DMP & Mutual Support Thread - Part 11

sourcrates

PinkNE wrote: »

Hi sourcrates,
thank you for your quick reply. We have looked at all options and bankruptcy is another option open to both of us but it terrifies me because of our house. IVA is an option open to my husband but not to me. Do you think we should consider these options more?

Basically we have 2 children (6 and 2), we also have a mortgage - not much equity maybe £10k but that's just a stab in the dark. I might need to look into it more as been burying my head in the sand for too long.

In answer to your question the thought of an AP marker on file for what is probably 12 years isn't what we want but we just need to be out of the mess we are in now. From what I've read over the last few days am I right in thinking that what we want is actually a default from all 13 creditors - the sooner the better? Please correct me if I'm wrong here. Is your suggestion that rather than a DMP we just stop paying? What would usually happen in these circumstances, worst case scenario? Would it be a case of negotiating affordable payments once we've defaulted and will this involve people knocking at the door demanding money and/or trying to take our things? Sorry for all of the questions I just feel quite out of my depth.

We will try and open a basic bank account tomorrow and I'm going to cancel direct debits now.

Hi,

Yes that's correct, ideally a default from all 13 creditors is what you seek.
I understand this is all new to you, it was new to me once too, so, you have to understand how debt collection works, you have not even missed a payment yet, so creditors are non the wiser to your situation.

Quite honestly should you cease all payments tomorrow, your account would be passed to internal collections, after a few weeks, if still no payment, they will attempt to contact you, this may last 1-3 months, they would then pass your account to an external debt collection agency, who would have no rights whatsoever as they would be acting for the creditor, this scenario may go on for a number of years, the debt would be passed between different agencies, eventually the debt may be sold on to a specialist debt purchaser, but that could be a long time from now.

Once an account gets defaulted, then you start your DMP, now Stepchange will not tell you this, there objective is to get you debt free and start paying straight away, but you have to way up how this will effect you credit file wise.

You also need to build an emergency fund in case the unforeseen happens.

No one will be knocking on your door or taking your belongings, in order to do any of that a debt must first be defaulted, they must then take you to court and obtain a CCJ against you, you must then default on the CCJ payments, then and only then, would use of a bailiff be considered.

Lots to take in I know, but you need to be in charge of what happens as a pose to just been a part of it, if you know what I mean.

Sazzie23

PinkNE wrote: »

Hi sourcrates,
thank you for your quick reply. We have looked at all options and bankruptcy is another option open to both of us but it terrifies me because of our house. IVA is an option open to my husband but not to me. Do you think we should consider these options more?

Basically we have 2 children (6 and 2), we also have a mortgage - not much equity maybe £10k but that's just a stab in the dark. I might need to look into it more as been burying my head in the sand for too long.

In answer to your question the thought of an AP marker on file for what is probably 12 years isn't what we want but we just need to be out of the mess we are in now. From what I've read over the last few days am I right in thinking that what we want is actually a default from all 13 creditors - the sooner the better? Please correct me if I'm wrong here. Is your suggestion that rather than a DMP we just stop paying? What would usually happen in these circumstances, worst case scenario? Would it be a case of negotiating affordable payments once we've defaulted and will this involve people knocking at the door demanding money and/or trying to take our things? Sorry for all of the questions I just feel quite out of my depth.

We will try and open a basic bank account tomorrow and I'm going to cancel direct debits now.

Hi,
Well done for making a start and facing up to your debts, it's very confronting and you've done great to get here so far.

There is a lot to think about, debt options and payment plans etc.

This would be how I'd approach it.

1. Get your new bank account, you can go with one of those offering incentives, but be selective about the DD you bring to the new account. If anyone asks so why just say it's because you are setting up a new joint account for your household bills etc.
I use coop and YB (part of Clydesdale) biut don't especially like the web part of either account, still never mind.

2. When that is set up and active, make sure your wages are going to be paid in there, cancel your DD. you can get calls straight away, these are usually automated. Options here are : remove your number from on line accounts, ignore the calls, or answer them and say 'We are in serious financial difficulty, we have been in contact with Stepchange, here is my reference number, we will be in touch'.

3. You them officially have 30 days to decide what to do, however on this thread we recommend putting off the start of the DMP for at least a couple of months whilst you sort out some savings to at least you give a buffer while things settle down. Just try to imaging your life without credit (in reality you'll still get some, such as insurance instalments and mobile phone contracts but try to imagine you won't and think what you'll need to have in readies'.

3. Redo your budget, the idea of making your payments as low as possible is to a. Get the defaults and b. Discourage the creditors from adding interest. The closer the payment to the minimum the more likely you are to come some, albeit reduced, interest.

4. While all this is going in, take some time to decide if bankruptcy or an IVA is for you, or either of you. It's ok to covert DMP to either so Cary on as if you intend to start a DMP until you decide, or even start it and change your mind. They are all very serious options, don't rush in, find out implications for jobs and future employment as well as the financial implications.

Sourcrates is quite correct about token payments being discouraged by creditors, but SC do recommend them so it's your choice. I didn't pay any, but many do, bank transfer is the easiest way if you plan to do this. And tjhis is the point you then decide to not pay until defaulted or start paying on a DMP, but you'll be equipped and ready to deal with is a bit better. It is a worrying time, but mostly the worry is worse than the reality.

Be ready for letters and phone calls, know what you are going to say. Many will be automatic calls and letters asking you to contact them. These will trigger as soon as you cancel the DMP and then again when payments are missed. Most are very friendly and encouraging but if Anyone gives you a hard time, hang up straight away.

