how long to wait?

shepd1958

Hi Guys,
as a newbie, just wanted some more advice off you very knowledgeable and helpful people, I have decided to take the plunge with a DMP, using stepchange, I have used their debt remedy tool, have my plan and application pack here, they want £1315 a month off me and say the debts will be cleared after 20 months, I have written all my letters to my creditors (13) total £26000, and I have written to them also cancelling my card withdrawals and also the bank, I intend to call the bank today and report my card as lost, I could do with delaying the DMP by 4 months and build up an emergency fund as I will have no chance of any further credit, (not that I want any but sadly I fell into the robbing of Peter to pay Paul trap) do I send my form and wageslip to stepchange now ?or wait the 4 months, then send it over to them, I will send the creditors the budget sheet prepared by stepchange. Do I just sit tight and wait for the onslaught from the creditors and ignore everything? any help would be most appreciated, thanks.

sourcrates

Hi,

Yes your doing all the right things.

You will find that creditors are a lot more understanding these days with people who fall into financial difficulty, the main reason for this isn't because they have suddenly developed a conscience, its because the regulator, the FCA, has cracked down on them, they now have to take affordability into account, so you will find, once you have informed them your entering a DMP, there will be very minimal backlash over it.

Most people find it a very easy experience, there will be a few letters and calls initially, but once news filters down, it will go quiet, you'll make your payment, and before you know it, 18 months will pass, and the debt will be gone.

Building an emergency fund is crucial before hand, and you must decide how you want your credit file to come out of this, in a nutshell, ideally you want all accounts to default, that gives you a clear timetable for the default to be gone, which is 6 years.

If accounts dont default, you can end up with "arrangement to pay markers" (AP) these stay on your credit file a further 6 years after the debt is paid off, so a lot longer potentially.

It depends if that is important to you, or not, as to how you proceed with this.

shepd1958

Hi
many thanks for your valued reply, still not sure about the following?


Do I need to do anything more with stepchange until I decide to initiate the dmp?, I am planning to stop all payments with no token payments, build up an emergency fund and get the defaults, then initiate the dmp, I feel physically sick at the thought of 13 creditors chasing me for money, surely its hard work coping with all these creditors chasing you? your comments would be most appreciated, many thanks.

sourcrates

I realize the prospect of non payment seems daunting, but you are doing this for a good reason, so just keep that in mind.

You really want to start this DMP with every account defaulted, that will give you the best outcome, stepchange usually give you a timescale in which to respond, but if you write to them and tell them a date your comfortable with, i`m sure that will be fine.

Once you tell your creditors your embarking on a DMP, your accounts will be frozen for 30 days anyway, after that you may get calls and letters, but as long as you give them a timescale to be starting your DMP, they should be fine about it.

Also you should write, asking for all interest and charges to be stopped, also ask them to default your account according to FSA guidelines, which specify a default should be recorded after 3-6 missed statutory payments.

Dont be afraid to take control and ask for what you want, things tend to get done a lot quicker that way.

Sazzie23

Hi Shepd

Yes I think you've got it all in hand, just checking though have you double checked to make sure your bank account does not have connections with any creditors, as 13 is likely to cover a wide range and so many banks are linked these days. Creditors can use rule of offset to take money to pay against debts if there are links between debts and accounts.

Do not worry about the creditors contacting you, I can still remember it was a very confronting time for me, but now I know that a lot of the time it was automated calls and letters and when I actually spoke to the people on the phone they were all fine. My advice to you is to actually speak to people if you can, tell them you're with SC and give them your number. Have a phrase that says 'that's all I can discuss at the moment' and then hang up. If any are funny with you just hang up. I know not everyone in the boards recommends talking to creditors, but I found it helpful once I was able to do it without sobbing :-(

My personal experience was that token payments made me feel better, but I can't say I tried it without making them. Also as your repayments will be comparatively very high I think creditors could be more likely to chase you for something?
I agree you need an emergency fund, but for some of us that meant 6 months of reduced payments months to acheive a fund of £5-600.

My final point is whilst 'going for it' and clearing your debt in 2 years is an excellent target, is your budget comfortable enough, or is that going to be a horrid 2 years? Would you be better dropping your budget repayments and going for 2.5 years. Admittedly short term pain is more do-able than a long term DMP but trust me, 2 years can seem a loooooonng time when you're skint.

Saz

January2015

Hi

If you are concerned about speaking to creditors you can write and ask they communicate in writing only. Write something similar to the following paragraph in a letter:

Plese ensure all communication regarding this account is done via written letter only. I do not give permission for you to contact me by telephone. I will respond to any letters received.

Creditors should honour this request. It does take the pressure off when you are worried at the beginning of the DMP process.