DMP & Mutual Support Thread - Part 11

Maddie57

Hi all

Just a quick update. My DMP is finally starting to progress and Stepchange have confirmed all my debt balances. The next step is they will make payment offers to all my creditors and by 17th December I should hear back on the outcome of this.

For anyone just starting be aware it can take a while to get everything up and running - I applied for my DMP at the end of September and hopefully will be up and running by the start of 2016. Definitely take advantage of this time to save an emergency fund.

I have found Stepchange to be really easy to talk to about any issues -I may have a salary reduction in the next few weeks and they gave me advice on what to do if this happens and assured me they would manage this if it happened.

Maddie

January2015

canuckinuk wrote: »

5) What is the advantage of managing a DMP myself vs. going with SC?


Ok sorry that is so many questions. I really appreciate the help.

I posted the quote below on another thread on the forum, but copied it here as it answers your Question 5 Sorry, I don't know all the other answers, but someone will be along who can help very soon.

January2015 wrote: »

Some people opt to self-manage their DMP because it gives them to option to manipulate the level of payments to individual creditors.

For example Barclaycard are notorious for not zeroing interest and not defaulting. It seems the only way to force their hand is to maintain £1 token payments. This is well below their required level of minimum 1% of the outstanding balance (the level at which they seem to advise they will continue charging interest), and the level at which they will within a few months default the account. Barclaycard have reduced interest for us to 3% but it would be better if it was zero

Stepchange (and other DMP charities/companies) insist on treating all creditors fairly and according to their formula for calculating payments.

If you are young enough to think you may want credit again in the future it's important to get those defaults as quickly as possible as they drop off your credit file after 6 years. For me - I am looking at retirement when my DMP finishes and obtaining credit again is not something I anticipate needing or wanting. However Barclaycard mark my credit file with AP (arrangement to pay). This will stay on my file until the debt is finished and then six years after that. So in my case another 8 years to end of DMP, plus 6 years on credit file = 14 years for a poor credit payment record on my credit file from Barclaycard. The AP marker sits against the payment history part of the record; once the account is cleared it will show as settled, but the AP markers are there on the payment history if creditors want to look for the full 14 years explained above. However, if they would default me it would be gone in 6 years.

Another reason some people choose to self manage is that they can pay creditors slightly less and build up a saving fund so that when they have a sufficient lump sum they can offer one or more creditors a full and final settlement of the debt. They seem to start negotiating at 30% of the debt (or thereabouts) and sometimes have been successful in negotiating discounts of up to 70% of the debt - many people on this forum do report they have achieved significant reductions by offering a lump sum.

We've only been on a DMP since March this year and already one creditor has written and offered 25% discount to clear the debt in full. I don't have the funds, but perhaps if I had been self managed from the start and had this knowledge I could have saved some money and perhaps been in a position to negotiate a higher discount.

Hope all this makes sense.

Sazzie23

canuckinuk wrote: »

.... I think he just kept his head in the sand while I spent and spent to try and get us all the basics that we needed for our home. He has now come to terms with the truth and he is on board for us to be debt free again.


I have a few more questions:


1) SC have said for my husband to be included as part of the DMP. We went along with this and he has signed the DMP agreement that we sent off to SC. However all of the debt is in my name only with the exception of the 315 pounds owed to child tax credits which is in both of our names. Why have they included him in the plan? Is it because we combine our finances? Will he receive bad credit for being part of the DMP even though none of the main debts are in his name?


2) I have changed my direct debits and wages from the dismal debt burdened Lloyds account over to my old building society account. With this account I don't even have a debit card so there is no way fro me to spend out of it unless I go to one of their cashpoints or into branch. This suits me fine because all of my monthly wages, every penny of them, will go on monthly direct debits. My husband gets paid weekly so from his wages we have budgeted for food, weekly bills, pocket money, petrol, and all the little pots etc. Now, his account is also with Lloyds. Am I right that Lloyds will not be able to take anything from him because all the Lloyds related debts are in my name only?



Ok sorry that is so many questions. I really appreciate the help.

Hi CanU
That's better, you sound much more positive than yesterday.

Q1)&2). I think it must be because you are combining finances for the budget. Lots of couples have gone into DMP with only one half getting on the DMP and the other preserving some sort of credit rating. If you could separate the budget, even if only for paper exercise, maybe they'd let you just have a solo DMP.
Q2, certainly your money will be safe in the building society, and it's a good way to make sure you habpve money for the DD.
If your name is on the LL bank account, I'd be careful as they could still take the DH money.

