-negotiated.... If you only miss a couple of months some of your creditors might start to threaten court action (they mean issuing a county court judgement) but I think bailiff action is unlikely.
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mikkilaw

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Re: Consequences of breaking a DMP.
« Reply #3 on: Jan 06, 2012, 09:08:00 PM »
Thanks for the response James, as always top quality advice!
I fully intend to resume my DMP payments, albeit potentially at a reduced amount (my rent is likely to be higher elsewhere, as my current landlady is a friend), as soon as I get back on my feet. Since my last post I have written to each of my creditors explaining the situation and hopefully they will be agreeable. My only real concern is that some may get a bit edgy about the fact that I'm moving house, as I imagine from their perspective this could be seen as me potentially trying to evade my liability?
Since I work in financial services, it is of the utmost importance that my credit rating doesn't get too hammered; I'm about on the end of my rope as it is! Do you think there is a real possibility of me being issued with a CCJ?

James Falla

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Re: Consequences of breaking a DMP.
« Reply #4 on: Jan 09, 2012, 05:52:18 PM »
You will definitely have to speak to each creditor and explain the situation mikkilaw. If you have to find new accommodation and the cost of this is going to give you problems there is really very little you can do. I would hope to think that the creditors will be understanding. However if you have to miss a couple of payments and then reduce the payments you make on an ongoing basis you must expect that some will not be too happy and will start up their collection actions once again. Having said that in terms of whether you might face getting a CCJ, I think this is unlikely as long as it is only 2 months payments you miss. The key is to start making monthly payments again asap (albeit that threy will be lower).
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mikkilaw

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Re: Consequences of breaking a DMP.
« Reply #5 on: Jan 16, 2012, 12:30:46 PM »
Thanks James, I have contacted each creditor in turn and explained the situation and, thus far, have had no threats of recovery action or court proceedings. Going forward, I may be tempted to try working with a DMP company as I imagine this would be the kind of situation where such a company would come into its own? A friend of mine who has been using a company to organise his DMP told me that, when he lost his job, they were quite happy to freeze his account for 90 days until he got back on his feet. I would also appreciate the convenience of only having to make one payment to one party once a month. I guess the only downside is that most such companies charge a fee, and so further prolong the period for which payments must be made.

James Falla

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Re: Consequences of breaking a DMP.
« Reply #6 on: Jan 17, 2012, 04:27:27 PM »
Hi mikkilaw
 
You are quite right. The advantage of using a DMP company is that they (the good ones at least) are able to manage the agreement on your behalf and negotiate payment breaks where they are justifiable and of course allow you to make one single payment each month.
 
As you know mikkilaw there are some DMP organisations who will do the job for you for free. I think you have already spoken to the CCCS which is one of them. However you have to bear in mind how they are funded and of course it is by the creditors themselves. As such you are never quite sure whos best interest they are working for. Yours or the creditors....? If you use a fee charging company then yes, you are prolonging the period over which you will be paying your debt as you have to pay the fee as well. However at least you are sure they are working in your best interests and these companies are normally the ones who will help you if you need a payment break. Let me know if you want any recommendations.
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mikkilaw

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Re: Consequences of breaking a DMP.
« Reply #7 on: Jan 20, 2012, 07:22:53 PM »
Thanks again. I think one of the criticisms I would make of the CCCS is that they force you into making a payment plan which allows you very little to spend on anything apart from paying off debts!! I did seek their advice, and obtained their all important reference number (having that alone seems to help when talking to creditors), but rather than have them administrate my payments I set up and administrated my own plan. I ended up paying a little under £200 a month, as opposed to the £300 plus the CCCS would have wanted me to pay!!

James Falla

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Re: Consequences of breaking a DMP.
« Reply #8 on: Jan 25, 2012, 02:34:26 PM »
That is interesting mikkilaw. At the end of the day the most important thing when starting a debt management plan is to ensure that your monthly payments are reasonable and based on a figure that you can afford. It is no good squeezing your living expenditure budget too hard as this will often result in you failing to be able to keep up the payments. I am surprised that the CCCS squeezed you regarding the amount they said you could afford to pay. At the end of the day the key fundiamental of a debt management plan is that your creditors are not agreeing to write debt off for you and will eventually be paid in full. As such they are normally happy to let you have a reasonable living expenses budget as they know this will mean you are more likely to stick to your payments. You have proved this by agreeing payments at £200 when CCCS wanted you to pat £300. Seems crazy.
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mikkilaw

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Re: Consequences of breaking a DMP.
« Reply #9 on: Jan 25, 2012, 10:16:58 PM »
Yes the amount I was paying (actually about £180) was quite affordable, another £120+ would have been a struggle but there are very rigid guidelines around filling in the online form. For example, there was a category on there called "food at work" and the maximum it would let you spend was £30 a month! Very strange!


Alas, even the £180 proved unsustainable in the light of having to move - but I hope to be back to paying something by the end of February, probably somewhere in the region of £125 taking into account the impending changes to my outgoings.

James Falla

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Re: Consequences of breaking a DMP.
« Reply #10 on: Jan 26, 2012, 02:02:58 PM »
Good luck with getting your payments back up and running mikkilaw. Let us know who you get on.
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mikkilaw

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Re: Consequences of breaking a DMP.
« Reply #11 on: Jan 27, 2012, 09:05:19 PM »
Many thanks for all your help James, it is very much appreciated!

James Falla

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Re: Consequences of breaking a DMP.
« Reply #12 on: Jan 30, 2012, 03:30:18 PM »
No problem at all Mikkilaw. I am very pleased to be able to help. :)
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