About to start a DMP - give me the cold hard facts please.

chopper_99

Hello all,

I'm currently sitting with all of my forms etc filled out and ready to go off to Stepchange to start on a DMP.

But I'd like you lovely people to tell me exactly what to expect once thishas started; based on the info I'll lay out in this post. Tell it to me like itis even if, in fact especially if, it's not what I want to hear.

I did just write out a long story of how I got into the debts but really it's not relevant, the debts are there and I'm struggling with them. I have a fiancee who I've been with for 12 years (but can't afford to marry )and two fantastic kids (aged 3 and 1). Over the last few years, since my OH dropped from full time work to 10 hours a week to be an almost full time mum, I've found myself using cards to make up the shortfalls in our income. Stupid as that is it's now got to a point where it's not sustainable and Stepchange have recommended a DMP.

I have no savings and my budget analysis shows I can afford to pay £114 a month towards the following debts:

Barclays overdraft - £3000
Tesco CC - £3500
Creation CC - £2000
Asda CC - £1250
Sygma Silver CC - £1000
Flybe CC - £1000
Capital One CC - £1000

I am due a pay review in the next couple of months which I'm hopeful about, and my fiancee will be back to her 10 hours soon having gone the last 3 months unpaid to use the full years maternity. So I'm hoping to up that £114 payment to something closer to £200 within a year.

But here's what I'd like to know:

1 - My credit rating currently isn't too bad, I've only been late with 3 payments to one of the above cards in the last few months, apart from that everything has been paid on time (usually by paying it with other cards ). But I'm guessing a DMP will hit my credit file pretty hard?

2 - Following on from the above, we currently rent but at some point would like to get on the property ladder. Do I just need to accept that this is not going to happen within the next 6 years? Or will it be longer than that (we're both 32 at the moment)

3 - I currently don't get any hassle from creditors as I'm just managing to make the minimum repayments. But I think these next couple of months will be the point where I can't do that anymore. Am I going to start getting phone calls from all of the above demanding money, despite using stepchange?

I think that's it. I'm currently going back and forth as to whether I should enter into this at all. On the one hand I need to do something, as I'm so short every month and it's now got to the stage where I simply won’t be able to afford to pay the debts if I want to buy enough food and fuel to get to work etc. But on the other hand I don't want to scupper my chances of getting a mortgage and suddenly start getting constant hassle.
Any advice/answers would be much appreciated.

Tixy

Hi

Well done for deciding to tackle things and contacting stepchange.

1. Yes. Your creditors will very likely file a default notice on your accounts within the next 3months or so. Those defaults stay on file for 6years and then drop off. If you pay off your debts before 6years they are marked as settled but still show, and still look pretty bad. If its not fully paid by 6years from the default date the default and the whole account still drop off.

2. You will find it very hard to get a mortgage with defaults on file. It might in theory be possible if the defaults all showed as settled, but usually not with mainstream lenders but with those that charge higher rates and require a bigger % deposit.

3. To start you will get letters asking to you pay more, or telling you you are going to default etc. You could also get calls. If you do you simply give them your stepchange reference number and don't get in to any discussions. If any become a pain with calling there is a 'telephone harrasment letter template' which you can send to state that all communication must be in writing.
Things usually calm down after a month or so.

Do you have any joint accounts with your other half? If she is not entering a DMP then its best to close any joint accounts, and to file a notice of disassociation with the credit refernce agencies, to protect her credit file.

How long are stepchange predicting the DMP will be? It looks like it would probably take you more than 6years to repay the debts and save up a deposit for a mortgage anyway, so being on a DMP might not slow down how soon you might be able to buy.

Good luck

chopper_99

Hi Tixy, thanks for the response.

We don't have a joint account, just a separate account in her name that we both pay into for rent, bills etc (well that I pay into at the moment as she has no income). We do have a Virgin credit card though that is in her name that I'm an additional cardholder on. Should I look into getting myself off that card and is that easy to do?

I will also look into the notice of disassociation you mentioned, so thanks for that.

Stepchange are predicting 9 years to pay everything off
But I will be upping the payments as soon as I possibly can in the hope to have it all paid off in 6 years or less (finances allowing of course).

