PayPlan Advise Please...

[jo5ephedward5]

Hi,

I’m about to star claiming my bank charges back – I expect these to be in the region of £2-3000.

My problem is I currently owe around 22K in unsecured debt so the refunded charges will make a minimal impact, and truths be known I’ve had no spare money for so long I’ll prolly waste it on a holiday and some new stuff!

I have been affording the payments on all my debts for some time (about 3 years) but every month is a struggle – if I was to go into a Debt management like Pay-Plan how would It effect my credit file…I am up-to-date with all payments and haven’t missed a beat for 2 years but living in London now and only have £20 a month after bills to have a life with isn’t going very far lol...

Having said that I would like a mortgage when these debts are gone…at the current payback rate that’s only 2 years, so should I just struggle on and pay them (as credit file will look good and I’ll be debt free in 24 months), or should I look into a pay-plan and pay for longer (and if so will it screw up my credit file) – decisions decisions.

what are peoples thoughts and are there any alternatives?

[opalfruits]

Any kind of reduced payment will be noted on your credit file. This will be wiped clean after 6 years.

[jo5ephedward5]

will it show as a negative though or will the payment total reduce and the period extend (i guess not as a new loan agrement would be needed as oppose to an ammendment to an existing)

[elsinore]

In some respects, jo5ephedward5, you're in an enviable position. You're up to date with your repayments and you have a clean credit file (you have seen your credit file, I take it?).

 

If you have aspirations to obtain a mortgage then the sooner you clear your debts, the sooner you will be able to apply with confidence.

 

If you opt for the Payplan route, your creditors are not bound to accept your proposals for reduced payments. Even if they did, as you have said yourself the debts would take longer to settle and your credit file would have derogatory entries.

 

I think you should stick with it. Concentrate your efforts on getting your debts reduced by reclaiming your charges. Your creditors will either credit your account with the refunds or send you a cheque. If it is the former, then you will be clear in less than 24 months. If the latter, well that will help to make life more tolerable in the meantime:-)

 

Elsinore

[C&D]

Hello

As you havent missed any payments and your credit rating is good, please dont join a debt management company - When I was about 20 I got into debt and thought the only way out was Payplan and although they have really helped, I wish to god I had just got a big loan and paid all my creditors off and stuck with it.. Trouble is, if you are easily tempted to use your credit cards again this is very dangerous as you will get yourself into more debt!

 

My advise is:

Get one big loan to consolidate your debts into one affordable repayment - even if its over 5 years, its have a good effect on your rating so is ok.

Cut up any credit cards and cancel the accounts so that the temptation isnt there

Consider counselling for spending habits so that you dont end up in a worse situation.

 

I dont know if that helps but thats what I wish I had done!

 

C x

[loobyloo85]

Hello

 

I have been in a debt management plan with Payplan Ltd since November last year. It is a very flexible arrangement, which you make a monthly payment each month into, until your debt is cleared in full. I have found it very useful. I owe about £9730, and before this arrangement I was all over the place. Since paying through Payplan, I am assured that the payments will be made direct to my creditors each month, plus it is free - the creditors fund this DMP with Payplan. Your credit rating will be affected, as you will be making reduced payments, but you should be fine getting a mortgage - I am in rented accomodation at the moment, but getting a mortgage especially with smaller companies shouldn't be a problem. You would also need to find at least £50 for the DMP too.

 

Payplan Partnership deal with IVAs too which is another option, where your debt would be written off in 5 years, however, you would need more surplus, but this would be on your credit rating for 6 years then wiped clean x

[C&D]

Hello

 

Your credit rating will be affected, as you will be making reduced payments, but you should be fine getting a mortgage - I am in rented accomodation at the moment, but getting a mortgage especially with smaller companies shouldn't be a problem.

 

Me & my other half havent been able to get a mortgage due to me being on the debt management programme - We have tried a high street bank and a subprime lender but they didnt want to know and I imagine that would be worse if you had only just joined! If you dont mind waiting 6 years + for a mortgage then Payplan is ok but I really wish I hadnt!

[master woody]

The first thing i would like to say is way at the at this time in the housing market why would any one want a mortgage???? house prices have drop 18% in the last year and are only going down. So if you've you've been refused on say a 100K mortgage in the last year and you were going to buy for 110K you've saved 19 and a half grand! Just in equity alone!

 

At the moment i know people with "perfect credit" rating and can't get mortgages, the banks have no (less) money to lend so have very strict criteria for making loans, this will continue for some years

 

right now it's best to rent and wait for the house prices to come down pay off your debt or save and put down a bigger deposit when house prices are lower...a bigger deposit will mean a better deal.

 

At the end of the day lenders are going to loan you money if your on a DPM, one of the conditions of a DPM is you don't borrow any more which if you think about it if your in deep trouble with debt the last thing you need is more debt!

[jonni2bad]

Just a quick reminder folks -

 

Original post date: 21st August 2006, 11:52

 

Always worth a check!