Debt Management Plan - 2 Years in

kb_soma

Good morning everyone,

Last night, I had the task of redoing my budget for my yearly review of my debt management plan, and I thought I would post an update for encouragement to anyone that is thinking of starting up a DMP.

The steps were fairly easy and I would definitely recommend getting in touch with National Debt Line, as that is where I started.

Step 1: Make a list of all of your creditors, how much you owe them, and how much you pay them a month.

Step 2: Call National Debt Line with these figures, they will talk you through your options and send you a welcome pack.

Step 3: Set up a basic (no overdraft, no chequebook) bank account, which is unrelated to any of the creditors that you owe money to.

Step 4: When you have received the carefully explained pack, fill in the relevant forms and send them back. Write letters to your creditors explaining what you are doing, following the advice of the pack. Change your wages/income to come into the new bank account and any standing orders that you need to pay.

Step 5: NDL assigned me an agency, in my case it was CCCS, now renamed StepChange who have given excellent advice and support to me over the last two years, they are always willing to talk to you when difficult times arise, be it a change of income or a letter from the bank.

Step 6: When all was set up, CCCS went through my budget with me and we worked out how much I could afford to pay my creditors each month, I set up a standing order to them and they distributed the moneys in order of priority.

Step 7: Start enjoying life again, it is nice knowing that my debt is being paid off slowly, but surely.

In November 2011, I had £9565.29 debt, I now have £6836.48 left, meaning that I have paid off £2701.81 in the last two years, it is going down. Before I set up my plan, I was paying over £400 per month on interest alone.

It is a slow process, but a very supported one, I can't thank NDL enough for the initial advice and support that I received, and it truly is good knowing that if I'm worried, then I can make a quick phone call to StepChange to help me out.

Good luck with dealing with your debt, you will feel so much better when it is being paid off.

RGJC

Well done KB. I did a similar thing, but slightly differently. Now 5 years in. The main difference was I knew my default was comming and was lucky enough to already have a separate bank account that I hadn't used for a while with Nationwide, that I could transfer all my DD's and S/O's to and it still had a cheque book and credit card. I contacted the National debt line, whom were very helpful, as were their template letters. I didn't use a debt company and managed everything myself. I get a call usually every 6 months to review things from different companies, some don't call at all. My repayments range from £23 to £120 and quite a few of them, but its manageable.

So as a heads up for everyone, things I have learnt:
1) Always have a backup bank account. if you think you will get in difficulties, try opening a bank account, before it all comes crashing down. Check your credit score first. lol. You can get a basic account after, but better to use someone you have a relationship with. Having a credit card, (even thought it only has a £550 limit ) is really handy for shopping, car service, life, etc. lol
2) Depending on how much you owe and your ability to repay, be careful what you ask for in your letter to the companies. Essential is to ask them to freeze interest and offer a realistic payment, even if its small. However, I wish some companies would have defaulted me sooner. I dealt with my issues all at the same time in April 2008, but some didnt default until Nov 2009. so it will take longer to clear my file. Some companies seemed reluctant to default me, such as Lloyds whom I banked with, and Abby (MBNA) whereas Egg, RBS and Capital one acted much more quickly.
3) Always pay on time, if you have difficulties, contact the company in writing and ask if you can pay less and give evidence. They won't like it, but they like a missed payment even less.
4) Some companies behaved really bad, like my Lloyds Bank Credit card, Lloyds bank were quite good, but the Credit card company tried to take, (and succeeded) in taking several thousand pounds from my account on 3 occasions. At the time it was a joint account and had both mine and my wifes wages in it. Lots of letter writing later common sense prevailed, I got an appology, refunded money, (even though at the time I still owed the cared £11,000) and a good will payment.
5) Make sure you plan for everything if you are doing it yourself, don't leave yourself short by paying too much and ending up not being able to meet the commitment. Better to take a little longer and be realistic.

Good luck. R

fermi

Thread moved as per OP's request.

Good luck with everything.

kb_soma

Time to check in again.

I have cleared one of my creditors, which I'm so pleased about. I still have a long way to go, but am also aware that I have come a long way.

From my initial £9565.29 debt, I now have £4,274.90 (estimated, but not far off).

It gets frustrating, and I just want the debt gone now. I've joined frugal groups and budgeted really well so that I can have the extra to pay off lumps through stepchange when I can, this has meant I've managed £950 overpayments to my DMP this year alone.

Anyone that is on this journey, I wish you well and good luck!

moneyonmymindsam

WELL DONE KB


Good on you for the over payments and sticking with it

kb_soma

moneyonmymindsam wrote: »

WELL DONE KB


Good on you for the over payments and sticking with it

Thanks, I'm hoping that all the extra paid off will leave me debt free next week. Xx

kb_soma

A day to go...

Tonight, I have some things to do.

1. call my creditors and get updated balances, ask about how much interest may be added..

2. wait until tomorrow. I have the feeling that it is going to be the longest night of my life.

What is tomorrow? Tomorrow is my newly planned Debt Free Date.

30th June 2015. I am currently 94% paid off...

Hope tomorrow doesn't take too long to come round...

parsniphead

Good luck for tomorrow. Very exciting for you.

kb_soma

Thank you Parsniphead. xx

timetosayenough

KB, well done. That is really exciting. Like all Christmases and birthdays at once. Thanks for your help earlier. Really appreciate it.

kb_soma

No worries at all. Do pop into the mutual support thread, there are lots of people there that are going through various stages of dmps. Lots just starting off, they've been a great lifeline to me, they really are a lovely bunch, and you aren't alone.