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By Mr Bump
#19799
Hi there. I hope I am posting this in the right place.

I have been paying into my debt management plan for nearly 7 years paying £70 a month. I have paid back nearly £6,000 of my debt but still have c£12,000 to pay. I recently went to the CAB and they told me that the best thing to do would be to carry on paying the DMP as I am with a free dmp company and all my payments go towards my debt. However I just can't see the end of it and want to know if you think I would be better off stopping my DMP and going bankrupt. Many thanks for any advice.
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By Philip Corfield
#19808
Hello Mr Bump.

You've done really well to keep up with your debt management plan for seven years, but it does appear that the arrangement is due to run for a very long time.

Are you a homeowner? Do you own a car?

If you have few assets and your employment will not be affected bankruptcy may well be a better option for you than the DMP.

I'd suggest you carefully look at your disposable income (the £70 you mention) as if it were really less than £50 a Debt Relief Order might be a much cheaper way to deal with the debts than bankruptcy.
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By Hayden
#19816
Hi there Mr Bump and welcome to the forum :)

I agree with Phil. You have done a good job paying off the debt that you have but if you can only pay c£70 a month it looks like it will take a further 14 years to pay off your debt in full using the DMP.

It is important to understand whether you are a home owner and who much your car is worth if you have one. However if these are going to be unaffected then bankruptcy or a debt relief order (similar to bankruptcy but cheaper to implement for someone with little or no assets) would certainly be sensible. You can find out more information about a debt relief order here: https://www.beatmydebt.com/debtrelieforder/index.htm

Please let us know a little more about your circumstances and I am sure that we will be able to advise you further.
By Mr Bump
#19860
Hello and thank you for your replies.

I have been renting from the Housing Association for the past 20 years. I do not think I will ever be in a position to own my own house... I do have a car, a Vauxhall Corsa which my sister gave to me. I am not sure what this would be worth but it is an R reg and I d not think it would be much more than £500.
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By James Falla
#19894
Hello Mr Bump

Given the circumstances you have described it will clearly take you many many years to become debt free if you continue to pay your debt management plan. Therefore as you have no assets I would suggest that you should seriously consider the option of bankruptcy or a debt relief order.

A DRO would be by far the best solution as it costs just £90 and all of your debt would be written off within one year. However to qualify your monthly disposable income mut be less than £50. As Phil mentioned, it is highly possible that this is the case. What did the CAB say when they looked at it? My sugestion is that you should speak to a expert debt advisor who will be able to help you analyse this.
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By Geraldine
#19910
Hello Mr Bump

I think the debt relief order is certainly the best solution for you. You really should talk through your expenses with one of the Beat My Debt advisors to see whether your disposable income is actually under that all important £50 limit.

If you do not qualify for a DRO, I know it will be difficult but I would then be inclined to seriously consider saving to go bankrupt. If you are on a low income you will need £525 to pay the court fee. If you can save £70 + a month, this will take you 8 months. OK I know this seems daunting but it is far better than the 14 years it looks like you will be paying your DMP.

Even if they thought you did not qualify for a debt relief order, I cannot see why the CAB did not encourage you to consider the bankruptcy route. I fail to see how it is not best advice for you over paying a never ending debt management plan.
By Mr Bump
#20048
Thanks all. As you say, the debt relief order does look like a good solution for me. However I am not sure I will meet the £50 per month disposable income criteria. As you know I have been able to keep up my payments of £70 a month so I am not sure there is much chance of proving that I can pay less than this. Perhaps I should try to save up for the bankrupty. I might be able to save £100 a month if I really try. But what would happen with my creritors in the meantime. I would not be able to pay them as well so i assume that they would take me to court?
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By Hayden
#20055
Hello Mr Bump

I think the first thing for you to do is have a good review of your living expenses. Have you seen the Beat My Debt living expenses guide?: https://www.beatmydebt.com/consumer-deb ... -guide.htm This should help you understand all of the expenses you are allowed to include in your budget. It may well be possible that you have been living on a very tight budget to maintain your DMP payments which could be reasonably expanded. As such your disposable income may legitimately be below £50 a month.

If not, then I agree that saving for bankruptcy is the right thing to do. If you decide to do that then in the mean time you can stop paying all of your creditors and simply offer them token payments of £1 a month. Be open with them and tell them you plan to declare bankruptcy. Yes you may get some hassle from some of them. However as you are renting there is little or nothing that they can do to you which will not be overturned when you go bankrupt.
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By James Falla
#20071
Hello Mr Bump. I agree with Hayden that you should carefully review your living expenses budget before making any decisions. If you want any help with this please contact us at Beat My Debt.

If you do decide to save for bankruptcy then offering token payments is a good idea. It may not stop all of your creditors from taking further action but ultimately this would be stopped when you go bankrupt. To answer your question about being taken to court, some of your creditors might apply for county court judgements against you (this is the court action they are talking about). However as I say, any such action is overturned by the bankruptcy order itself so you in fact have very little to worry about on this front.