DMP & Mutual Support Thread - Part 11

sourcrates

Floopy2009 wrote: »

Hi there,

I am looking for some advice

I am looking to start a debt management i have about 40,000 pound in debt after everything is gone i have about 500-600 left to pay to the creditors on dmp

Does anyone have any dealing will the below will they be ok with the proposal from StepChange

Halifax
Barclays
Santander
Argos
Next
Virgin

Have any of them taken people to court thats my concern ?

Currently i have no arrears but will do next when i stop paying so that the dmp gets setup

Hi,

Any particular reason you have chosen debt management over an insolvency option ?
It would take you around 8 years to repay at £500 a month on a DMP.

Let me just stress that the debt collection process can take many, many months, even years, before court action is likely, as you have not even defaulted as yet, your a very long way off any further action.

Personally I think token payments are a waste of time, what you really should do is stop all your payments, give it a few months, use the time to save up an emergency fund, then start the DMP.

Most will agree that's the way to go, in fact I would wait until all my accounts defaulted first before organising any form of repayment, that way your credit file is going to be clear of negative info after 6 years, rather than be marked "AP" (arrangement to pay) which stay on your file 6 years after you've repaid the debts.

Stepchange will not tell you this though, as there remit is to just get your debts repaid regardless.

Floopy2009

Hi there,

Thanks for your input. Currently i am renting so will be looking to downsize to a smaller rented accomadation etc once contract is finished mid next year plus have a few work changes so will be able to put some money aside to pay some creditors off through agreement or pay more to the dmp.

Yeah from what i am reading it looks like i need to just not pay and get them defaulted before starting a dmp as it seems some lenders wont do it if you are paying something towards especially barclays.

So how many months do you do it before you start dmp wait until all have defaulted. Is there some templates i can use.

Sorry for all the questions just need to get all this clarified as i will start cancelling some of the direct debits next week.

Anything you save should you just put it in you new basic account or somewhere else ?

sourcrates

Floopy2009 wrote: »

So how many months do you do it before you start dmp wait until all have defaulted. Is there some templates i can use.

How long is a piece of string !!

Some creditors can be more awkward than others, when it comes to issuing defaults, I would say, if you can cope with the collection letters and calls, wait until they all default you.

You can't really send them a letter saying I won't pay you till you default me, it will happen naturally.

If you have debt at your current bank then a new basic account is required first and foremost, you will be surprised how not having access to an overdraught makes you concentrate on your budget more closely !!

I would say 6-8 months may be sufficient, but I'd wait as long as it takes.

You really don't want "AP" markers as they can potentially affect your file for 12 years or more, which you really do want to avoid.

Sazzie23

Floopy2009 wrote: »

Hi there,

I am looking for some advice

I am looking to start a debt management i have about 40,000 pound in debt after everything is gone i have about 500-600 left to pay to the creditors on dmp

Does anyone have any dealing will the below will they be ok with the proposal from StepChange

Halifax
Barclays
Santander
Argos
Next
Virgin

Have any of them taken people to court thats my concern ?

Currently i have no arrears but will do next when i stop paying so that the dmp gets setup

I have been also told to open a seperate bank account will i need to make sure that all my direct debits are setup or can i provide the details and the new bank setup them.

Also i have some savings for emergencies do i keep this in my new bank account or put them somewhere else ?

Does anyone have an example of a single persons plan so i can get a feel or are the limits set in the StepChange form which will be accepted ?

Also i see people going down other avenues and doing this on there own is that better ?

Also token paymnents i have been advised to do so to get some savings how long should i do that until activating step managment plan

Many thanks in advance
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Hi Floop

First thing, make sure you have any savings safely tucked away in a bank account that is not with any of the companies or linked companies you have debts with, whichever debt free route you take.

I think SC might be able to tell you which banks are interlinked.

Second : Sourcrates is quite correct that creditors can take varied amounts of time to defaults. If you are taking this route I wouldn't do tokens unless you have very specific reasons.
I might take issue with the theory that most people do it this way. Since I've been on the thread, some have taken this route but there are a good proportion who have gone down the Stepchange route, or self-managed DMP before defaults either for practical or necessity reasons. Many including myself, rushed into a DMP having never been in a situation where they couldn't pay bills. I wouldn't have coped with the stress of sitting it out, nor would it have been practical as the partner needs to be on board for this approach.

Third as Sourcrates posted, there are other routes to debt relief, including DRO, bankruptcy, etc. I've also discovered another route to downsize debts, it relies on your debt being defaulted and sent to a DCA, I'm not going to post details here, I came across it on a 'social media' site but it does have some quite strong successes. Doesn't work for me as I sit mainly in the "I borrowed it, I'll pay it back" camp. It may explain though why some creditors don't want to default and DCa debts.

Finally just to say single person (now) debts of £36k at the start, now approaching halfway debt after 3 years, but payments now down to £130 a month due to life's events and about 8-10 years DMP to DFD left, so dont stress about paying every last free cent each month, it won't do you any favours in the long run.

Saz

Floopy2009

Hi Both of you thanks for your advice much appriciated

Some creditors can be more awkward than others, when it comes to issuing defaults, I would say, if you can cope with the collection letters and calls, wait until they all default you

So do i just wait until the letters and phone calls come and tell them i cant afford to pay anything and seeking advice or just ignore them. If i ignore them surely that will get there backs up ? Also read alot after default that you might get a ccj which is something dont want

I was going to downsize and save 100 or quid on rent but it might be worth while this is going to stay put incase i miss any correspondance and get most to default ?

