Looking for help with quickest way to get out of debt

curlyhair1

Thank you. Sorry don't know how to quote in my replies.

If a default was given in say 2009 but the debt is still outstanding as its on a dmp after six years what will show on my credit file? That there is a debt but payments are being made? Or nothing at all? It's quite confusing.

It's going to be a long hard battle but me and my other half have been students for as long as we can remember and had children along the way. We're in a terrible financial situation due to debt but the best one we've been in income wise. I hope once this debt is shifted if I work hard in about 18 months we will be in a reasonably stable financial position.

Thanks for your help.

curlyhair1

My question is, is it better to pay off the debts that have AP on my credit file before the ones that have interest acruing with regard to applying for a mortgage in the forseable future

HappyMJ

curlyhair1 wrote: »

Thank you. Sorry don't know how to quote in my replies.

If a default was given in say 2009 but the debt is still outstanding as its on a dmp after six years what will show on my credit file? That there is a debt but payments are being made? Or nothing at all? It's quite confusing.

It's going to be a long hard battle but me and my other half have been students for as long as we can remember and had children along the way. We're in a terrible financial situation due to debt but the best one we've been in income wise. I hope once this debt is shifted if I work hard in about 18 months we will be in a reasonably stable financial position.

Thanks for your help.

6 years after a default has been applied nothing shows on your credit file. You could stop making any more payments to the debt and they cannot report anything new to the CRA's. They could though go to court to get a CCJ against you and if you fail to pay that then you'll have a new marker on your credit file. Personally after 6 years I'd be making full and final settlement offers. As your credit will appear perfect you should be able to get credit at good rates of interest again so can borrow some money to make those F&F offers but make sure it's worth it. You're looking to get at the very least half maybe 75% written off.

Puzzcat

That is on the assumption all debts have been defaulted, I understand any marked dmp/ap so not defaulted will remain on your credit file for 6 years from when settled. I don't know how damaging these markers are for someone wanting a new mortgage. OP needs to check her credit file.

curlyhair1

The defaults were at the end of 2010, so im better off spending the next year paying off all the debts not defaulted and charging interest then at the end of 2016 offer F&F to the debts on the DMP,

Thanks for your help, its made my plan of action alot clearer!

DandelionPatrol

curlyhair1 wrote: »

The defaults were at the end of 2010, so im better off spending the next year paying off all the debts not defaulted and charging interest then at the end of 2016 offer F&F to the debts on the DMP,

Thanks for your help, its made my plan of action alot clearer!

That is probably correct assuming

• The DMP debts are all defaulted
• Having your credit record clean at the end of 2016 is soon enough

If any of your DMP debts are not defaulted, but marked as Arrangement to Pay or DMP, then the situation is less clear. They may remain for 6 years after they are cleared unless you can make a convincing case that they should have been defaulted in 2010

curlyhair1

DandelionPatrol wrote: »

That is probably correct assuming

• The DMP debts are all defaulted
• Having your credit record clean at the end of 2016 is soon enough

If any of your DMP debts are not defaulted, but marked as Arrangement to Pay or DMP, then the situation is less clear. They may remain for 6 years after they are cleared unless you can make a convincing case that they should have been defaulted in 2010

Thanks. Its a shame as the only one not defaulted is £200 owed to Barclaycard! Not sure how i could ask them to give me a default backdated to 2010...

The_Only_Girl

curlyhair1 wrote: »

My other half earns £2000 on a good month and £1700 on a bad month. I'll be working part time and earning around £1000 per month. There's no excuse not to get the debts paid off ourselves. Was just wondering the best way. Which first etc bearing in mind the minimum payments each month we would have to continue to pay.

Hi we have just paid off £49,000+ debt with the help of DMP via Payplan, and what a relief it is to have come out of the debt trap, six years after our lightbulb moment. But if I knew in 2009 what I know now, I wouldn't have gone on the DMP route because takes a long time for your credit history to recover.

I have recently bumped into an audiobook by Dave Ramsey called The Total Money Makeover and he has good things to say about snowballing and paying off debt without going into bankruptcy or DMP. My friends call it the game changer and it has changed our perspective about debt and how to get rid of it. As mentioned on previous comments above, there is no quickstep to get out of debt. DRamsey says the best way to eat an elephant is one bite at a time; he calls it the baby steps, of which there are 7. We used his baby steps towards the end of our journey and we are now on baby step 3. I hope you'll find it useful.

HappyMJ

The_Only_Girl wrote: »

Hi we have just paid off £49,000+ debt with the help of DMP via Payplan, and what a relief it is to have come out of the debt trap, six years after our lightbulb moment. But if I knew in 2009 what I know now, I wouldn't have gone on the DMP route because takes a long time for your credit history to recover.

I have recently bumped into an audiobook by Dave Ramsey called The Total Money Makeover and he has good things to say about snowballing and paying off debt without going into bankruptcy or DMP. My friends call it the game changer and it has changed our perspective about debt and how to get rid of it. As mentioned on previous comments above, there is no quickstep to get out of debt. DRamsey says the best way to eat an elephant is one bite at a time; he calls it the baby steps, of which there are 7. We used his baby steps towards the end of our journey and we are now on baby step 3. I hope you'll find it useful.

Lost me when he said pay off smallest debts first. My smallest unsecured debt (£500) charges the lowest interest (3.9%) even lower than my mortgage (4.1%). It's the last debt I'll ever pay off. I'll pay my mortgage before I pay my smallest unsecured debt. I even have debts that temporarily charge 0%. There's no need to pay them off before the introductory period expires.

A lot of is quite sensible. Pay all your current bills first and on time. Don't try and keep up with your neighbours and get a small emergency fund even with debts outstanding so that when income unexpectedly stops minimum payments can still be made for a few months protecting your good credit rating. Although he despises credit and tells readers never to use any credit cards or loans ever he still wants to protect his and the readers credit rating.

SeduLOUs

It all boils down to self control. I have £2k of debt on a balance transfer card that I've saved up enough to clear. But the 0% runs until the end of 2016, and my current account is paying me 5% interest on the £2k so I'd be barking mad to pay it off now.

But that's only because I KNOW I won't touch it. If there was the slightest risk that having it in my bank would tempt me to go on a shopping spree, then it would obviously be worth sacrificing the interest to clear the card now and close it.