Is this a way of dealing with debt?

Locke

debtstressed wrote: »

Spoke to NationalDebtline and the person I spoke to did an income and expenditure with me before explaining all the options. Thier I & E amounts are quite generous (more than Im allowing myself at the moment).He identified what I am suggesting as a self managed DMP and also agreed that lenders are not very accomodating unless the account is in arrears. He also agreed that some lenders simply refused to negotiate and went down the CCJ route as soon as they could.

He suggested that a self managed DMP can always become a managed DMP at any point so no harm in trying it myself. If I run in problems they have a 'cashflow' team who then approach the creditors on my behalf. Everyone gets pro-rata of what I can afford and the worst they can do is go for a CCJ. Defaults and CCJs fall away after 6 years.

For some reason bankruptcy was presented as a very viable option for me!:eek:

So back to my original point....seems I have to default first to get the ball rolling! Seems no-one will help me before I default or am in serious arrears.

Should I wait until it all falls apart or take the bull by the horns and start the process myself?

Start the process yourself with all of them as soon as possible.

You're going to get defaulted by all of them so it's better for you to get the default now as the sooner you get it the sooner it can come off.

debtstressed

Locke wrote: »

Start the process yourself with all of them as soon as possible.

You're going to get defaulted by all of them so it's better for you to get the default now as the sooner you get it the sooner it can come off.

That's my logic. However just had a look at the poll and it seems the "No. Keep struggling" vote is gaining momentum. I wonder why. Anyone care to share their thoughts?

DevonGirl

debtstressed wrote: »

Poosmate wrote: »

I

In a recent Managing Debt article on here, Martin Lewis reckons that DMP's are for those in Debt Crisis, i.e. those who can no longer afford their minimum payments and have defaulted already.
So if Martin is right then what is there for a debtor on the edge? Wait till you actually default and cannot pay anything because you have nothing and no starting point before doing anything about it

Hi Debtstressed - you might not like to admit it but you are right on the brink of Debt Crisis. Many of us on the DMP thread had never defaulted or had any late payments. But ultimately if you are paying the minimum it's a fool's game because it will take you YEARS to pay off your debts. (Not sure what the equation is - something like £1000 on a c/c at 17% will take you 40 years or something).

I can only speak for myself here (and you did ask for opinions ) but I was getting to the point where my minimums were only going down a tiny bit each month (literally pennies) and very stupidly, I still kept one card for 'emergencies' which in reality could be anything from a real emergency like car repairs, to an 'emergency chinese' on the way home from work on a Friday evening!! Eventually I ended up with about £120 to live on after all my minimum c/c payments and contracted loan payments (which were £860) - this £120 was for food, petrol, clothes, entertainment, the lot. What CCCS do is turn the whole situation around - rather than look at the amount left over after debt repayments, isntead they work out a reasonable (if tight) budget for you to live on, taking into account all the essentials, plus a fair amount to have a bit of a life (i.e. £20 entertainment per month), and THEN look at the debts. For me, at the very start, the remainder was £300. They then contacted all my creditors and divided up the £300. All but 2 have frozen my interest and, while life on a DMP is by no means a picnic, it does mean that I can finally see the debt come down on most of my debts and the bigger picture overall, and know that every month I don't have to chose between, for example, getting a necessary monthly medical prescription (I pay for mine) or paying a credit card, which I was before!

Again, personally speaking, I did the whole 'rate tarting' thing before my DMP, which did work for a while, and I was constantly borrowing off X to pay off Z etc, but eventually those deals ran out and I couldn't get anymore credit, and even with cutting costs to an absolute minimum thanks to Martin Lewis and his top tips, eg lowest electric, cheapest insurance etc, I was just slipping into crisis. I still keep a very close eye on my debt, while continuing to live frugally, and am doing odd jobs to get money together for F&Fs (recently had 2 F&Fs accepted! ), but life is so much simpler knowing I have money allocated for all necessary lilving costs, and make a single payment to CCCS who distribute it fairly.

Sorry to ramble just wanted to show that you don't have to default before taking action, and that, for me at least, this was the way forward.
Best wishes
DG

Willow_K

debtstressed wrote: »

Poosmate wrote: »

I forgot to add, I haven't voted in the poll. Personally, I chose to struggle on and to try to up my income and manage my finances better in order to free up that little bit more cash to pay my debts. I have no non or late payments defaults so I believe my credit rating should be quite good.

Not neccessarily. My credit file is like yours and I cannot get any credit. I purchased the (useless I know) credit score from experian and even that said I was in the very poor category. No late payment or defaults EVER!

debtstressed wrote: »

That's my logic. However just had a look at the poll and it seems the "No. Keep struggling" vote is gaining momentum. I wonder why. Anyone care to share their thoughts?

If you have no late payments or defaults, your credit score is probably poor simply due to the amount of debt and possibly the available credit if you are not up to the limit on all of your cards - as you pay off the debt and close the accounts, your score will improve much more rapidly than if you had defaults or CCJ's.

