DMP & Mutual Support Thread - Part 10

in_a_noodle

Hi all,

I’m thinking of starting a DMP and am hoping you kind souls can offer me some advice of which route to take. For the few weeks I’ve been reading through this support thread and various diaries and realised I need to do something and the quicker the better. Apologies in advance for the length of this post.

I have two creditors at the moment, HSBC (£14.5k loan (interest preloaded), £1k overdraft (maxed) and £500 credit card (I reduced the limit to this but ended up maxing it anyway) and £5.2k MBNA credit card (maxed).

Whilst I am able just about able to cover the payments at the moment (with everything remaining maxed) around 50% of the MBNA is at 0% but will revert back to standard rate after Christmas that will provide a huge strain, and of course the CC’s remain at virtually the full amount as I’m only covering the minimum payments.

The main cause of running up the debt has been (as stupid as it sounds) smoking, I would estimate that 90% of the debt has been spent on that over a ten year period. I have now just given up so it shouldn’t be an issue any more but it has left me with the above mess.

I haven’t let my OH know the situation. Around six years ago I came clean (I had a similar situation but around £6k total rather than £21k) and I set up a loan with HSBC to consolidate matters. However the ease of internet banking and online only accounts has meant I’ve been able to get the MBNA credit card, HSBC credit card, as well as adding to the HSBC loan every other year to keep funds going, without OH’s knowledge. I’m ashamed of what I’ve done and can’t bring myself to come clean yet again after the promises made after last time.

I’ve done the SOA via stepchange and have £250 a month left over. I estimate that this would equate to 60% of what I should be paying and will take 80 months to repay (providing interest frozen).

Given that I only have two creditors I’m thinking of self DMP’ing but am terrified about contacting them. My main worries are if they will accept 60% and will they be willing to freeze the interest? Would I be better to do this through stepchange?

Both HSBC and MBNA appear supportive of those in financial difficulties looking at their websites. With MBNA in particular I’m thinking of phoning to say I’m in the process of starting a DMP and will they freeze the account for 30 days?

In preparation I’ve set up a new bank account with Nationwide (who our mortgage is with so nice and easy to set up), but have yet to divert my wages into it. A lot of my direct debits come out a few days after payday so I’m thinking of letting this month go in as normal, then update with payroll and set up new direct debits as they go out.

Ideally I would also like to send token payments for the first couple of months to build up an emergency fund. With HSBC should I send letters for each account (loan, CC, OD) or just lump them into one? Also do I send to my local branch or main office?

Is this a decent plan of attack?

1. Get wages into new account
2. Transfer Direct Debits (cancel HSBC and MBNA)
3. Send letters with token payments (to whom with HSBC)
4. Apply to stepchange
5. Pray

Any thoughts or advice would be greatly appreciated, especially from those who have had multiple debts with HSBC as these are what I’m most worried about.

Startingover14

Thanks for everyone's comments and good things to know when starting a DMP. I am now home from work so have got myself a cuppa so I can read through this thread as suggested to get a list of any questions or thoughts i have.

Stepchange were really good talking through things with me yesterday and they did suggest setting up the basic bank account. I tried to do this today but fell at first hurdle as got Mrs unhelpful who couldn't offer anyone to talk to or give me any application forms. No appointments until next week, so going to look around this afternoon to find out my options with which one to go with.

I am wondering what happens if I set the DMP up but don't start it - does that mean i would do the token payments and then ask Stepchange to start the plan once I have done that for a couple of months?

Am feeling nervous and scared but I also feel somehow better that I spoke to someone about it and also the warm welcome I got here

jessbaird

Sorry i can't answer your question inanoodle I'm new myself to this in fact I have a few questions if anyone can help

I've not heard back from the debt management company yet (they said it would take 48hours) but I have few questions about the plan itself after reading comments on here.

My debts around £8000 with 8 creditors ranging from an overdraft, catalogues, payday loans & student loans overpayment. Debts range from £3000 to £250.

I know it probably sounds stupid but I was hoping to have all but the £3000 catalogue & £1500 OD paid of in over a year, that's where my question comes in to this. To pay £8000 over 2years is just over £333 a month (I can afford that I make just over £1000 a month after tax, sometimes more if it's a 5week month) so hypothetically speaking say I pay £450 to towards the DMP will the money be split evening to each creditor (meaning I could pay 3 of the creditors off in 6months) or do they do it differently.

