DMP Mutual Support Thread - Part 12

System

Done my new I&E on NEDCAB and as it shows the payment for 5 of the creditors ( we have 16 in total), as being under £5 a month....one of them is only just over £1. I know they have to accept what my budget shows, but are they likely to query such a small amount? Or will this make them see they should offer me a deal?

LadyMorticia

Hey guys.

So, yesterday I finally sent off a letter to SC advising them that I'm going self-managed and sent off letters to all of my creditors.

Now I'm in panic mode that I haven't done it correctly! Such is the life of an anxiety sufferer!

System

LadyMorticia wrote: »

Hey guys.

So, yesterday I finally sent off a letter to SC advising them that I'm going self-managed and sent off letters to all of my creditors.

Now I'm in panic mode that I haven't done it correctly! Such is the life of an anxiety sufferer!

I am exactly the same, worrying about all of it. Our letters to creditors are ready to be posted today & I am ringing Step change later & will follow it up in writing.
Next stage is to make sure I have all the bank details (some are already on previous paperwork from the DCA's) and set up the standing orders.

I'm sure it will all go smoothly for us....stay positive.

January2015

ploppy57 wrote: »

I am exactly the same, worrying about all of it. Our letters to creditors are ready to be posted today & I am ringing Step change later & will follow it up in writing.
Next stage is to make sure I have all the bank details (some are already on previous paperwork from the DCA's) and set up the standing orders.

I'm sure it will all go smoothly for us....stay positive.

Don't stress about setting up payments for DCAs. In your letter advising you are going self managed, ask for the payment details - when they send those details back to you, then you can set up the standing orders

That buys you a bit longer between payments

Chedders

Hello all, I've been in debt ever since I turned 18 and had credit cards thrown down my neck. I'm now 30 and in more debt than I have ever been (£20K). It has got to the point where I have little disposable income after paying the household bills, large loan payment and "minimum balances" on the other cards. I already went down the second job route so I work 60 hours a week, coming out with approx. £1,660.

So I have gone to StepChange to get some advice. They have suggested a debt management plan and I'm just so unsure...

a) Firstly, from reading this thread £20K doesn't seem like a lot of debt to be in to warrant such drastic action. At the moment, although constantly worrying about the situation, I'm making the minimum payments and managing to *just* keep my head above the water... running my flat, whilst maintaining a "fair" credit rating.

b) From what I can tell by reading the info pack and the thread here, I'd still be paying what I'm paying now (not freeing up any more disposable income to give me some breathing space) but in addition it will be shooting my currently "fair" credit rating to bits by going into arrears and defaulting on my loans/credit cards. Something I've not done so far.

*My other SC option was bankruptcy - my credit rating will still be shot for 6 years like with the DMP (although possibly for the rest of my life) but the debt will be written off. I understand this would affect me and my partner for the rest of my life and I would kiss goodbye to owning a house with him in the future.*

I'm not sure if the DMP is the right option. I'm just so lost. Any advice?

[Deleted User]

Chedders wrote: »

Hello all, I've been in debt ever since I turned 18 and had credit cards thrown down my neck. I'm now 30 and in more debt than I have ever been (£20K). It has got to the point where I have little disposable income after paying the household bills, large loan payment and "minimum balances" on the other cards. I already went down the second job route so I work 60 hours a week, coming out with approx. £1,660.

So I have gone to StepChange to get some advice. They have suggested a debt management plan and I'm just so unsure...

a) Firstly, from reading this thread £20K doesn't seem like a lot of debt to be in to warrant such drastic action. At the moment, although constantly worrying about the situation, I'm making the minimum payments and managing to *just* keep my head above the water... running my flat, whilst maintaining a "fair" credit rating.

b) From what I can tell by reading the info pack and the thread here, I'd still be paying what I'm paying now (not freeing up any more disposable income to give me some breathing space) but in addition it will be shooting my currently "fair" credit rating to bits by going into arrears and defaulting on my loans/credit cards. Something I've not done so far.

