Step Change Question...

stupidboy69

Hi guys,

I am in need of some advice dealing with StepChange. Long story short, I have about ~£10,000 in debts which include payday loans, credit cards, a store card and an overdraft facility.

I have managed to reach an agreement of paying my creditors £420 a month through StepChange, which I can deal with.

Now, when I was investigating my repayment plans per creditor, I noticed StepChange agreed to pay Lloyds £55 per month to pay off my £2000 overdraft. I called Lloyds about this and the payment breakdown is that £40 will cover interest and charges, whereas the other £15 will go towards reducing the entire debt. I thought this was nonsense, so I asked for them to freeze the interest, and they said this can be done with no problem, but the only consequence is that the account will have to be closed permanently and I will take a 6 year hit on my credit file (which I don't mind, because I am quite young and after I clear this debt I don't think I'll be borrowing any time soon).

So I agreed to close my account with Lloyds. Now it turns out that Lloyds don't even require any payment from me. I authorize when and how much I can pay, given my situation, so I can make token payments of £1 a month just to keep them quiet.

Now, as StepChange have agreed to pay them £55 per month, I think this is quite unnecessary (from my perspective). I would much rather that £55 a month go towards other debts, such as payday loans or credit cards that I took out, given that this lender isn't really chasing me for any payment. The plus side is that it's less stress for me, dealing with one less lender, and that all the other lenders will be paid off quicker. Then eventually after I am off my DMP I aim to clear the balance with Lloyds in 4-5 months with higher payments.

Now, when I explained this to StepChange, they weren't having it, because they said "lenders will see this as you treating them unfairly, the whole point of a DMP is that all your debt is managed by us, etc.". I kind of understand where they are coming from, but lenders are at benefit because it means I am paying more money towards them if I take Lloyds off.

I am just wondering what everyone else thinks about this. I can tell StepChange that I have paid off Lloyds fully so they take it off the DMP, but it will come with the aforementioned consequence. What would you do in my situation? I would much rather be on a DMP for £8000 in debt than £10000 in debt.

sourcrates

You can ask them to remove the debt from your DMP.

Why don't Lloyds require any payment from you ?

Bouncybubbles

Just my experience but it may help, I have an OD with co-op for £200 which is part of my DMP now if I really wanted to I could pay that off in full one month and stop the £10/month step-change are giving them. But I'm not going to. My reasoning is that if I had £200 spare one month (highly unlikely but you never know) it would be better suited to my savings for EF. Co-op also stated that it didn't require paying as it's an OD not accruing any charges as at 0%. However if I don't include all my debts I will never feel like I am beating those debts down. And I can guarantee that if I hadn't included it I would have never got round to paying it off as it is not causing a problem as such. I cannot influence your decision however if it was me I would keep to the original agreement (again just my opinion) as you are guaranteed to have paid it off alongside all your other debts and in X amount of time will be debt free rather than thinking my DMP has finished but I still owe £2k.....

RingoC

With regards to your PDLs, it may be worth checking out https://forums.moneysavingexpert.com/discussion/5289150 to see if you have a case yourself here or not with reference to those if you have taken several of them or rolled them over