Huge amounts of debt, advice on DMP needed

On_my_way · 16 December 2016 at 10:51PM

Yes but you definitely wouldn't be defaulting on the whole amount anyway.

sourcrates · 16 December 2016 at 11:34PM

January2015 wrote: »

We have a mortgage and a secured loan. We have about £250k equity in our home. I work in a financial role which would be seriously impacted if I had CCJs or even worse, i.e. bankruptcy, IVA.

I worried myself stupid in the run up to, and the first couple of months of our DMP. We have not had a single bad thing happen - no CCJs, no charging orders. In fact we have one debt of well over £10k which we just haven't paid in over a year now - because we believe it is not enforceable. We have had a couple of nice letters asking if we would mind paying, we have had a couple of reduced settlement offers on this particular debt but nowhere near low enough for us to consider them. We have hit a particularly bad patch recently (not financial but it impacts our finances) and I just told creditors they would only be getting £1 token payments for several months. All replied and were extremely supportive. No problems at all. Note, I didn't ask if we could pay token payments - I told them that's what needed to happen, and what would be happening.

Creditors such as banks, credit card companies etc. rarely (if ever) take out enforcement action such as CCJs. The account will linger with them for a while (sometimes a short while, sometimes a long while), but when they've had enough and realised your situation is not going to change anytime soon they will either pass the debt to a debt collection agency (DCA) to manage for them, or better still they will sell the debt at a ridiculously low rate to a DCA. Either way, the DCA will be the one collecting the debt. I have found as long as you keep in contact and make some payment regularly the DCA will happily do nothing and let the debt and payment plan tick along. I informed all DCA I was not prepared to be contacted by phone and formally advised via letter that all communications regarding my debts must be done in writing. They have all honoured that so I don't worry about phone calls at home or work now.

We now put aside money every month for repairs/maintenance/dentist/prescriptions etc etc. We really do save for what we need and then when something goes wrong we don't panic and we just draw the money from the savings.

We are so much happier with life as as a couple because we have finally been honest with each about debt and we are working together to create a debt free future (sounds corny but it's true). From our perspective taking the plunge into DMPland is the best financial move we have made in a long time, and I think you will find most of the DMPer's who post on this forum will agree.

I know it's daunting, but once you have decided what is the right way forward for you and your family, DMP or some other solution, and got the process started you will feel a whole lot better.

Always informative, always anecdotal, anyone in this situation please take heed of this post.

Recent changes on affordability have severely cut back the options a DCA has for recovering debt, as long as you are paying what you can afford, the creditor has little option but to accept it.

Going to the expense of legal action, is pointless, when they still end up with the same amount of money.

Well done January, have followed your journey from the beginning, and am super impressed how you have faired to date !!

January2015 · 16 December 2016 at 11:48PM

Keezing wrote: »

Thanks a lot January2015. I must admit I just spent the last couple of hours reading through your diary and I feel much more comfortable about the whole situation.

Ooooo...diary - there's a guilt trip waiting to happen :rotfl: Seriously, life has interrupted and I do pop on here and post, but my diary is not my priority at the moment. I will pick it back up sometime in the new year.

Keezing wrote: »

I think I will self manage with NEDCAB. I guess the next thing I need to decide is whether I make a token payment or just stop paying altogether for a few months in an effort to expedite the defaults.

I would inform them of your financial difficulties and that you are seeking advice (you don't have to say where from). It's important to keep them informed even if you don't make any payments.

Keezing wrote: »

I guess I'm still concerned that my debts are larger than most other people's and I may be treated differently. I just can't imagine Barclays playing nice over that 30k loan!

Seriously, whilst I have been on this forum I have seen people who started with larger debts than mine. I used to think, for a long time, I was the worst, I had the largest debts. Someone else always comes along and suddenly your debts are not the largest - and by then they will have dropped. We will be sub £80k next month. If we deduct the disputed debt (non-compliant CCA) then we will be at sub 70k. Still sounds a lot to some people but to me that is amazing and I am so chuffed with those figures. Don't worry about how large your debt is compared to other people. Different folks, different strokes as the saying goes;)

Also, when we first went onto our DMP we just four months into 2 loans with a high street bank (not BC). The 2 loans totalled in excess of £31k. Bank was fine. They risk assess lending and in my view they stuffed up lending to us when it was clear we were in debt over our heads. We also drew out cash on every available credit card the week we started the DMP process as I was so scared we had no money. Not one creditor commented/told us off etc. which is what I had thought would happen. We did what we needed to do to get through the beginning of the DMP process. At the point we went onto DMP we had not missed a single payment to any creditor ever. It felt so wrong, but very quickly everything felt so right.

Good luck with it all - any questions, just ask

January2015 · 16 December 2016 at 11:49PM

sourcrates wrote: »

Always informative, always anecdotal, anyone in this situation please take heed of this post.

Recent changes on affordability have severely cut back the options a DCA has for recovering debt, as long as you are paying what you can afford, the creditor has little option but to accept it.

Going to the expense of legal action, is pointless, when they still end up with the same amount of money.

Well done January, have followed your journey from the beginning, and am super impressed how you have faired to date !!

Thank you :beer: I will always consider you to be Socrates - I've learnt so much from you

Keezing · 17 December 2016 at 10:20AM

On_my_way wrote: »

You won't get persued for bankruptcy or CCJ's if you can make arrangements to pay.

I don't really see how you didn't know that your wife had debts of that size as where did you think the money was coming from? Anyway, that is slightly besides the point now.