Your totally right i dont want an AP that long 12 yrs i am looking to get out of this debt in a few years max then once done get a morgage once the default disappears

Second : Sourcrates is quite correct that creditors can take varied amounts of time to defaults. If you are taking this route I wouldn't do tokens unless you have very specific reasons.
I might take issue with the theory that most people do it this way. Since I've been on the thread, some have taken this route but there are a good proportion who have gone down the Stepchange route, or self-managed DMP before defaults either for practical or necessity reasons.

What are the specific reasons people do token or stepchange route before default i presume its down to not have any money at all to spare ? Sorry silly question i know but just need to here both sides of the story

Thanks for all ur help this is a great board

sourcrates

Floopy2009 wrote: »

So do i just wait until the letters and phone calls come and tell them i cant afford to pay anything and seeking advice or just ignore them. If i ignore them surely that will get there backs up ? Also read a lot after default that you might get a ccj which is something dont want

What are the specific reasons people do token or stepchange route before default i presume its down to not have any money at all to spare ? Sorry silly question i know but just need to here both sides of the story

Thanks for all ur help this is a great board

First off, let me say that stepchange are brilliant at what they do, they offer free, impartial advice, to anyone who needs it, however, they are funded by the banks, so there motis operandi, is to choose a debt solution, and go with it straight away.

Now if its an insolvency option you choose, then fine, you dont need to worry about defaults as accounts are automatically defaulted on the date your insolvency starts.

Its not like that with a DMP, as its an informal arrangement, there are no rules to follow, so creditors can mark your file as they see fit basically.

Token payments are advised for people who are nervous about the whole DMP thing, creditors wont be bothered one way or the other, its just another business transaction to them, and will cost them more to process the token payment, than its actually worth.

Thats why SC is good for people who either are not bothered about there credit file, or people who would struggle to do this themselves, but if you are halfway competent, its wise to take control of things yourself, force defaults by non payment, then start your repayment plan.

Court action, CCJ`s, yes you hear a lot about them, there are a lot of judgement`s granted every day, but again, the creditor normally follows a well worn path before getting to that stage, for starters, the original creditor never takes legal action (unless were talking serious money) normal procedure goes approx something like this :



Creditors own collections debt - up to 3 months.

Creditors "in-house DCA" - up to a further 6 months.

Debt passed to external collections agency - up to a further year.

Debt could then be passed around further agencies for unlimited amount of time.

Up to 3 years - debt may be sold on.



Thats just an approximate time scale, may be sold on sooner than that.

You will find creditors/DCA`s threaten lots of things, but hardly ever follow up on them.

Apologies for the long post.

Floopy2009

Once again great read Sourcrates much appriciated.

What happens if the creditors default at different times one does after 3 months and the others maybe 6 and they advise you to look for debt help and not to ignore, how will that work then, could you start SC on one or just deal with each creditor seperately yourself ?

debtisnotme

This thread is great, I have learnt so much over the past few days of reading it. I am in the process of setting up a DMP with Stepchange for around £37k of debt.

I've lived with depression and anxiety for years, the depression has wained somewhat thanks to a better time at work, supportive colleagues etc but the anxiety remains and I think its mostly debt related. Alot of my debt has been taken out within the past six months or so. In addition to that £37k I have a mortgage and a secured loan of £20k also taken out six months ago. I wish I had got my head around it all six months ago but ti is what it is. The only good news is the loan is on a fixed rate and term of five years so in four and a half years I should be able to get everything paid off.

I wish I had the mental strength to go it alone with a DMP and also to build up an emergency fund by just not paying for a few months but I don't so for now this is the best way to go. I feel bad about using Stepchange, there are much less financially savvy (huh thats a joke!) than me that they could be helping instead.

Just waiting on Coop setting up my basic bank account, I have until 25th to change my bank details at work and would feel much less anxious if I know my pay didn't have to go in my current bank account as I have both a credit card and overdraft with them. It seems stupid you can't set it up online and its so far been 11 days since I sent off the paperwork so fingers crossed it will be sorted this week.

Feeling very anxious about letters in the post but at least the telehphone calls won't be a problem, I never answer the phone unless I recognise the number

sourcrates

debtisnotme wrote: »

Feeling very anxious about letters in the post but at least the telephone calls won't be a problem, I never answer the phone unless I recognize the number

All i can say is dont feel anxious.

Debt collection letters are specifically worded, and computer generated in their thousands, all with one point in mind, to get you to contact the creditor.

As your setting up a DMP you can relax, you've done the hard bit, ignore the phone calls, dont respond to spam "contact us now" letters, you'll breeze through this.

sourcrates

Floopy2009 wrote: »

Once again great read Sourcrates much appriciated.

What happens if the creditors default at different times one does after 3 months and the others maybe 6 and they advise you to look for debt help and not to ignore, how will that work then, could you start SC on one or just deal with each creditor seperately yourself ?

Well thats up to you really how you want to deal with them.

Another path you could take is to wait until all accounts default, or as each account is defaulted and then sold.

During this time, save as much money as you can, when you get contacted by the new owners, they usually want to off load pretty quickly, and come at you with discounts of anything up to 60%.

So with a little negotiation, you could settle each account as and when they contact you, for a lot less money, than if you paid them monthly.