Massively in debt! Help please?

nomunnofun

fuzzyhead1 wrote: »

Last of all, do overdrafts have to be included? The bank are fine with us having the overdraft and the overdraft interest is relatively small (35 a month) so I'm not sure it's worth !!!!ing my bank off with by adding it to my debts. Our mortgage is with them as well and we have an account that means we don't get charged if we go overdrawn or anything. I don't want them to remove that.

Thanks

Overdrafts are most definitely to be included - the idea is to pay off all debts. You would also save current account charges by so doing.

This means that you MUST change banks - otherwise the bank will simply withdraw the overdraft and leave you with no money once they get wind of your debt situation (and they being one of the creditors)

There are basic accounts out there but, as I suggested to a client of mine who is with stepchange with £120000 of debt, open an account somewhere else before your DMP is up and running. He went with the Nationwide and there were no problems but this option owuld not have been available to him after the DMP commenced.

sexyshark

Fuzzyhead1

I can confirm that you can pay the pre payment monthly by direct debit as i have done this

http://www.nhsbsa.nhs.uk/HealthCosts/2131.aspx

Puzzcat

Hi,


What you can do is delay the start up of the dmp by writing to your creditors and paying a token payment of £1 each month to show you are willing to pay whilst setting it up. With the excess that you are not paying the cc with you can build up an emergency fund for the dreaded car troubles... If your overdraft is tiny you could consider paying that off too.


You would be expected to include it if it is still around when you start your dmp. You would need to change bank accounts to a basic account - one with no overdraft factility.. this is credit and you are not allowed credit whilst on a dmp. You would definately need to change bank account if your have any debt with this bank or any associated banks as they have the right to offset so when your wages go in, they will disappear.


With regards to interest it is an informal arrangement and we all hope the creditors play nice and don't charge. There are plenty of letter templates on how to ask/complain etc. If you pop over to the dmp mutual support thread and have a good read, it may answer many questions that you have and some you had not thought of.


Good luck with your journey.

loveka

Hi. You are.in a tough situation, and I know how scared you are feeling. I was in your position last year.

A DMP really is the way to go. Any sort of remortgaging definately isn't! If you make an unsecured loan secured you risk losing your home.

Are you aware that you can set up a DMP yourself? We spoke to Pay plan about a DMP, but in the end we realised that we were already on one because we had contacted the credit card companies ourselves when my partner lost his job.

We phoned each credit card company and explained the situation. We had 2 cards both froze interest and accepted reduced payments. We had a business overdraft who reduced the interest to 3%. After 6 months we had to submit an income and expenditure form, but they were happy to carry on with the arrangement. All along we have spoken to real people who have been mostly understanding. We split our surplus income between the creditors on a pro rata basis.

A DMP isn't legally binding- you don't have to prove any of the figures. There Iis an allowance for smoking for example that you could put down even if you don't smoke! I know you are worried by 'what if' and that's totally understandable, but don't let it get in the way of starting a DMP, either self managed or with Step change. It will be such a relief to you. You could even wait until you have had the MOT before starting it. I would phone Step change and talk to someone if I were you put your concerns to them, you won't be under any obligation to do anything. Good luck.x

jackieblack

loveka wrote: »

I know you are worried by 'what if' and that's totally understandable, but don't let it get in the way of starting a DMP, either self managed or with Step change. It will be such a relief to you. You could even wait until you have had the MOT before starting it. I would phone Step change and talk to someone if I were you put your concerns to them, you won't be under any obligation to do anything. Good luck.x

I second this ^^^ :T

What you MUST do is take the bull by the horns and tackle the situation head-on.
Prevaricating and finding reasons not to go for it aren't going to resolve your financial situation.