*My other SC option was bankruptcy - my credit rating will still be shot for 6 years like with the DMP (although possibly for the rest of my life) but the debt will be written off. I understand this would affect me and my partner for the rest of my life and I would kiss goodbye to owning a house with him in the future.*

I'm not sure if the DMP is the right option. I'm just so lost. Any advice?

Welcome to the thread and please keep posting with any other queries/worries you may have.

I fully understand your anxiety about going down the DMP route. I felt exactly the same largely because of the credit rating issue. It had got to the stage though where something had to give, my repayments were totally beyond me.

I can honestly say a DMP was the best thing I could have done but I realise it isn't the solution for everyone. Have a long think before you commit as once you start all your debts will be marked as DMP on your credit files and you will probably be defaulted at some stage. If you read the thread in detail you'll see that defaults are no bad thing, I wish I'd realised that at the outset, it would have prevented lots of sleepless nights and robbing Peter to pay Paul, existing rather than living.


From what you tell us it seems clear that your current situation is unsustainable and you are working every hour possible just to service your debts and essential outgoings. That's no life. I've been there and done that myself:o


As for what you say about £20,000 not being much it's all relative. How long would it take you to pay it off if you carry on as you are doing now? You would probably get further and further in debt as paying minimum payments doesn't make any inroads and the interest keeps mounting up. One of the pluses of being on a DMP and being defaulted is that lenders usually (but not always) freeze interest:j. I haven't paid a penny in extra interest for about 5 years now and the balance is decreasing quickly:beer:


You say that you'll still be paying creditors what you are paying now but this shouldn't be the case. When you fill out the SC I&E form you should claim in most/all catagories so that it looks as if you have the least possible disposable income with which to furnish your debts. SC will ask for proof of your earnings etc but I don't recall them asking for bank statements and they certainly won't ask for receipts etc. I know it's being rather creative with your figures but I'm afraid most of us have had to resort to it:o


There's also the subject of building an emergency fund before starting your DMP as once you start you will have no usable credit cards:eek:. This has been covered lots of times on here so if you haven't done so already I recommend you sit down and read as much of the earlier posts as you can.

You must also ensure that your debt doesn't impinge on your boyfriend's credit worthiness if you are hoping to obtain a mortgage together. As I understand it, getting a mortgage for the first time would be impossible with a very bad credit rating. Someone else will hopefully be along later to advise you on that.

In the meantime, have a good think about your options both now and in the future. Good luck:beer:

leanne12345

ploppy57 wrote: »

Done my new I&E on NEDCAB and as it shows the payment for 5 of the creditors ( we have 16 in total), as being under £5 a month....one of them is only just over £1. I know they have to accept what my budget shows, but are they likely to query such a small amount? Or will this make them see they should offer me a deal?

Hi we have 20 creditors and payments to 14 of those are around the £1 mark. None of them have had any problems with that so far but even if they do it's tough luck- they can't have what I haven't got and my I&E shows this.

hign10pines

So NCO/Very got back to me to say that shop direct don't default unless the person hasn't paid off the areas in 12 months.

Hi, we only default customers if they stop paying or cant clear their arrears with us via stepchange self help pack within 12 months. We don’t promote these options and as customer with a DMC they should continue this way as would help them further down the line once balance is cleared

Ah well looks like it's £1 a month from now on then or should I just not pay them anything. Annoying that when I finally get a default it will be mush later than the rest

Foxforcefive

Hi all,
I'm absolutely blown away with your success stories on here and am slowly getting my head around what I need to do. But I have a few questions and I think I'm in the right place to get answers!

Ok, so we've managed to rack up 19.5k of debt. Not the highest of them all, but the most difficult to handle is our overdraft. We go over every month, then sometimes the bank (evil HSBC) reverse direct debits and throw in bank charges at the worst times.

We've been panicking and called Stepchange. They were fab and broke it all down for us and we're able to see the wood from the trees which is great.

