In a mess with our DMP

ChefBungle

Hi everyone,

I received a message from StepChange saying I needed to phone them to update my DMP budget. So I did so and said at the start of the call when asked if I had any credit cards or any other credit that wasn't currently part of the DMP. I said I did - it's a Capital One credit card that I took out last year to pay for some car repairs.

I know I was stupid, but I need my car for work and needed to get it fixed. Since then I have used it for tyres, repairs, servicing etc for both my car and my wife's car and the balance on it has gradually grown to £2000. My annual mileage is about 25,000 and we live in the middle of nowhere so public transport isn't an option.

We have been on the DMP for over 4 years now and are just over half way through it, having paid back £12500 so far, with just under £11400 left to go. When we originally set it up, the budget only allowed for £30 per month for car repairs, which was a stupidly low amount given my annual mileage.

When I told StepChange this, they said they would have to either (a) cancel the DMP (b) add the credit card to the DMP. I said I would need to think about it and get back to them.

So my options are either :
* cancel the DMP and contact my creditors myself to see if they would be happy to continue with the current monthly payment (I could maybe stretch it by an extra £10 or so for each of the 4 creditors). Has anyone done this? Are they likely to be receptive to this?
* add this new credit card to the DMP, and update my monthly budget to give me £200 a month for car repairs. This would significantly reduce the amount I am paying to everyone else and would therefore take me longer to clear everything.

To add to this, another issue has recently surfaced over the last year. The house that I had with my ex-wife was voluntarily repossessed, that was over 4 years ago. I never heard from the bank until last year when (via Shoesmiths) they said there was a shortfall of £46k and how would I like to pay! Up until now, there has been some communication backwards and forwards, I advised them I'm on a DMP and could afford a token payment of £20 per month - since sending this back I've not heard from them in around 6 months, so not sure what they're currently thinking.

So I'm at a bit of a crossroads at the moment I think. Do I continue down the DMP route and hope that one day I could offer Shoesmiths £2000-£3000 in full and final settlement of the outstanding £46k (am I being optimistic?). If I continue with the DMP, should I try to go it alone or should I just get StepChange to add this credit card to the current DMP. I'm thinking if I go it alone and the creditors are not receptive to a direct arrangement that I can always go back to StepChange or PayPlan?

Or do I bite the bullet and look at either bankruptcy or a Protected Trust Deed (I'm in Scotland) to get rid of everyone once and for all?

Thanks in advance for any help or support from anyone. I got myself a little bit upset this morning over the whole thing, I just want it all to go away.

sourcrates

Hi,

Shoe-smiths are unlikely to take 3 grand settlement on a 46 k debt.

Bankruptcy (or Scottish equivalent) may be the best option.

Do you own a house now ?

If not, may be best to sort the lot out for good.

National debt-line Scotland will give you free impartial advice.

ChefBungle

Hi Sourcrates,

Thank you for the reply, we don't currently own a house we're just renting. I don't have any assets or savings other than my car (worth about £2k at the moment), but I need that for work so can't do anything with it.

I think you might be right, I can't think of any other way I'm going to deal with this £46k.

sourcrates

ChefBungle wrote: »

Hi Sourcrates,

Thank you for the reply, we don't currently own a house we're just renting. I don't have any assets or savings other than my car (worth about £2k at the moment), but I need that for work so can't do anything with it.

I think you might be right, I can't think of any other way I'm going to deal with this £46k.

If its a cheap car, and is needed for work, chances are you will be able to keep it in bankruptcy, or sequestration as its called in Scotland.

The good news is the fee is only £200 !!

It is a big step to take, so getting the right advice is crucial, speak to some of the debt charities, or National Debtline (scotland), there is also government advice here :

https://www.mygov.scot/how-do-i-apply-for-bankruptcy/

ChefBungle

Would sequestration be the best option? I was leaning more towards the protected trust deed.

I know I need to get detailed advice on the whole thing. My wife and I would like to be able to own a house again at some point, the bankruptcy route might prohibit that in the future?

National_Debtline

Hi

I agree it’s best to contact us to discuss your options, particularly if you’re considering a trust deed or bankruptcy.

Trust deeds and bankruptcy are both forms of insolvency, so I’m not sure whether one would have more impact on your ability to get a mortgage than the other. After 6 years, neither of the options would show on your credit reference file. It might come down to whether a mortgage lender asks a question such as ‘Have you ever been bankrupt?’ or ‘Have you ever used a form of insolvency?’ etc.