It's scary, but so is being in debt and feeling out of your depth. It may not be easy but you'll feel better once you feel in control

dancingfairy

O.k to answer a few questions in no particular order:
1) yes you have to include all debts including overdrafts.
2) no you can't guarantee the bank will stop interest and charges although most do eventually. It is kind of counter productive to keep charging people. Stepchange or whoever you go with can keep pressing for interest and charges to be stopped but you should also keep an eye on it and press for it yourself. Also if the creditors get really silly then first you exhaust their complaints procedure and then you can take them to the financial ombudsman service (FSO) and complain that they are not treating your fairly and giving you a chance to get on top of the debt.
3) Your mortgage should be unaffected (Apart from having to have anew bank account to pay it from) (unless you have a weird offset mortgage or something). Obviously once you start defaulting on debts it will affect your credit file so remortgaging may prove difficult and you may not get such a good rate but apart from that you should be fine.
4) the amounts stepchange suggest are for guidance only. If you spend more than that you spend more than that. If you can prove that you genuinely need them (ie prescriptions) you should be fine. Another option is to slightly adjust another category to allow for this so add another 10 pounds to your food bill or something.
5) You could defer the start of your dmp for a month or 2 and make token payments whilst you are 'considering your options' and taking advice. Any money saved could be put towards car tax etc.
6) If the absolute worst did happen and something drastic happened to your car or something before you had managed to save an emergency fund/work fund then you would drop your dmp payments for a short while or suspend them. The key is to let Stepchange or whoever know and keep in contact with your creditors. It is not like bankruptcy where things are more tightly controlled, a dmp is an informal agreement.
Hope this helps.
df

dancingfairy

Oh and as for the secured loan idea. That is a really, really bad idea. Sadly people rarely stop at one consolidation loan, they always relax and then start shopping again and end up in worse mess 2 or 3 consolidation loans and a handful of payday loans later
Also if you can't pay a credit card or loan they take you to court and you get a ccj, you get a trashed credit rating.
If you don't pay your mortgage you run the risk of loosing your house. Why would you want to make your debt bigger and make it more likely you would loose the house? Also don't forget you would probably be paying the debt off for a lot longer - maybe 10 years or more.
Maybe, just maybe you're in the <1% of people who a consolidation loan works for but I doubt it. Sorry.
df

mum2one

I 2nd what dancing fairy said, Im with stepchange and had to take a payment break due to changing cars - the one I had was going to be to expensive to put through MOT and this one was to good to refuse, so CCCS contacted my creditors and explained the situ, I have 20k debt/9 creditors and not one moaned. xx

eyeopener2

Your loads of questions and what ifs going round your head. I went through all this but I kept coming back to the same question.

What is my plan if I do not do a DMP?

You already know that you cannot add it to your mortgage. You probably won't get an unsecured loan due to the amount of credit you already have. That leaves you in the clutches of ocean finance secured loans and the like.

You want to keep the overdraft and a credit card, just in case. But you will use the overdraft and the card if the car breaks down or whatever. Before you know it you will have a mortgage, £25k secured loan, an overdraft and £3k of credit card debt. It happens time and time again.

So the best option is writing to all your creditors explaining the situation and pay them a £1 each. Save the hundreds of pounds your paying them for 2 or 3 months in an emergency fund, change your bank account to a basic one, and then embark on your DMP.

It isn't easy but your currently on a downward spiral and something has to change.

The other option is earning more money, delivering pizza or pub work.

Good luck.

seanavfc92

I can only echo what has already been said.

Contact Step Change and discuss your income and expenditure to create a budget that is affordable for you.

Provide all of your creditor information so once the plan is set up, they can contact the creditors on your behalf.

You make your payments to SC and they disburse it pro-rated to each of your creditors.

As for the overdraft; yes, you do need to include. One of the terms of the DMP is that you include all of your debts and that you no longer use credit.

You say you don't want to mess your bank about, but they have no loyalty towards you whatsoever. If you owe money to them as well then you run the risk of them using the right of offset where they can seize deposits from your account to pay off the money that you owe.

Also, maximise your income. Take on part time work somewhere, sell unwanted items, do mystery shopper reports, online surveys, etc etc.