Also how does a DMP affect my credit rating ? I'm concerned about will I be able to upgrade my phone in January & the big one I have car finance in my name (got it before the payday loans but I was approved even though I was in negative from my OD) the agreement is I pay monthly till March 2016 then either get a new one or make a final payment. In anyone's opinion do you think I have a chance to get another car on finance.

ghostmadlittlemiss

Hi,

Does anyone have any information on the rules that energy companies have to follow re customers in financial hardship please? I'm about to write a letter to EDF Energy complaining about the fact that they've taken a Direct Debit payment towards my arrears despite my making payments through StepChange to those arrears at the time. I'm going self-managed now but at the time of the bill they send telling me that they'd be taking the payment today (which I somehow managed to miss ), I was still with StepChange. So I was wanted to know what legislation to quote at them to stop them from doing it again as this isn't the first time they've done this.
Kayleigh

kb_soma

in_a_noodle wrote: »

Hi all,

I’m thinking of starting a DMP and am hoping you kind souls can offer me some advice of which route to take. For the few weeks I’ve been reading through this support thread and various diaries and realised I need to do something and the quicker the better. Apologies in advance for the length of this post.

I have two creditors at the moment, HSBC (£14.5k loan (interest preloaded), £1k overdraft (maxed) and £500 credit card (I reduced the limit to this but ended up maxing it anyway) and £5.2k MBNA credit card (maxed).

Whilst I am able just about able to cover the payments at the moment (with everything remaining maxed) around 50% of the MBNA is at 0% but will revert back to standard rate after Christmas that will provide a huge strain, and of course the CC’s remain at virtually the full amount as I’m only covering the minimum payments.

The main cause of running up the debt has been (as stupid as it sounds) smoking, I would estimate that 90% of the debt has been spent on that over a ten year period. I have now just given up so it shouldn’t be an issue any more but it has left me with the above mess.

I haven’t let my OH know the situation. Around six years ago I came clean (I had a similar situation but around £6k total rather than £21k) and I set up a loan with HSBC to consolidate matters. However the ease of internet banking and online only accounts has meant I’ve been able to get the MBNA credit card, HSBC credit card, as well as adding to the HSBC loan every other year to keep funds going, without OH’s knowledge. I’m ashamed of what I’ve done and can’t bring myself to come clean yet again after the promises made after last time.

I’ve done the SOA via stepchange and have £250 a month left over. I estimate that this would equate to 60% of what I should be paying and will take 80 months to repay (providing interest frozen).

Given that I only have two creditors I’m thinking of self DMP’ing but am terrified about contacting them. My main worries are if they will accept 60% and will they be willing to freeze the interest? Would I be better to do this through stepchange?

Both HSBC and MBNA appear supportive of those in financial difficulties looking at their websites. With MBNA in particular I’m thinking of phoning to say I’m in the process of starting a DMP and will they freeze the account for 30 days?

In preparation I’ve set up a new bank account with Nationwide (who our mortgage is with so nice and easy to set up), but have yet to divert my wages into it. A lot of my direct debits come out a few days after payday so I’m thinking of letting this month go in as normal, then update with payroll and set up new direct debits as they go out.

Ideally I would also like to send token payments for the first couple of months to build up an emergency fund. With HSBC should I send letters for each account (loan, CC, OD) or just lump them into one? Also do I send to my local branch or main office?

Is this a decent plan of attack?

1. Get wages into new account
2. Transfer Direct Debits (cancel HSBC and MBNA)
3. Send letters with token payments (to whom with HSBC)
4. Apply to stepchange
5. Pray

Any thoughts or advice would be greatly appreciated, especially from those who have had multiple debts with HSBC as these are what I’m most worried about.

I would call NDL or stepchange to look at your options, it may be that they suggest another solution. You have taken the first step and recognised that the debt is a problem.

Before you call them, have a list of all your creditors and amounts, all incoming and essential outgoings and other outgoings.

NDL here: https://www.nationaldebtline.org/EW/Pages/default.aspx
Stepchange here: http://www.stepchange.org/

Startingover14

Having read through this thread I am exhausted – in a good way – as I’ve learnt a lot about the good things and the bad things about going on a DMP.

Stepchange have sent out a pack to me where they indicate I would pay £127 a month to them for my debts. The chap I spoke to suggested that my budget for food was a little low and he suggested I increase it a little and to give it some thought. They are calling me on Monday to see how I am feeling about things after giving things some thought over the weekend.

I have sent for an application pack to set up a separate bank account as I couldn’t get an appointment for a week. I am just unsure what to do next. Do I do letters to the creditors offering token payments? I don’t know how much to offer them and am petrified of them contacting me and threatening me with all sorts. Do I cancel direct debits to the creditors now or do I wait until the plan is in place? Stepchange have said they can get it in place so that a payment goes out to the creditors from them in September if I get things to them by 24th I think.
I know someone mentioned an emergency fund – how do I get that, do I wait to start the DMP with Stepchange until I have had a couple of months paying a token amount?

I am afraid of what’s to come with the creditors as I have been paying the minimum and haven’t missed a payment so I am worried the creditors will not take on board I am in financial difficulty and won’t accept the token payments or the DMP.

May I say that you all are so lovely, helpful and supportive to those that post and ask questions and other things – it seems like a nice place

kb_soma

I set my new bank account up before sending any letters and put any spare money in here.