If you are going to have £35k of debt paid off in 4-5 years based on your current repayments you must be paying more than the minimums? If this is the case, you should try and avoid defaulting and perhaps play around with the payments to each creditor using the snowball method.

If you can get one card paid off, ask them for a fixed low rate of 0% balance transfer.

Also refuse the interest rate rises on the most expensive cards.

You are on the edge but not there yet - I wouldn't jump unless you have absolutely no other choice - especially if a DMP will get you nothing but a default (if the creditors refuse to freeze interest)

redkev76

From personal experience, I would go (and have done) down the DMP route. I was in a similar situation to you whereby I could just about afford to pay the minimum I was being asked for every month but I, on the other hand, knew it was never going to get paid off as the minimum payment was pretty much just paying off the interest.

I have 4 creditors, GE Capital, Barclays, Halifax and Egg and all 4 have stopped interest and accepted my payments and have told me that as long as I keep up the payment schedule then there isn't an issue. I aim to try and build up money and then take advantage of their settlement offers as currently if I accepted all their offers I would cut £6000 off a 20k debt.

rustybucket

Living on the edge for 5 years to settle this. I think you're going to find this hard, DMP will offer some respite, yes defaults etc which will cause some issues for the next 6 years.

If you've no assets, and I don't think you should take this decision lightly, I'd research more into the bankruptcy route as well.

dancingfairy

A couple of thoughts for you:
1) have you thought about a credit union at all? they may be able to offer you a loan at a lower interest rate than what you are currently paying on some of your debts? you could then take a loan if offered and pay off the most difficult/highest interest rate creditor.
Please note: I would not recommend this is you do feel that you are going to default and go for a self-managed dmp as the credit union would not be pleased if you took a loan out only to default on it - but this may help you to avoid the defaults?
2) some dmps I believe allow an amount for emergencies to be set aside each month - if you were to do a self managed dmp - you could perhaps set aside 30 -50 a month for emergencies?
3) you aren't going to get full and final settlements while you are paying the minimums and like you've already established - the lenders won't necessarily help while you are paying the minimums

To me you seem to be at a turning point - you either struggle on for x years (have you tried the snowball calculator for a debt free date?) or you default 1 or more debts, make smaller payments for a time while saving up for full and finals - a difficult decision but you seem to know the pros and cons of each option.
Good Luck
df

babyhead

Great thread! Me and OH are having this same debate at the moment as we have pretty much the same scenario as you going on.

We have decided to start on a DMP as our current situation is just simply not sustainable. I'd rather deal with it head on and be in control of it than have the added stress of doing it afterwards iyswim.

Good luck!!

pepe2008

I had no Defaults or Arrears on £64K. I contacted CCCS to agree that I could go on a DMP, then I wrote to my Creditors and explained what was happening.....using all the correct phrases ' circumstances beyond my control' ' doing all I can to ensure that payments are met' 'will increase the monthly payments whenever that becomes possible' ' treating all Creditors fairly', etc, etc, etc
and they were all as good as gold ( except for Citi who sold debt after 6 months to a DCA who I have since successfully complained about through FOS and won compensation....and the debt is unenforcable, serves them right:D)

I have since taken the DMP over from CCCS and now Self-Manage....which enables me to negotiate with Creditors directly, resulting in some Charges and Interest refunds.

Be honest with your Creditors and they will be helpful. They are all but obliged to be so.

Good luck.

debtstressed

rustybucket wrote: »

Living on the edge for 5 years to settle this. I think you're going to find this hard, DMP will offer some respite, yes defaults etc which will cause some issues for the next 6 years.

If you've no assets, and I don't think you should take this decision lightly, I'd research more into the bankruptcy route as well.

Stressful day today. Decision time...I'm going with option 2.
Rustybucket is right, it is really hard and probably not realistic. Got my payslip today...I laughed. It's been nothing but numbers for the last 4 years. I realised I earn a good wage...above avarage. I have never actually had any money to spend though. - Suppose I spent it beforehand!!
I recieved my pack and budget sheet from National Debtline it dawned on me I'm in a precarious position. I'm in trouble and its unsustainable.

According to the budget we prepared, I should be debt free in around 6 years if all my creditors play ball. Their budget is a bit more generous than what I live on at the moment! Apparently I'm living in poverty!
I'm living on the edge and really haven't got much room for any unexpecteds of which I'm sure there will be many in the next 4 or 5 years. It's unsustainable. If I default, I can pay back what I owe in that time - same amount of time it takes for the defaults to come off.

I cannot see any other way, planned defaults and a DMP is the way to go. I think I'd better just bite the bullet and plan for it before I'm forced into it so am going to execute my plan. It is really hard when you realise you are about to destroy your credit file and open a nasty can of worms but I'm tired of the worry and uncertainty. I have not been sleeping well but its time I face this head on.

Thanks all