Many couples on here will recognise the situation how you get the blame because you are the one that kept stuff going while the OH sticks head in sand, yet you are the one fixing it! But at least you have been able to come clean and you'll find that's a lot less stress to carry about.
Always remember you are not running away, you are trying to fix stuff and you should be proud of dealing with your debts.

Puzzcat

canuckinuk wrote: »

Hi everyone and thank you so much for the welcome and for the advice and support. It is a big relief to know that there are other people in the same boat. The past few weeks have been very stressful as I finally came to the realisation that the debt was out of control. My husband and I have had quite a few rows because he did not know the full extent of what I had spent on credit and he didn't know about the loan and credit cards (he knew about the overdraft). In a way I was annoyed that he reacted so badly towards me because he must have known the money was coming from somewhere. I think he just kept his head in the sand while I spent and spent to try and get us all the basics that we needed for our home. He has now come to terms with the truth and he is on board for us to be debt free again.


I have a few more questions:


1) SC have said for my husband to be included as part of the DMP. We went along with this and he has signed the DMP agreement that we sent off to SC. However all of the debt is in my name only with the exception of the 315 pounds owed to child tax credits which is in both of our names. Why have they included him in the plan? Is it because we combine our finances? Will he receive bad credit for being part of the DMP even though none of the main debts are in his name?


2) I have changed my direct debits and wages from the dismal debt burdened Lloyds account over to my old building society account. With this account I don't even have a debit card so there is no way fro me to spend out of it unless I go to one of their cashpoints or into branch. This suits me fine because all of my monthly wages, every penny of them, will go on monthly direct debits. My husband gets paid weekly so from his wages we have budgeted for food, weekly bills, pocket money, petrol, and all the little pots etc. Now, his account is also with Lloyds. Am I right that Lloyds will not be able to take anything from him because all the Lloyds related debts are in my name only?


3) Since we are going with SC, do I still need to contact each of the creditors myself to say anything/propose anything? If so, what exactly do I write to them? Does anyone have a link to a template or example letter?


4) With regards to making token payments for 3 months to save up an emergency fund- this sounds like a good idea. However as things currently stand we only have 74 pounds a month surplus to go towards the DMP. (FYI this will change as our 2 year old's large childcare bills get less and less as he goes to nursery and then school). So if we did token payments of 1 pound to each creditor that would only leave 67 pounds a month to put towards an emergency fund. So we'd save up 201 pounds in 3 months. Do you still think it is worth it to do this for 3 months for such a small amount of savings? If so, what exactly do I say to SC? Will they approve of this idea? If they do allow us to start the DMP in 3 months time, do they still oversee the token payments plan for the next 3 months? Like do I send the 7 pounds to them? Or do I have to sort it all out with each creditor? If I have to sort it out, what exactly do I do? I don't even know how I would send 1 pound payments. I am so confused!


5) What is the advantage of managing a DMP myself vs. going with SC?


Ok sorry that is so many questions. I really appreciate the help.

Hi,

I shall have a go at answering some of the questions...

1. I don't believe you have to include your husband in the dmp as you state the debts are in your name. The only problem is the child tax credits, is this being included in your dmp? Your husbands credit rating could be affected if you hold any financial products jointly so you would be financially associated.

2. Personally I wouldn't risk it but I assume you have separate accounts and not a joint one, I would check with Step change on this one.

3 & 4. I will upload a token payment template letter in my next post for you to use.. Step Change do not do this for you if you wish to delay the start of the dmp then you tell them when you wish it to start. It is an informal arrangement and is entirely up to you. Personally any buffer for an emergency fund is better than none. I just sent a £1 cheque to each of my creditors with a letter for each normal payment I missed.

5. I haven't done a self managed dmp but plenty on here have or have switched over once the plans are settled.

Puzz. x

Puzzcat

Your address




Account Details
Date

Dear Sir/Madam



I am writing to inform you that I am currently seeking advice and assistance regarding my current financial difficulties.

I am working with StepChange to set up a Debt Management Plan (DMP) – my reference number is ******* They will send you an offer of payment along with a copy of my budget and list of creditors.

I am unable to meet my normal monthly payments, would you please accept a token payment of £1 per month until StepChange contact you with my DMP details. I would appreciate if you could hold any action on the above account until this time.

I would ask that you please consider stopping or reducing interest and any other charges on my account to help me during my financial difficulties and to avoid increasing my debts any further.

I would please note all future communications should be in writing only.
I thank you in anticipation of your assistance and co-operation whilst I am going through this difficult time, and assure you that I am doing everything I can to resolve my current financial situation in a responsible and sustainable manner.



Yours faithfully

And...

I would also strongly recommend for everyone considering a dmp to read back through this thread and some of the others, lots of information available.