The thing is, by using stepchange we are actually still paying our creditors around about the same amount according to their figures, except for the monthly amount we'd be paying off our overdraft. We'd also need to set up a basic bank account. Which I definitely want to do and will do regardless.

My question is, if we're virtually paying the same is it worth doing?

Am I getting a bad credit from getting a DMP from stepchange which I might be able to avoid?

In my heart of hearts I'd rather have the support of stepchange. We are notoriously crap with money (I get great bargains but too many of them but that's another story)!!!

Also we both had houses before having more kids and ending up renting. We'd love to try and get another mortgage in the future. I know that the DMP will affect this, but how long for? Is it possible?

Also which basic bank accounts do you recommend?

Sorry for the immensely long dramatic post, I've got to get this sorted! Thanks for reading xx

January2015

Foxforcefive wrote: »

Hi all,
I'm absolutely blown away with your success stories on here and am slowly getting my head around what I need to do. But I have a few questions and I think I'm in the right place to get answers!

Ok, so we've managed to rack up 19.5k of debt. Not the highest of them all, but the most difficult to handle is our overdraft. We go over every month, then sometimes the bank (evil HSBC) reverse direct debits and throw in bank charges at the worst times.

We've been panicking and called Stepchange. They were fab and broke it all down for us and we're able to see the wood from the trees which is great.

The thing is, by using stepchange we are actually still paying our creditors around about the same amount according to their figures, except for the monthly amount we'd be paying off our overdraft. We'd also need to set up a basic bank account.

My question is, if we're virtually paying the same is it worth doing?

Am I getting a bad credit from getting a DMP from stepchange which I might be able to avoid?

In my heart of hearts I'd rather have the support of stepchange. We are notoriously crap with money (I get great bargains but too many of them but that's another story)!!!

Also we both had houses before having more kids and ending up renting. We'd love to try and get another mortgage in the future. I know that the DMP will affect this, but how long for? Is it possible?

Sorry for the immensely long dramatic post, I've got to get this sorted! Thanks for reading xx

Hi and welcome to the forum :beer:

If you DMP figures with SC are showing you will pay virtually the same to your creditors as you currently are paying, I assume this means that they will be getting the minimum monthly payments - or thereabouts. If this is the case it is unlikely creditors will zero interest. Creditors don't just stop charging interest because you are on a DMP - many of us have had to battle to get interest and charges stopped. So just take this into consideration when deciding how to proceed.

I guess, from reading your post, that you can just about manage your monthly debt payments, but you feel you need the support of SC to help you keep on top of everything. Is that correct?

I think going down the route of DMP and paying practically the same as you are already will result in your credit file being marked with AP (arrangement to pay). This is not good for your credit file. Accounts are unlikely to be defaulted and therefore these AP markers will stay on your credit files until 6 years AFTER the last payment to each account. If you paid far less and defaulted the accounts the defaults would clear 6 years from the date of the defaults. So in terms of moving forward with a mortgage your options are:

1. Struggle on without a DMP and keep paying your debts on time - no negative impact on your credit files other than lenders may view the level of debt you have as not good, but no bad markers. Interest and charges will continue to be added.
2. DMP paying almost the same to creditors as your currently are - AP markers remain on your credit file for years, e.g. 5 years to clear an account and markers remain for 6 years after that = total 13 years of bad markers on your credit files. Remember interest and charges likely to continue to be added.
3. Self manage your DMP, pay lower or token payments and force defaults. Defaults drop off credit files after 6 years. No record of debts remain on credit files after that (even if debt not cleared) and credit file starts to improve. Interest and charges will stop - possibly not immediately, but usually once accounts are defaulted.

How realistic was the budget you worked out with SC. Don't be tempted to make it as tight as possible so that you can pay creditors. If you do that your DMP will fail. We all need to live. We don't expect to live flamboyant lives on a DMP, but we do want to live and have the occasional treat. We also need to make sure we budget for emergencies that crop up (car repairs, etc).

Hope this helps you in some way :T