I'm going to sit down and have a talk with my OH tonight, as at the moment she doesn't know I'm considering a DMP. I take care of alll the bills etc and she knows were skint and that I have an overdraft and a few cards, but isn't fully aware of the state it's got to.

Not looking forward to that

climbingoutoftheabyss

Well done for taking the steps to gain control of your finances.

Just a word of warning on defaults. I started a DMP 6 years ago and have 4 defaults which all end February/March/April this year.

Fantastic you would think. However, one creditor (lloyds TSB credit card) didn't default me 6 years ago and despite the fact that I have made every repayment on time and increased the amount I pay every single year decided to default my account in April 2012. This means I now have a new default on the credit file but that it also stays on there until 2018.

Its not a huge problem for me as I'm not planning on getting credit any time soon. However, I was still very annoyed. There was no reason for it, I think it was pure spite.

Hey ho, that's the bumpy route of a DMP though.

However, you're doing the right thing getting control of your debts and don't let that put you off. Overall, the DMP has been fantastic and now having repaid 75% off I can finally see an end in sight for 2014.

climbingoutoftheabyss

I'm going to sit down and have a talk with my OH tonight, as at the moment she doesn't know I'm considering a DMP. I take care of alll the bills etc and she knows were skint and that I have an overdraft and a few cards, but isn't fully aware of the state it's got to.

Not looking forward to that

Yes, been there

But, it was much better once it was out and we were able to face facts and it was out in the open. My wife was very understanding and we were able to handle everything together.

It was a huge weight off my shoulders once I had confessed.

Tixy

climbingouttheabyss - have you tried complaining about the very late default? Might be worth a shot, you can quote the ICO guidance on filing a default notice, which has a clause that states something like 'a debtor making an effort to repay should not be put in a worse position that someone who has made no effort to repay' (not that wording, but that sort of sentiment). You can find the guidance notes on the ICO website.

climbingoutoftheabyss

Thanks Tixy

I hadn't considered that, but its certainly worth thinking about.

I'm not adverse to the default, I fully accept that I owe the money, but I do think that it was unfair to place the default after 5 years of on-time payments, completely in-line with their agreed schedule.

Hatecreditors.com

climbingoutoftheabyss wrote: »

Just a word of warning on defaults.

Following on from this, please don’t assume (like I did) that all creditors will default you (which will drop off in 6 years).

Barclaycard update my credit file with AP (Arrangement to Pay) markers which are added every month until the debt is settled. So if you have a DMP for say 5 years, and debt is settled on the 5th year, the last AP marker will stay on for 6 years from the date of the last entry not the start of your DMP. So your credit file would effectively be trashed for 11 years not 6.

I’ve heard that AP markers are just as bad as defaults if not worse given the example provided above.

lizzy23

yes your credit score will be trashed,,,,,,,,, but ask yourself if that is so bad? at your current rate of paying minimum payments all that is happening is that your debt is getting bigger and in reality will probably never be paid off. We started our DMP in November, and for the first time in 15 years did christmas without credit, we alos have a liveable budget, i just wish i'd done this the last time we consolidated.

Yes there are negatives but on the whole the positives far out weigh them

chopper_99

Ok, thanks everyone.

I suppose if I'm completely honest with myself the options I have come down to - phone calls and defaults without decreasing the debt VS possible phonecalls and defaults but actually decreasing the debt.

If that makes sense.

So I'll have the conversation with the OH tonight and then get the ball rolling on the DMP I think.

Hatecreditors.com

Honestly you won’t look back!
When I started my DMP with £45k of debt (yes, you read it right £45,000) I started a DMP purely as a way of getting my monthly payments down in order to live. I never thought the debt would reduce and I would live with it forever. 3 years later my balance is £15k!

You’ll be amazed at how much the debt reduces once you start your DMP and just chip away at it.

I actually had my light bulb moment in my first year of the DMP, realising that you can actually still live on a budget and my focus changed from ‘let’s just keep paying the minimum payment for now’ to ‘I want rid of these debts as soon as possible’.

So when it came to my annual review I kept everything low on my budget and tried to pay as much into my DMP as possible.

Good luck.