debt management plan

[im-confused]

please can someone help? I have a loan with about £7770 owing, I pay £168 a month and have 47 months left on it. I also have a credit card, £2270 owing and pay minimum payment of £60 a month and the interest is about £44 a month.

I recently had a pretty big cut in income and I'm struggling to pay. I phoned a debt management place and they can do the following - knock my payments down from £230 a month to £171 a month (this includes a £32.50 a month fee) i would pay this for 74 months and then my loan and card will be cleared. They say the interest on the card will be frozen. According to them if I pay the credit card at minimum payment it will take years to pay off and I think they said I would pay £12,000 back in all on it.

I can also have a bank account with them where they would pay all DD and the monthly payment on my debts then transfer the left over amount (which we have agreed on) to a card account, this has a fee of £14.50 a month. I am undecided at the minute whether to take this option.

I dont know what to do. I am not good at maths and I am unsure whether I would be better carrying on paying as I am then after the loan is paid put the extra money on the credit card. Would this clear the debts quicker or is there any other option I can take? please help :(

[CheekyChops]

Definately don't go with any company that are going to charge you a monthly fee!! £32.50 a month for 74 months is over £2000 which could go towards clearing your debt. There are charities that can set you up on a DMP for free, try one of these:

http://www.cccs.co.uk

http://www.payplan.com/

[Buenchico]

I'll add my support to CC's post.

CCCS can help you sort out your problems. If a formal debt management plan is required, they'll set it up for free. (Alternatively, your local Citizens' Advice Bureau can provide a similar free service, but many branches have a lengthy waiting list before you can speak to a specialist debt adviser. CCCS can start helping you straight away).

There is never any need to use the commercial companies which feed off people's debt.

Chris

[tigwig]

As others have said please dont go with the options you have mentioned. Go to the CAB and get free help from them. They are supposed to be really good and will help you without charging you. Think about it if you go ahead with this other company you will be paying them £47 every month which is not necessary. Thats £3478 over 74 months!

[themas]

Totally agree with previous posts. Apart from the fee issue, their calculations assume the interest & charges on both debts will be frozen & remain frozen throughout.

Also, do not set up a bank account with any organisation that is connected with your debts. If your present account is with one of the companies you owe money to then immediately open an account elsewhere (NOT with this feecharging outfit) & move your income DDs etc. to it. Otherwise you could find the bank grabs any money paid in to the account to put towards the debt you owe them.

You should get advice from CAB or CCCS on all options, including a Debt Relief Order if you are renting & can satisfy various other criteria.

[im-confused]

Thank you so much to everyone. I'm going to look at the links and try to sort something out this way rather than the way I was thinking of. Hope you all have a lovely day :-)