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- Mon Feb 07, 2005 9:46 am #3684 As the subject line says i am sinking in debt and really don't know the best way forward, i owe shed loads on credit cards and personal unsecured loans ( i don't even know how much i owe i am too afraid), my earnings have taken a sharp drop over the last 6 months which has been the major problem, i am commited to also paying child maintence too, it's a mess. I have thought many times about running away strarting a new life and waiting for if and when the debt collectors find me, but i don't want to always be looking over my shoulder, my wife hasn't a clue how much debt i am in, and honestly i think she would leave if she knew. Bankruptcy isn't an option as i need to have a bank account and a home to live in.

I am thinking about contacting payplan, what i need to know is this

1. how succesful they are.
2. also if i enter into a dmp what effect will this have on my credit score
3. does entering into a dmp mean having a charge put on my house (i own it but mtgged of course) there isn't a huge amount of equity in it maybe £15k - £20k
4. would i still be able to have a credit card, as i need to buy fuel for my car which gets reimbursed by my company on a monthly basis,
5. sorry forgot to add, i have a fixed rate mtg that is coming to an end in august this year and will need to remtg hse at this point, what effect would a dmp have on this too.

Any other advice would be most welcome, seems like i am not alone with this situation by the looks of things



Thanks

Eddie

[JaneClack]

- Mon Feb 07, 2005 1:10 pm #3685 First of all - bankruptcy does not mean you would not have a home to live in or a bank account. Unless you own your own home or have a mortgage which means there is money technically available to your creditors (and the beneficial interest in which you could buy back anyway) you would not lose your home. Secondly there are about 40 basic bank accounts available - and Nationwide for one will open a flex account for a discharged bankrupt the day after you go bankrupt. So that is not a reason to not go bankrupt - but there are others including some jobs which prohibit it.


Payplan are successful - they provide a non fee-charging scheme as it is sponsored by many of the UK creditors. They are not the only one - CCCS also do this and again are financed in exactly the same way. CCCS is a registered charity and Payplan is an ethical enterprise - staff are paid in both. Neither have unwaged volunteers. The CAB may also be able to do this for you and they do have unwaged volunteers.

Your credit rating will be affected - as it is already if you have not been making payments and I have to say that "in debt management" on the credit file does show that something is being done. The whole aim and object of this is to encourage lenders to lend responsibly - if you cannot pay your creditors now then it is unlikely you could add to the burden of credit. Yes, some clients do have one credit card as long as it is repaid in full every month. The idea of debt management is to use no further credit.

Remortgaging might not be as easy as if you had a perfect credit score but is possible and lots of people do. You might not get the best deals available but your mortgage payments are taken into account - and again if you have not been paying things it will be on your credit file anyway.

If you need more advice telephone NDL and ask for their opinion or contact a local CAB and ask for theirs but if Payplan think it is suitable then I would have no qualms in recommending it.

- Mon Feb 07, 2005 7:16 pm #3689 Eddie

I to have a lot of debt. The CCCS set me up a DMP. Before I set up the DMP I opened a new bank account. My credit rating was still good so I was given an account with a switch card etc. I also had a credit card which I previously paid off so I was able to keep this. It is good to have especially like you say if you need it for work, You could not keep a credit card with a bank you are going to default on.

- Tue Feb 08, 2005 7:59 am #3699 Thanks for the advice, i should have said my mortgage is with my bank, what effect is this going to have if any and i also have a personal loan with them as well.

Cheers

Eddie

[JaneClack]

- Tue Feb 08, 2005 8:31 am #3700 The mortgage would not be affected unless you cannot pay it. The personal loan would be included in any bankruptcy petition or any repayment plan. In bankruptcy if there is any equity in the property this would vest in the Official Receiver and would need to be bought back from him - indeed if you were in negative equity you (or someone else could buy this for £1 and the conveyancing fees).Look at http://www.insolvency.gov.uk and download the leaflet What will happen to my home?

In a payment plan this would not be affected. If any creditor wanted they could go for a county court judgment and if this were not adhered to they could in theory go for a charging order. This would, effectively, turn the unsecured debt into a secured one on your home - it does not mean that the home would have to be sold though. If you were in a DMP you would be paying back the whole debt and this could be included in the DMP.

You really need to go through a financial statement to see the options available to you. With Payplan (and CCCS) you would be under no obligation to go any further if the advice was unpalatable and both would give you the best money advice for your circumstances. It also costs you nothing to do this and everything you say is treated in the strictest confidence.

- Wed Feb 09, 2005 1:28 pm #3742 Thanks again for all your help so far, i have being doing some calculations today it looks like i am £500 short per month and that's with out taking into account buying food, petrol, beer, fags etc. Jeez this is a mess and worse than i thought, i currently pay £540 on 3 personal loans and then have been paying £150 a month to 3 credit cards.

i owe money to the following egg (card and loan), northern rock (loan), co-op visa (card) morgan stanley (card) and natwest (loan) who i also banl with. looking at the advice that others have recieved i am thinking of opening a new bank account for when the s**t hits the fan but who with which is why i posted the details above.

I am gonna give paypal a call but based on what you see above any ideas on what advice they might give other than throwing myself off beachy head!!!


Thanks


Eddie

- Wed Feb 09, 2005 5:58 pm #3759 Hi Eddie,

Don't do anything silly. You can sort this out.

I think it is normal to feel even worse once you realize exactly how much debt you are in but now you have confronted it you will feel better.

Northern rock egg and nat west froze interest once I had a DMP in place.
One exception was that 1 of my egg accounts proceeded to a CCJ. Although I was worried at the time once the CCJ was in place the Judge agreed to a variation order and ordered that I pay the amount put forward on my DMP.

Your wife probably knows there are financial problems. The last thing she needs is for you to do something drastic-- its just not worth it. Contact one of the charities- they really will help you.

Once your set up with a DMP and feel more in control you probably feel you can discuss it with your wife.

Good luck

[JaneClack]

- Wed Feb 09, 2005 6:03 pm #3761 Nationwide do a basic bank account called a Flex Account cash card - does standing orders, direct debits and gives you a hole in the wall card. It will also do you counter cheques for third parties and charge you nothing. It doesn't give you a cheque book, debit card or overdraft facility - but you do not need one. You need somewhere your money will be safe.
You can open an account with them overnight!!

[JaneClack]

- Wed Feb 09, 2005 6:04 pm #3762 I know - I have that card!!!