Puzz. x

Growurown

canuckinuk wrote: »

5) What is the advantage of managing a DMP myself vs. going with SC?


Ok sorry that is so many questions. I really appreciate the help.

Hi canuckinuk, I would suggest that you use SC to start with. They get everything set up for you and it was really nice in the beginning when I first went on my DMP to have their help and backup. Once you get into the swing of things you can then consider going self managed.

One of the disadvantages of SC is that they have a formula to spread your payment amongst your creditors and they stick to it. However some of your payments may be too high to persuade creditors to stop interest. When self managed you can reduce payments to these creditors in order to get interest stopped.

Disadvantages of self managed - more admin really. SC deal with all your creditors so if you need to change your payments they inform them all, and they will review your account annually. On a self managed plan you would have to phone all your creditors individually if you needed to change your payments, and every year or possibly six months they will want to review your account. This means going through all your I&E and agreeing on an affordable payment.

Sazzie23

Wow it's December, I managed to save loads of money on Black Friday and cyber money - I didn't buy anything, sorry it made me smile to think of it that way.

I keep telling people I'm really looking forward to Christmas (what I don't say is because I can't wait for it to be over for loads of reasons,) but hopefully it makes me sound cheerful and positive. There is a thread on the MSE forums of fantasy, what would you do if you won £100k. Quite amusing the replies, but I think I'm the only one that said they'd pay off their DMP. I sometimes forget there are people on MSE that have money and savings. One day I hope I'll be one of those deciding where to invest my savings.

Some suggestions for making money and savings on the MSE email this week, if you don't get it already, sign up now.

January2015

Sazzie23 wrote: »

Wow it's December, I managed to save loads of money on Black Friday and cyber money - I didn't buy anything, sorry it made me smile to think of it that way.

I keep telling people I'm really looking forward to Christmas (what I don't say is because I can't wait for it to be over for loads of reasons,) but hopefully it makes me sound cheerful and positive. There is a thread on the MSE forums of fantasy, what would you do if you won £100k. Quite amusing the replies, but I think I'm the only one that said they'd pay off their DMP. I sometimes forget there are people on MSE that have money and savings. One day I hope I'll be one of those deciding where to invest my savings.

Some suggestions for making money and savings on the MSE email this week, if you don't get it already, sign up now.

Sazzie - whatever the reasons - you have Christmas as a goal in your mind and your attitude is positive I know 2015 has been a hard year for you personally and I think you are one amazing person to keep so positive and to keep posting on here and helping others day after day

Forum of fantasy - I missed that one :eek: I think if the fellow members of this thread found that we would all choose clear the DMP/debt as our 'fantasy'. It is what we live for at the moment. I can't even begin to think of anything I need/want once my debt is cleared. Sitting here this morning I think my fantasy spend (once DMP and then mortgage gone) would be to give the money to my son and daughter to help them purchase their own home. A year ago (pre LBM) I would have had a list as long as this thread of things I wanted. Not any more - I am cured.

Oh, and I also saved loads in the Black Friday sale What a brilliant way to look at it

Take care Sazzie - have a great day

Growurown

January2015 wrote: »

Sazzie - whatever the reasons - you have Christmas as a goal in your mind and your attitude is positive I know 2015 has been a hard year for you personally and I think you are one amazing person to keep so positive and to keep posting on here and helping others day after day

Totally agree! With so much bad news flying around, talk of cuts and deficits, it so wonderful to find people willing to help, free of charge and in the face of adversity. I've always thought this thread was the best and most supportive. Christmas is a very stressful time of year for lots of people, not only for those on a DMP. It's great to know we can come to this thread for a moan, or advice and just to have someone listen who knows what it feels like I guess.

canuckinuk

Hi everyone,

Well things seem to have moved along quite quickly since I called Stepchange 8 days ago. They emailed me today to say the DMP is set up and my first payment of £74 will come out January 1st.

Today I spoke wih Lloyds Bank who I owe the bulk of my debts to via a loan, overdraft, and credit card. The woman I spoke to was really kind and actually praised me for having called SC and trying to take control of the situation. She said that they would freeze interest and charges so that is good news :j

I have now paid off the November bills that bounced last month (thanks to the debt payments and charges that were sucking my account dry). And we have a budget to get us through December. Then January our proper budget will begin. We have labelled large envelopes which will act as our money 'pots'.

Christmas is going to be very very minimal this year. We have the kids who are 19, 17, and 2 plus our 4 and 2 year old nephews to buy for. Plus my mother in law and sister in law. And food etc. For Xmas day. We have £200 to cover all of that. It is gonna be tough.

It does feel good to feel in control again. I felt so out of control over the past few months and it was miserable.