James
@natdebtline

ChefBungle

I am going to send the following letter to the creditors - is this ok?

[FONT=&quot]Dear Sir/Madam,[/FONT]
[FONT=&quot] [/FONT]
[FONT=&quot]Re : [/FONT]
[FONT=&quot]Account : XXXXXXX
[/FONT]
[FONT=&quot]Name : XXXXXXXXXX
[/FONT]
[FONT=&quot]Amount Outstanding : £XXXX[/FONT]
[FONT=&quot]Monthly Repayment : £XX[/FONT]
[FONT=&quot] [/FONT]
[FONT=&quot]I am writing to you regarding the above account.[/FONT]
[FONT=&quot] [/FONT]
[FONT=&quot]As you can tell from your records, this account has been managed via StepChange Debt Charity for the last several years. Unfortunately, StepChange have informed me today they are closing my DMP due to the fact I took out a small credit card in order to cover some car repair costs.[/FONT]
[FONT=&quot] [/FONT]
[FONT=&quot]I am writing to you to see if I can continue to make a payment to this account, albeit directly rather than going through StepChange. I am also able to increase the repayment amount slightly to £100 per month as a token of my intention to repay this debt.[/FONT]
[FONT=&quot] [/FONT]
[FONT=&quot]If this proposal is agreeable to you, then please can you confirm this by return mail and let me know the account details (sort code, account number and reference) and I will arrange to set this up as soon as possible.[/FONT]
[FONT=&quot] [/FONT]
[FONT=&quot]I am also in the process of exploring whether a Protected Trust Deed or Sequestration will be a better route for me to go down, I will of course keep you informed of any further developments on this front.[/FONT]
[FONT=&quot] [/FONT]
[FONT=&quot]I look forward to your reply.[/FONT]
[FONT=&quot] [/FONT]
[FONT=&quot]Yours Sincerely,[/FONT]

DawnW

Not an expert on this stuff at all, but instinct tells me that they don't 'need' to know about your conversations with Stepchange, or the new credit card. And I wouldn't be telling them about any thoughts I had on bankruptcy etc either. Just a simple letter telling them that you have decided to manage your DMP yourself going forward, and you would like to continue with the same arrangement as before sounds best. If you decide on another route at a later date, you can tell them then.

I am sure more knowledgeable people will be along shortly.

All the best.

sammyjammy

Don't increase what you are paying, save up for potential bankruptcy fees.

sourcrates

ChefBungle wrote: »

I am going to send the following letter to the creditors - is this ok?

[FONT=&quot]Dear Sir/Madam,[/FONT]
[FONT=&quot] [/FONT]
[FONT=&quot]Re : [/FONT]
[FONT=&quot]Account : XXXXXXX
[/FONT]
[FONT=&quot]Name : XXXXXXXXXX
[/FONT]
[FONT=&quot]Amount Outstanding : £XXXX[/FONT]
[FONT=&quot]Monthly Repayment : £XX[/FONT]
[FONT=&quot] [/FONT]
[FONT=&quot]I am writing to you regarding the above account.[/FONT]
[FONT=&quot] [/FONT]
[FONT=&quot]As you can tell from your records, this account has been managed via StepChange Debt Charity for the last several years, I am writing to inform you that from now on I intend to self manage my DMP.[/FONT]
[FONT=&quot] [/FONT]
[FONT=&quot]I will continue to make a payment to this account, albeit directly rather than going through StepChange. I am also able to increase the repayment amount slightly to £100 per month as a token of my intention to repay this debt.[/FONT]
[FONT=&quot] [/FONT]
[FONT=&quot]If this proposal is agreeable to you, then please can you confirm this by return mail and let me know the account details (sort code, account number and reference) and I will arrange to set this up as soon as possible.[/FONT]
[FONT=&quot] [/FONT]
[FONT=&quot].[/FONT]
[FONT=&quot] [/FONT]
[FONT=&quot]I look forward to your reply.[/FONT]
[FONT=&quot] [/FONT]
[FONT=&quot]Yours Sincerely,[/FONT]

I have edited it for you.

Aced2016

I would suggest bankruptcy !

You can go on the account in bankruptcy website they are based in Ayrshire I'm sure.

Pay the £200 and then they will liaise with you from there. As I don't think the £46000 debt will disappear.

Your credit file will be affected for 6 years, but as you were on DMP I imagine it already is.

Going forward make a better budget ! Once you've had practice of managing your budget you'll never need to go back to debt

Good luck