May I make a few suggestions that could help you to at least meet minimum payments while you sort things out:

1. If you have any Gold that you could sell do it. The MoneyShop gives good rates - take I.D and a utility bill with you. I recently got £45 for a tiny 9ct necklace that I never use and isn't sentimental

2. Seriously reduce your bills eg grocery shopping etc

3. Sell anything that you can on ebay - remember to calculate the postage - even bundles of children's clothes that are no longer needed sell. Handbags and unused clothes sell very well. You might be able to make £1k at least like this in a few weeks if you are very serious about it. If you have computer consoles, games etc they may also be worth money

4. Have you got any old phones you can sell? Mazuma (I think) recently bought an old Samsung for £80 which was paid straight into my bank. Again possibly a few hundred to be made here

In my opinion you have got to maintain your credit file as much as you can because of your job - so you have got to find ways to get money from what you have as fast as you can.

Good luck. You can do this. Make sure you and your wife talk about this and get money saving tips from here.

Thanks for the advice on my way, I appreciate it.

It's possible that we could sell some items (and we will) to allow us to meet the minimum payments for 2 more months.

However, there are only so many items I can sell.

I feel that if it is inevitable that I will start to miss payments in a few months' time, I might as well start now.

What do you think?

The_Debt_Expert · 17 December 2016 at 10:36AM

Hi Keezing

Most of what I've read on this thread seems sound advice. If you've been recommended a DMP now and have chosen to go for it, it's likely to be better to cancel all the payments immediately and pay them £1/m until your DMP is set up; rather than struggling to make another full payment or two.

If you can sell some things, it'd be better to keep that money aside in case of emergency/unforeseen costs. This could mean you avoid missing any DMP payments for example. Paying another full payment or two when you know you're going to default anyway isn't as beneficial as putting a bit of money aside.

Just a quick point on further action as well... orders for sale for credit card/unsecured loan debt are extremely rare. CCJs and charging orders are quite possible but by no means likely. Doing a DMP reduces the chance of creditors taking such action as they know people are more likely to stick to them than a self-managed plan.

Good luck - I'm sure the DMP will be helpful to you.

blisteringblue · 17 December 2016 at 11:34AM

Start the DMP now, no point struggling to find minimums you are on a hiding to nothing.

Let them all know you are starting a DMP journey either self managed or with Stepchange and they will instantly give you 30 days breathing space to get it started anyway.

Personally I would pay them £1 a month for 6 months while you prepare for the DMP, nothing bad will happen and you are likely to be defaulted on all accounts by then (a good thing if you go down the DMP route)

sourcrates · 17 December 2016 at 12:00PM

Keezing wrote: »

Thanks for the advice on my way, I appreciate it.

It's possible that we could sell some items (and we will) to allow us to meet the minimum payments for 2 more months.

However, there are only so many items I can sell.

I feel that if it is inevitable that I will start to miss payments in a few months' time, I might as well start now.

What do you think?

Seriously you are beyond that point now, as others have said.

This is the point where you need to stop thinking about how your creditors will manage over Christmas without there full payments, and start thinking about how you are going to run this DMP.

You haven't posted an SOA as yet, so i can only make assumptions about your finances, You need to decide if you will go self managed, or with stepchange, you have a few advantages by doing it yourself, more control, you decide who gets what, with stepchange, you have to follow their guidelines.

We always advise, for example, with-holding payment until debts get defaulted, stepchange would not sanction this, basically, there are two ways to run a DMP, one for the benefit of yourself, and the other "stepchange way" for the benefit of your creditors.

Your first choice is which route you want to take.

You have a 30 day window where no action will be taken, once you have informed your creditors of your intention to start a DMP.

In reality all that means is they wont ring you, or write to you.

January2015 · 17 December 2016 at 2:11PM

Don't stress about selling anything right now. Cancel all payments to creditors and advise them you are going on a DMP.

If you decide you have stuff you can (and want) to sell, then do it at a time when you can focus on what you want to keep and what you want to get rid of and at a time when you will get the best price for it. January is not (in my experience) a good time to sell stuff. The shops are full of sales and eBay is awash with people clearing out to make space for the present they received at Christmas. When you sell anything, the money is for you to build up your emergency fund or pay for small luxuries - we all need a treat now and then, if we don't we would all fail on a DMP.

As others have said before me, stop paying those creditors now. If your existing bank account is linked to any of your creditors you need to sort out a new bank account where you have no links to any creditors and sort out getting your salary paid into the new account asap.

Most of all - enjoy Christmas with your family. Stop worrying about the debts because you have made a decision and I promise nothing bad will happen. Christmas 2014 was not good for us. I worried about bills all over Christmas and my LBM was January 2015 - I wasted precious family time Christmas 2014 worrying about paying creditors who were not bothered at all that I couldn't pay them and had to drop to token payments.

The_Debt_Expert · 19 December 2016 at 9:45AM

sourcrates wrote: »

We always advise, for example, with-holding payment until debts get defaulted, stepchange would not sanction this, basically, there are two ways to run a DMP, one for the benefit of yourself, and the other "stepchange way" for the benefit of your creditors.

SC are completely impartial and don't do things 'for the benefit of creditors', as don't other free services. I know from working with creditors that they're more likely to accept a plan through a debt advice service like SC/payplan/NDL etc than they are a self-managed plan, because history shows people are more likely to stick to it. Hence, all these organisations work for the benefit of debtors. To suggest otherwise is odd.

Huge amounts of debt, advice on DMP needed

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