Then I transferred my wages and essential outgoings to and from this account.

Then I cancelled my direct debit to creditors and then
I think I sent off my creditor letters at the same time as my dmp agreement. You need to make it clear that you are in the process of setting the plan up. Listen to step change, make your food budget bigger and if you find you have extra leftover you can always make overpayments. The emergency fund that people are speaking about is putting some money aside for the bit in between that you're setting your plan up and having the exact figures going in and out of your account. Hope this helps. Xxx

Sazzie23

Hi Everyone, big warm welcome to the newbies and new posters. Great advice appearing.

Bit general as I've not got so much time today.

First thing to any newbies, make sure your bank account is not linked to any debts, this is because any money paid in to an account which has links to outstanding debts (including stuff on your DMP) can be taken out to pay for the debt. This is legal but obviously not ideal as you could be left with nothing ! Called offsetting rule if you want to search it.

Regards rules on electric companies, I think there is a thread for utilities somewhere on the boards, I don't have time to check today but come back here and let us know if you find it. Make sure you cancel any direct debits that you no longer want to keep in force, cancel with the company and the bank, and keep copies of letters or emails, this will give you more 'clout' if you end up needing to complain.

Budgets, build in the amount you need to spend into your food/fuel/entertainment budgets, if there is no categories for something you need to spend, add it into one of the others, of you keep leaving yourself short you'll need to raid the savings you re supposed to have to pay off the insurance/mot/house maintenance etc. I have heard that some people claim to be smokers on their SC budgets, NSD use this for their 'wiggle room'. Remember this is marathon not a sprint, NSD if you find yourself with a bit of spare cash, keep it for a few months then decide if you want to use it to make an overpayment or stash it for a F&f. MB (where are you ?) has had some great success at F&f for less than 50%. Although I have several years left of repayments, I have had F&f offered to me by DcA's. If your budget is wrong, do a review sooner rather later NSD avoid getting yourself in a pickle. You can do emergency cut payments occasionally on SC if something dramatic happens like car trouble. Talk to them.

I think someone asked what a DMP will do to your credit rating ?
If you are really in need of a DMP, and only do it if you need it, your credit rating will be crashing already and will likely drop through the floor if you don't DMP. DMP won't help a credit rating, but it is the first step towards solving your financial problems and then you can working on improving your credit rating.

Finally PLEASE do not pay a DMP company. Charities like SC and PP are well respected and do a good a job, we have had OPs with DMPs where the company has gone bust and lost their repayments, and the money you pay a DMP company would be better used repaying your debts.

Hope this helps, sure some of the regulars will be long with more help soon, have a good debt busting day.

Startingover14

Thanks - it helps a lot. Trying to get myself a list of things to do in a good order so I make sure I can get my salary paid in and access to that with the priority debts like council tax. Just didn't want to fire off letters and everything start to close down before I was ready.

I have seen things about being fair to all creditors and this month have met the minimum payment for 2/3 and the 3rd is due on 18th of this month and don't know if I should leave this direct debit in place until after this payment has been taken. I will be able to do this for the month. Is this a bad idea or should I be doing the token payment thing straight away?

Kate_fixing_it

Happy Saturday/Defaultday all! For new people Saturday seems to be the day any default threats arrive - just so you can't enjoy the weekend in peace You have two options: open it and try to put it out of your mind until Monday or keep it safe, make the most of the weekend and open it Monday. There's nothing you can do when it lands on the doormat on Saturday (usually around lunchtime) and if you are here posting you've probably beaten yourself up enough already.

It's 9.30am and I've been quite productive. Already waved my old broken car off - yes, it's taken me this long to accept the inevitable and act on it but the combination of humble pie and self-realisation that I DO need to live within my means and I actually CAN has dawned. The last month has been an emotional Rollercoaster but I now have bags of room on my drive, a tenner in my pocket to soften the blow (the rest of the cash I gave to DH as he bought the replacement car) and I'm feeling at peace with my new life.

DH is taking me out for a double date with good friends tonight (NO KIDS!!!) and I was going to spend my £10 on new shoes but instead I'm going to raid DD1's collection (a he never wears heels) and I'll take the kids out next week.

So the rest of my Saturday is going to be spent pampering myself for my night out (haven't had a grown up night out together since April, selling little kids' outgrown clothes on Facebook selling page and playing with the kids before they head off to Nanny and Grandad's for a sleepover.

So here I am, 4 months into a 6 year DMP and happy! If you're just starting out please take comfort in this. I was just as upset and stressed as all of you. I had the same worries and questions but the last four months have flown. Not every day is sunshine and roses but there's always some good to be found. My creditors leave me to it now, I've grown up and learned so much about debt and myself and I've never been happier.

If you are nervous about the first step but you know it's the right thing then do it. Take heed of advice here and plan plan plan. Once you begin every day is one day closer to being free of the millstone around your neck.

Kate x