You can do this:D

Saz

second_chance

Hi just wondering if my direct debit to stepchange fails what happens do they try again? Just realised I'm a bit short and it goes out tomorrow. Thanks

Sazzie23

second_chance wrote: »

Hi just wondering if my direct debit to stepchange fails what happens do they try again? Just realised I'm a bit short and it goes out tomorrow. Thanks

I believe they give you a second chance a few days later, probably best to let them know though. They're usually keen to get you a workable budget so that is doesn't keep pushing you into difficultly. Have you reviewed recently ?

second_chance

Thank you yes I have... Although the plan is going well and I'm really pleased I still seem to cut it fine and spend all the money I have.. Although I would say I'm far more sensible with it x

Bananas777

Hi, I just wanted to say having a DMP changed my life. I've had it over ten years and paid off 2/3 of my debt- around £6,000. I have about £3,00 left. I've had support from Payplan and quite quickly had interest frozen and the debt has gone down. OK my figures aren't that high but considering I've had severe health issues and had to give up teaching during this time it's been quite tough.

Over the years I found the cash minder account from co-op bank good and easy to use and good to have no overdraft / fees, instead of going overdrawn and wapping charges on it just gives you no overdraft and declines your transaction. Helpful in a way.

Anyway good luck to all of you. My creditors include- RBS and Lloyds.

PinkNE

Just a quick update and wondered if anyone can advise if we are doing the right thing.

New bank account set up and we've cancelled all direct debits to creditors.

We've been in touch with Stepchange and have a reference number for DMP but haven't rang creditors yet to advise them of this. I'm now unsure what to do as I think maybe we should wait in order to build at least some savings over a couple of months incase the unexpected happens. What do you all suggest should we ring creditors and inform them we are in financial difficulty and give reference number or do we just make no contact with them and try to ride out a few months in the hope we get defaulted. Obviously with this we have no chance of interest being stopped or reduced. All suggestions gratefully received as I feel a bit lost.

sourcrates

PinkNE wrote: »

Just a quick update and wondered if anyone can advise if we are doing the right thing.

New bank account set up and we've cancelled all direct debits to creditors.

We've been in touch with Stepchange and have a reference number for DMP but haven't rang creditors yet to advise them of this. I'm now unsure what to do as I think maybe we should wait in order to build at least some savings over a couple of months incase the unexpected happens. What do you all suggest should we ring creditors and inform them we are in financial difficulty and give reference number or do we just make no contact with them and try to ride out a few months in the hope we get defaulted. Obviously with this we have no chance of interest being stopped or reduced. All suggestions gratefully received as I feel a bit lost.

Hi,

It's always best to get a bit of an emergency fund saved up before hand, even better if you can get all your accounts defaulted too, but that's not always possible.

You can write a short letter to each creditor, saying your taking advice from Stepchange, and that you will be in touch in the near future to duscuss repayment arrangements.

You get 30 days grace as standard, i'd give it 4/5 months, save up a little, then start your DMP, you can still negoatiate stoppage of interest etc, won't make any difference.

KID77

Welcome Piinkne and well done for making the difficult decision of a DMP, it will be one of the best things you have ever done. I started with £47k of debt in July 2015, along way to go but knowing its going down and not living off credit every month is a great feeling.

I opened a Halifax current account, £5 reward every month and I dont have the overdraft facility. There are other good bank accounts out there paying interest on current accounts so maybe worth applying before credit rating goes to poop, just dont take overdraft :-)

Have you given yourself some wiggle room qith monthly payment? In my opinion and only my opinion.... I would reduce the monthly payment by manipulating some of your figures with SC. You can then save the difference and put this towards getting reduced settlements down the line. Once you have broken the terms of your agreement, you are already in the "naughty pile" so I feel, why worry taking the moral high ground and paying back every single penny. Again, only my opinion and others will likely disagree.

As for delaying start, I contacted all of mine by online messaging facility as most accounts have that now, just tell them you are experiencing financial difficulty and working with Stepchange. Give them the date you intend to start your reduced payment plan and you can offer £1/ £5 per month to show willing. I just wanted to communicate and show my intentions rather than ignore.

I have never received a single call from a creditor, just letters and none of them aggressive. At first its scary seeing DEFAULT written on paperwork and we would be mortified if anyone knew of these but nothing bad has happened. I felt like a criminal at first and was so consumed by it, reading this forum every day for hours. Now, I still think about it and cant wait for the day to be debt free but my day to day life is much better, I have around 10 online savings account to help us budget our money better and it seems to be working. We could be alot more frugal and probably reduce our debt free date by a few years but I want to still enjoy a few nice things like family meal out once a month, take my kids places so I am choosing the "scenic" dmp route :-)

I still save towards my dmp and in around 5 years will start offering reduced settlement amounts so hopefully be debt free in around 5-6 years. If that plan doesn't work then it will likely be around 9 years before we are debt free but before the dmp it would have taken 99 years to be debt free :-)

I am rambling now but any questions just ask, lots of helpful people on here and makes you realise you are not the only one going through this.

xx

Little_Miss_Sunshine

Hi - we stopped paying creditors mid December 2015. I initially completed the stepchange paperwork and then we decided that self managed was a better route for us. We didn't pay anything for 8 months. All accounts are now defaulted which is what I wanted and - more importantly - we have a decent emergency fund. At the end of the day I think it all depends on how old you are and if you want credit again in the future. I'm 50 ( nearly), mortgage is nearly paid off and we don't want credit again. Definitely build an emergency fund - and make sure your budget is realistic too.