DMP Mutual Support Thread - Part 12

ClaretBob wrote: »

Hi guys,

The time has come that I need to do something about my debt. Ive maxed my overdraft with a week to go to payday and relying on credit cards to see me through and feed my family.

I have approx 14k debt, cards, overdraft and loan. Reading on the internet I believe dmp will be the way for me. I've not missed any payments currently. It might be worth you opening a new thread on the main DFW forum and posting a statement of affairs (SOA). Link to SOA here. With advice you may find you do not need a DMP and could manage to get through this. I love my DMP - best financial decision I've ever made to be honest, but it's worth checking if you need to take this leap before diving straight in

Couple of questions, my mortgage is due for renewal in July, is it wise I stretch things out until I do that and try and get a better deal before going to dmp?
You could try, but if you finances are really tight then lenders will realise this and that alone can affect the deals they will offer you. It's worth check what your mortgage will revert to once the existing deal is over. For instance our deal reverted to a base rate tracker + 0.5% so we are on 0.75% .... a rate we couldn't get on a deal anyway :rotfl:

I'll start applying for a new current account and get payroll at work to change over after this months pay.
Definitely worth doing. If you are still okay with your credit it might be worth investigating a switching deal which pays you to switch. Every penny helps :A

I have a car on pcp that I'd like to keep, I presume I keep that out of the dmp? Presume I'll struggle to renew it in a year when it's finished?
If you do enter a DMP then you are very unlikely to be able to get a new PCP deal in a year's time....well more than unlikely - you won't be able to get one. If you need the vehicle for work then you can justify it's a priority debt and you should be able to keep the car and make payments as per the agreed pcp contract.

Finally for now, people suggest stopping paying before starting dump, how long is normally acceptable? And what are the indicators for kicking off the dump after stopping the payments?
If you do decide a DMP is the right solution for you, then contact your creditors when you are ready and advise you are seeking support with your financial situation. This will kick in a 30 day no contact, no interest or charges period. I would recommend a minimum of 3 months before starting your DMP. If you are self-managing your DMP then I would just write and offer token £1 payments to all creditors and keep paying just that until each creditor defaults the account (not just sends notices of intention to default, but actually defaults the account). It really is worth holding out for those defaults if you are on a DMP. Also this gives you longer to save an emergency fund. Make sure you really do save that money. I have to be honest - I started out with Stepchange managing my DMP and I was with them for one year before I went self managed. I needed the discipline of them taking a single payment and paying my creditors and that time to learn to live within my budget and to save. However, having now gone self-managed. I love it. Only you will know if you can be disciplined from day one of your DMP.

Also, is it worth balance transferring some cash from one of my cards besore I start to boost emergency fund or is that a silly idea?
I raided every credit card that had an available balance on it to start my emergency fund. I don't think I admitted that on here at the time as I was embarrassed that I did that. It increased my debt and that felt wrong. However, it was our lifesaver at the time. I had one card that I could only take £300 a day out on. I visited the cash machine daily for 3 days With hindsight I was stupid - we sold a car for several thousand pounds and used this to reduce our debt level (it was over £100k). As I said, with hindsight we should have just kept the car sale money as our emergency fund, but at that time I was still pretending to myself we could sort the problem.

Also I need to speak to my wife, she knows we're skint but not this bad. Mortgage and all these debts are my name only, so would just be me doing dump.
I would definitely recommend sharing the load with your wife - my relationship has definitely improved because I'm not worrying about what my other half thinks about our debt - we are both working together to clear it. We actually enjoy the challenge now. Strange how life and attitude to debt changes so radically.

Thanks for reading

Hi and welcome :wave:

See my answers in red in your original post - quoted above

ClaretBob wrote: »

I've tried dealing with this myself and don't have the ability. The debt just keeps growing while I have access to credit. I'm seeing this as a way to stop that also.

I think I will go with one of the charities first while I get used to the situation.

With regards to the non payment for 3 months, is there something that indicates I should then start my dmp, or is it purely down to me?

I do need the car for work unfortunately, how do people handle this? Just buy a banger when the new car has to go back?

Fair enough - you've had you lightbulb moment (LBM) :j

I started the process with Stepchange (SC) early January 2015 and by the time everything was set up (and I delayed by one month), my first DMP payment was collected by SC in April 2015.

I would start the process with SC and let creditors know (but first, if you feel you need to, then draw cash from those credit cards you have left). No-one here on a DMP will judge you for this - we do what we need to do.

SC will want you to start the DMP asap once you start the process. Some people create a small emergency they need to clear before they start DMP payments, e.g. boiler or car repair or something similar (not that I'm saying to do this.... just letting you know what others have done at the start of their DMP )

My biggest recommendations are:

• Don't set you expenditure budget too tight with SC. When you fill out their form online each box will warn you if it thinks the amount you put in is too high. If no warning pops up, then up your figure until the warning pops up and keep you expenditure for each category just below that warning.
• Make sure you use every expenditure category you can. They are there and therefore you are allowed to have expenditure in them so make the most of it, even if living your life struggling with credit cards has meant you haven't been spending on those things lately.
• Make sure you really do save the money SC allow each month for things like clothing, sundries, car repairs, etc. etc. You need to save that money so that when something does crop up you will have the money ready. These things are not 'emergencies' once your DMP is running because you will have been saving regularly each month. You emergency fund really is just that.....for real major emergencies such as broken boiler - or perhaps even towards replacing your pcp vehicle in a year's time.

I look forward to seeing you on the forum and getting to know you :beer:

ClaretBob wrote: »

It's not the level of debt that has become unmanageable it's the not being able to live part that has taken its toll. My wife has a low wage and once she's paid childcare, her car and phone. She's only left with enough for day to day and occasional children's clothes etc.. which leaves me to pay mortgage and all utilities and everything else, food etc..

Does being a dmp make it impossible to get insurance products like car and home?

One last question we had some windows done on a buy now pay later thing which in reality we couldn't afford but a couple of the windows were rotten. We've not started paying for that yet. Am I going to get prosecuted for getting credit with no means to pay? I don't particular want to go to jail

Car and home insurance - you should be okay. However, after a while you will have been saving the money SC allocate for these things and you will be able to pay your annual policies in one lump sum. Until I entered a DMP I had never been able to do this. You may be paying monthly for a while - and therefore using the SC allocation each month, but you will be saving for other things and the savings will grow and eventually you will have enough to pay for these things in full - hope this makes sense, because it does work

I've renewed and upgrade my mobile phone contract since starting my DMP - no problems whatsoever. I stayed with the same provider though so I expect that helped as I've been with them for years.

You won't go to jail over the windows. Life changes. You honestly thought you could afford the windows when you had them installed and now realised you are in a position where you cannot service your debts. Not quite the same but I had buy now pay later with a catalogue. It went on the DMP and they were fine. They are used to seeing literally thousands of people entering a DMP. On the catalgoue BNPL they kept it interest free until the date the BNPL kicked in and then would have loaded on the interest. I managed to clear my BNPL before the interest was added but I guess windows are going to be more than my £1,200 catalogue debt was. Just be prepared to calculate the total owing on the BNPL as including interest. If you can get any reduction in interest on this then you are already ahead of where you thought your highest debt level was:T

Called Sc earlier, since reduced dmp payments from 180 to 80 from June's standing order ahead of starting reduced hours@work from tomorrow.

Another call to SC after next pay to ensure my new budget can be done from reduced salary.

Have to commend SC as they are always very non judgemental as are MSE'rs