DMP - pay off some debts and not others

w4nnabd3tfree · 2 October 2015 at 2:20PM

Hi Guys

Im currently on a DMP with Stepchange and owe about £23k broken down as below. Some accounts have been marked as default on my Noddle credit report and others havent.

My question is , if I worked my a$$ off and did lots of Overtime and saved up about £500 every few months could I pay off in full the companies that havent defaulted me yet?
Would stepchange mind that im favouring one company over another? The way I see it is that the ones that have defaulted me can wait as I see no benefit in paying them off early and they'll get an slight increase in monthly payments once I fully pay off another debt.
what do you think?

HALIFAX PLC - £5,641.97
HSBC BANK PLC - £4,632.56 - DEFAULT
AKINIKA DEBT REC... - £3,402.64 DEFAULT
HSBC BANK PLC - £2,785.60
BLAIR, OLIVER & ... - £2,650.34 - DEFAULT
NCO - OTHER - £1,188.30
SANTANDER CREDIT... - £896.01 -DEFAULT
Barclays Partner... - £641.96
PAYDAY EXPRESS - £626.80 - LATE PAYMENT??
CREATION CONSUME... - £512.82
NCO - ARROW - £412.49
QUICKQUID - £326.12 - DEFAULT

Thanks!

National_Debtline · 2 October 2015 at 5:08PM

Hi there and welcome to MSE,

It is understandable what you are trying to do (get debt free as quick as possible and limit the damage to your credit file), however, the concern would be that you would pay disproportionate amounts to some of the debts. This would likely be considered a preference payment and it is possible that this could cause problems with your DMP (potentially even risk cancelling it).

It is difficult to say for certain what Step Change would do in this situation (as it is their decision) so I think the best thing to do would be to talk to them about this idea before taking any action and see what they say / suggestion to try and help you further.

Laura
@natdebtline

Movingon5464 · 2 October 2015 at 8:27PM

I don't really see the benefit in doing this. You already have 5 defaults so your credit file is going to be awful for the next 6 years. I think a file with 12 defaults has the same impact as a file with 5 defaults - meaning you won't get credit for 6 years. You have over 10k without defaults. Paying £500 every few months will take a couple of years to pay them and probably a few of them will default you in that time. I think you should accept your creditworthiness is gone for the next 6 years so you are better getting all your defaults asap as your file will only be clean 6 years from the date the last default was added. If i was you i would consider stopping payments altogether on those that have not defaulted you yet to hopefully push them to default you soon. What you don't want are defaults applied years into your plan or AP / DMP markers which mess your file up for longer.

alamaya · 3 October 2015 at 4:48PM

Stepchange will not allow overpayments that are not split fairly between all creditors.
I have just gone self managed due to this as they wouldnt let me pay off a £40 debt but wanted to split the £40 even though two of my debtors are not stopping interest and are defaulting me and the other two if i pay more they restart interest.

DMP - pay off some debts and not others

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