DMP & Mutual Support Thread - Part 11

ella2ethan1 wrote: »

Hiya and thank god for this thread!

I am going to set up a dmp so far I am up to date with all my creditors, I am going to contact Payplan later today so finally sort things out.

Is your advice on here to stop paying the debts straight away? And why to open a new bank account? I am taking it that my overdraft will be stopped when I start all of this?

And am I getting it right that if they all default then it will be off my credit file in 6 years?

I/we are drowning in debt and paying it all back there is no money left at the end of the month I am hoping that with this we will get some breathing space. Who sets the repayment figure payplan is it all based on the other income/outgoings?

Sorry for all the questions I'm sure you have all answered lots of times.:embarasse:embarasse

Hello and welcome :wave:

Firstly - if you have made the decision to enter a DMP then there is no point making any further payments to creditors until you start your DMP. So, yes - stop making payments to creditors now.

You will only need to open a new bank account if you have any debts at all with your existing bank. Most people entering a DMP have some sort of debt with their existing bank, e.g. overdraft, loan, credit card etc. If you have debt at all with your bank you must open a new bank account with a bank which has no relation to any of your creditors. So, for example if you bank with Halifax don't open an account with Lloyds because Halifax and Lloyds are linked. The reason for this is that banks have a thing called right of offset which means if you owe them a debt on one account but have funds in another account they can take those funds without asking towards settlement/clearing of the debt.

Forget about your overdraft - you don't want it/need it anymore. If you are overdrawn just include it in your DMP.

Yes, you are right about defaults. Once account(s) default the information is removed from your credit reference agency files after six years. If creditors do not default then the record(s) stay for six years after the account is settled. What this means is that, say your DMP is forecast to be 7 years and a creditor marked your credit reference files as 'arrangement to pay' for the whole term of the DMP - in 7 years you make your final DMP payment, but the bad information of arrangement to pay will stay on your credit reference file for a further 6 years (making a total of 13 years reporting of poor credit management). This is the reason DMPers chase down defaults from creditors.

Payplan will calculate your DMP payments based on the information you provide on the income and expenditure form. They allow for priority debts such as mortgage/rent, utilities, council tax etc. and then an amount for things like clothing, dentist, sundries, etc. etc. Make sure you don't squeeze your budget too tight in trying to repay your debts as quickly as possible. You are more likely to fail your DMP if you do this. If there is an allowance for something make sure you use it.

Any other questions - please just shout, we are all happy to help:beer:

ella2ethan1 wrote: »

Thank you January2015 and carbootcrazy,

I have another couple of questions please.

Do I have to let my creditors know or just leave it up to stepchange? And how long does it normally take to get the defult?

I won't have debt collectors at my door will I? I have a mortgage so know I can leave that out and still pay it but I also have a car loan, reading through the paperwork they can't repossess as I've paid over half are they normally safe?

I will get a new account asap then as I have a card and loan with them and it is with Lloyds so won't chose Halifax thanks for the tip.

Thanks for the advice ��

Stepchange will let your creditors know but this can take some time. I would write to them all and advise them you are in financial difficulty and have been seeking the support of Stepchange (SC) and are in the process of setting up a DMP. In the letter tell them you will update them with your SC reference number as soon as you receive it (otherwise they will contact you and ask for it and you won't have until everything is set up with SC), also request they suspend all interest and charges on your account(s). Advise them that future payments to the account will be made via SC. Also put in the letter that all future communication regarding the account must be in writing and that you do not give them permission to contact you by telephone. Providing you do keep in contact with them, creditors have to honour this request - this takes pressure off of you when your phone rings - you don't have to worry it's creditors and you don't want to talk to them.

On this forum we recommend you take several months before you start your DMP payments. This may seem difficult to do when you have not missed any payments to creditors but it's important to remember you will no longer have access to credit. Use the several months to build up an emergency fund - save the money you would be paying to SC to put away for car or appliance breakdowns etc. If I were you I would not consider starting the payments until at least September - or even longer if you payments are likely to be low. Please believe me - nothing bad will happen. Creditors understand people who need to enter DMP will have several months before those payments start. If you really feel you cannot face not paying them anything then some people just pay them £1 each month per creditor whilst they save up their emergency fund. SC won't do this for you and you need to organise this yourself if you do want to pay a token £1 per month.

You will not have debt collectors at your door. Creditors recognise that people on DMPs are dealing with their debts and not avoiding them so please don't panic about this.

Put the details of your mortgage onto the income and expenditure form for SC and they will make sure that you pay that before any money is allocated to creditors.

Car loan - I assume you got the finance from the garage - is this right? I'm not sure what happens about things like this. Our car was purchased through a loan from the bank and therefore the loan was just another debt to be included in our DMP. You might want to talk to SC about your car / car loan situation. Sorry I can't be more help with this.

ella2ethan1 wrote: »

Ok thank you for all your help your a star! I've tried to open an account with Barclays but have to take my Id in �� So will do that tomorrow, then I have to transfer all my direct debits to my new account and use that instead, is that right?

For my mortgage and household bills I mean.

When setting up your new bank account I would recommend setting up all direct debits manually and not using the bank switching service. It's not hard - just contact the companies you need to set up DDs for and ask for a DD form to complete and return to them. They want your money so they will soon send those forms through.

Just checking - you didn't have a Barclaycard credit card did you? If you did - then don't go to Barclays as they are linked, otherwise you should be okay.

You will also need to make sure your salary payments go straight to the new account as soon as possible as well.

BeingDebtFreeStartsHere wrote: »

Hi

You only need a basic bank account - nothing fancy. I applied for one with Santander and it was all done online. Not sure which one you have gone for but just get one with no overdraft facility and just a debit card.

Only transfer the direct debits for your priority debts (mortgage, utility bills etc), make sure you cancel all loan/CC etc direct debits and don't give your new bank these details. These payments as they stand are now no longer in existence, everything will now be done through your DMP.

You have definitely made the right decision

Take care,

BDFSH x

I too opened a Santander account all done online and all up and running within a few days. Simples
M