DMP & Mutual Support Thread - Part 10

ICantPayYou

I keep reading that people want to be in default. Can someone explain this to me please? Sorry if this is a simple question but it's all new to me, I haven't started on the dmp yet and have not even missed any payments so am trying to gather as much info before we do
Thanks

blisteringblue

ICantPayYou wrote: »

I keep reading that people want to be in default. Can someone explain this to me please? Sorry if this is a simple question but it's all new to me, I haven't started on the dmp yet and have not even missed any payments so am trying to gather as much info before we do
Thanks

When you default you are guaranteed the adverse credit will be off your credit file 6 years from the default.

If when you enter a DMP the creditor records your file as "up to date" but with either AP or DM markers (Arrangement to pay or Debt Management) these have exactly the same damage on your file as a default and will remain until the debt is fully paid. It will then be a further 6 years from the point the debt is settled before it drops off your file.

ie. 5 years on DMP then 6 years till drops off files will mean 11 years of adverse credit on your file.

All debts default on day 1 then 6 years from then in total your file is clear.

phoenixx

Time_to_face_the_music wrote: »

Good morning DMPers old and new :hello:

I want to scream from the roof tops that our debt is down to 3 figures! We only owe hundreds, rather than thousands, or tens of thousands or our original £82,344 which is pretty close to one hundred thousand!

Can't sleep for excitement :rotfl:

We would never be in this position now if it wasn't for the help, advice, experience and support from this thread :T

TTFTM x[/QUOTE

Wow TTFM - that's amazing news. You'll be debt free in no time now! You have been such an inspiration to me as you were one of the first I saw on here with a debt nearly as big as ours...:eek: You have given me hope and it is great to see you reaching this milestone.

phoenixx xx

ICantPayYou

blisteringblue wrote: »

When you default you are guaranteed the adverse credit will be off your credit file 6 years from the default.

If when you enter a DMP the creditor records your file as "up to date" but with either AP or DM markers (Arrangement to pay or Debt Management) these have exactly the same damage on your file as a default and will remain until the debt is fully paid. It will then be a further 6 years from the point the debt is settled before it drops off your file.

ie. 5 years on DMP then 6 years till drops off files will mean 11 years of adverse credit on your file.

All debts default on day 1 then 6 years from then in total your file is clear.

Ahhhhh I get it now, so when we start the plan is to be defaulted ASAP? That way we get cleared sooner rather than later. Thanks for that...... I have sooooo much to learn

blisteringblue

ICantPayYou wrote: »

Ahhhhh I get it now, so when we start the plan is to be defaulted ASAP? That way we get cleared sooner rather than later. Thanks for that...... I have sooooo much to learn

You learn quickly though. A DMP should never be taken lightly because you are a credit pariah for some time. The key is to recover quickly. A default is by far the best way to guarantee this.

Probably worth pointing out, some people make token payments for 6 months before starting the DMP to force early defaults. This is quite an extreme approach though and you will get endless mither while doing it, but if it gets those defaults early it can be worth it in the long run.

I'm hoping I get all my defaults by the end of this year, which is still 2 years in, so it will be 8 years in total till off the file. I hope!

ICantPayYou

blisteringblue wrote: »

You learn quickly though. A DMP should never be taken lightly because you are a credit pariah for some time. The key is to recover quickly. A default is by far the best way to guarantee this.

Probably worth pointing out, some people make token payments for 6 months before starting the DMP to force early defaults. This is quite an extreme approach though and you will get endless mither while doing it, but if it gets those defaults early it can be worth it in the long run.

I'm hoping I get all my defaults by the end of this year, which is still 2 years in, so it will be 8 years in total till off the file. I hope!

Ok, by token payments I assume you mean less than the minimum monthly payment? I have read lots of people saying they do this so the build up an emergency fund also.
I think I will do this once the new bank account is up and running, I do need an emergency fund as I have started to think " what if the washer/cooker/ freezer, breaks? Whereas it never used to be a problem cos there was always the credit card, that will be no more

blisteringblue

ICantPayYou wrote: »

Ok, by token payments I assume you mean less than the minimum monthly payment? I have read lots of people saying they do this so the build up an emergency fund also.
I think I will do this once the new bank account is up and running, I do need an emergency fund as I have started to think " what if the washer/cooker/ freezer, breaks? Whereas it never used to be a problem cos there was always the credit card, that will be no more

Yes that is correct, I paid £1 for a month at the start while we got things together with stepchange. You ring the creditor and they normally freeze the account for a month until Stepchange contact them.

The dark days of horror stories from debt collectors is pretty much over. As long as you remain in good contact with them and make some kind of monthly payment most are quite pleasant to deal with.

ICantPayYou

Also what do you mean by endless mither? I'm really scared of people knocking at the door for money, even more scared that people could contact my work.

blisteringblue

If you do down the stepchange route they will be nice as pie when dealing with you. Freeze for a month and by then stepchange will be on board.

If you go down the £1 a month for 6 months till default then expect a lot of calls.

I think we had 2 calls in total setting up and as soon as you quote your stepchange reference they were as nice as you like. Nobody contacted me at work.

ICantPayYou

blisteringblue wrote: »

Depending on the debt also they apply different %. Eg an overdraft will get a slightly larger % of your payment than say a credit card.

However their biggest failing is they will always treat all creditors the same. If your payment means you actually end up paying a credit card more than your old minimum payment they will do this, and this in turn leads to interest from some companies (such as Barclaycard in my case) because you are paying too much, even though it's only the DMP and zero interest that means you make inroads into the debt.

It's this inflexibility that Stepchange cannot deal with. I should be paying Barclaycard £180 but I'm only going to pay them £5 until they default me. Stepchange cannot do this even though it's in my better interest, they will always pay the £180. So I've gone self managed and will pay them £5 until default.

Barclaycard were not even slightly bothered by this, all they are concerned is you make some kind of payment to prevent non-payment fees.

So, correct me if I'm wrong, does this mean that if I owe mint say £1000 and Halifax £10000, obviously monthly repayments would be different for me but step change would pay example £50 to each therefore mint being repaid in full before Halifax??????? Just trying get my head round things