Start Of Debt Plan - Default Or Not?

OneWay_2

Hi All,

Mentioned this in my other thread but had no replies - suspect it's now been buried!

I am currently setting up my DMP with StepChange, however it's not up and running yet and I have a number of payments due tomorrow (PayDay). For this first month I can JUST about afford to pay the minimum fees/rollover fees (although it would leave me very tight for cash). Where it will all go belly up is next month when many of the payments ramp up, but the plan is that the DMP will be up and running by then so it won't be an issue.

So, my question is - am I better (and will it stand me in any better stead) to stretch myself and meet these minimum payments now? Or would I be better just cancelling my card today and defaulting on them all, which might lead to a load of charges and penalties instantly (yet might also encourage them to accept my repayment plan more easily as they can see I've already defaulted?).

Any advice greatly appreciated.

jubilee14

OneWay wrote: »

Hi All,

Mentioned this in my other thread but had no replies - suspect it's now been buried!

I am currently setting up my DMP with StepChange, however it's not up and running yet and I have a number of payments due tomorrow (PayDay). For this first month I can JUST about afford to pay the minimum fees/rollover fees (although it would leave me very tight for cash). Where it will all go belly up is next month when many of the payments ramp up, but the plan is that the DMP will be up and running by then so it won't be an issue.

So, my question is - am I better (and will it stand me in any better stead) to stretch myself and meet these minimum payments now? Or would I be better just cancelling my card today and defaulting on them all, which might lead to a load of charges and penalties instantly (yet might also encourage them to accept my repayment plan more easily as they can see I've already defaulted?).

Any advice greatly appreciated.

Hi Oneway if you've already committed to going on the DMP then there is no point in trying to meet the minimum payments. Write to each of your creditors with a £1 cheque/Postal order stating your are about to start the DMP and cannot make the contractual payments. They will take the money. It shows you are not ignoring the debt and wont likely get too heavy handed if your DMP is all set up within a couple of months.

Make sure you have a new bank account if any of your debts are with your existing bank and transfer over salary/DD's for priority debts eg mortgage utitilies etc.

The whole idea of DMP is to allow you to afford to live ( not extravegantly mind) while reducing your debts.

Good luck

goldieds

to the best of my knowledge once you enter a dmp you are wrecking you're credit file anyway so to my eyes you may as well default providing you've already sent out letters to freeze the accounts etc.
Id wait for a more knowledgable reply than my own however

Fuzzy14

You are likely to get a default registered against you anyway as the payments Stepchange make on your behalf will be less than the amount originally agreed in the credit agreement and therefore a default of the agreement.

You might be lucky and not get a default, the question is can you live with having one on your credit file for the next 5 years?

Also remember that it's your debt you're having to pay back, if you don't pay it now you'll be paying it back later. I'd pay it but only if it's not leaving you really short, for instance don't then take out a pay day loan to cover.

OneWay_2

I have a shedload of defaults anyway so a couple more aren't going to do any harm at this stage!

I'm with you fuzzy in that I'm going to be paying anyway so why not start now. Although the payments are made up of a lot of interest rather than capital, at least it stops them just going into a frenzy slapping charges on left right and centre. I suppose my thinking is that I avoid any additional charges (at least for now), and if the DMP is set up successfully they won't slap any on further down the line.

Stewart_78

I would say get them all defaulted. The sooner they are defaulted, the sooner the 6 year clock starts ticking and they vanish from your file. What you don't want to find in 4 years time is that a creditor is marking your file with AP markers because you placated them enough to avoid a default. Get all your accounts defaulted as soon as possible would be my advice (humble of course). Your file is trashed for 6 years anyway.

Stewart_78

By the way, that means paying them very little for a few months until they throw up their hands and serve a default. Then you are in control.