Debt management plan help

Bounty1

Could someone please explain to me the difference between a self managed DMP and one set up by someone like step change.

I have agreed payments with one of my credit cards and we are able to make an offer to the other two but I’m feeling confused and don’t know what to do for the best.

We have been told the 1st one is going to default, I’ve read that some people want them to default when on. DMP??? I don’t understand, help please.

sourcrates

Stepchange act as your agent.

They agree repayment, based on your budget with your creditors on your behalf.

Self management means you take the place of stepchange and organise it yourself, its a very simple process.

Defaults are good as you know 6 years from default date, the entry will be gone from your credit report.

Bounty1

Thank you for your reply.

Iwanttobefree

Personally I found Step change (while I appreciate their help etc) to be of very little use unless everything goes as they suggest it might.

The entire reason I tried using them is that I was stressed to breaking point with my debts, and couldn't face trying to deal with the continual barrage of letters and calls from my creditors.

I wrongly presumed, the likes of Stepchange took all this stress off me.

They do take most of the stress off, IF and only IF the creditors agree to their proposals. Even then the creditors can still contact you to see if your circumstances have changed etc.

I can't remember the exact details now, but about 4+ years ago when I tried Stepchange, they told me what my monthly repayment would be and what my debt free date would be and it all looked totally rosy.

However, that was Stepchange presuming all my creditors would freeze the interest or not try to put other charges on etc.

When one of my creditors refused to freeze interest (three creation Finance accounts), I presumed one phone call to Stepchange and they would try to sort it all out.

But Stepchange simply said they cant force creditors to freeze interest (or words to that effect) and couldn't/wouldn't/aren't allowed to contact them on my behalf.

The end result, I was still dealing with some of my creditors myself, especially for the stressful stuff.

And within no time, other creditors sent letters asking for an update on finances etc.

At that point I simply did the DMP myself. Admittedly I used the same payment offer that Stepchange did for me, but it's no different to the plans various online sites provide for free (or your CAB will provide)

I've found it to be fine doing it myself with the exception of Creation Finance who have been a pain in the bum since the start, (I've contacted the Financial Ombudsman about them on an annual basis, (although that also was a complete waste of time, some of the FO conclusions beggar belief, then again they are financed by banks etc))

The other small problem I could see with using places such as Stepchange, is they have to fairly distribute all money around all creditors (the more money owed gets a higher percent), so if you say came into £3000, Step change would spread it between all of your creditors at what ever percentage they are paying your monthly repayments at.

If you managed it yourself, and you owed one company 5K, you could offer them a final settlement figure of 3K and if they accept, you've got rid of one of your debts. Or if they didn't accept it, and you had a few debts under £1000, you could clear them.

I owe Argos £400, apart from Creation, they have been the only other real pain, constant phone calls, constant letters etc etc etc. If I had £400 spare, I would pay it off just to get rid of that stress, however with Stepchange, (unless I've been informed incorrectly) they wouldn't do that, they would insist oin spreading it around all my creditors.


TLDR
Stepchange and other charities are great all the time creditors agree to freeze the interest, but if the creditors don't, you might as well deal with things yourself

Carrot007

Iwanttobefree wrote: »

TLDR
Stepchange and other charities are great all the time creditors agree to freeze the interest, but if the creditors don't, you might as well deal with things yourself

Pretty much this.


Stepchange etc insist on you being fair to all creditors even if they are not fair to you.


On your own if one refuses to stop interest or applies arragement markers for over 6 months you are free to stop paying until they default you and sell the debt on.


Also, if your plan is going to take more than 3 years to pay off then you are better stopping all payment untill they are all defaulted. Arrangement to pay sounds nicer but it is worse as it stays on for 6 years after the debt is paid off.

Bounty1

Thank you this is very helpful, I!!!8217;m now thinking I will be best to set this up myself as I would rather be in control of it myself. Barclaycard, mbna and sainsburys credit card have agreed to our offer but one of them is about to default and the letter says they may sell this debt? It!!!8217;s quite worrying but we cannot go on like this. We have a loan that we plan to keep paying as normal, is this something others would do?

Suseka97

Bounty1 wrote: »

Thank you this is very helpful, I!!!8217;m now thinking I will be best to set this up myself as I would rather be in control of it myself. Barclaycard, mbna and sainsburys credit card have agreed to our offer but one of them is about to default and the letter says they may sell this debt? It!!!8217;s quite worrying but we cannot go on like this. We have a loan that we plan to keep paying as normal, is this something others would do?

Don't fret about defaults - it'll likely happen anyway and whilst they do impact negatively on your credit file, it generally means interest and charges stop which freezes the balance at that point and you can start paying it down. In these cases you want to push for early defaults because they then fall off your credit file 6 years from the date the D is registered (irrespective of whether there is still an outstanding balance) - again good.

Also, don't worry if any of them hand the debt over to a company who may manage the debt on their behalf, or one who might buy the debt. All you do then is continue to pay the DCA whatever you were paying the original creditor.

As to whether you should continue to pay your loan as per usual and arrange a payment plan on your credit cards. That's up to you. But you will have to consider how you handle that when/if any of your other creditors request and income and expenditure statement. Maybe they won't -but if they do you wouldn't want them to see a loan repayment I imagine.

If it were me I'd put the loan into the DMP as well. Your credit file will be damaged now anyway, so one more potential default won't matter. Also, you will be paying interest on that loan. The aim here is to get all loans/CCs to stop interest and charges -so your money goes to paying the principle sum off, not interest.

fatbelly

Useful posts here.

I think the conclusion is that if you're capable of doing it yourself (and if you're posting here then you probably are) then it's better to go DIY.

There are loads of resources as well as the ones on this site (Debt Camel, National Debtline, NEDCAB, legalbeagles if things get sticky) and if can use the internet you can access those and end up with a better result.

Bounty1

Thank you for your replies, it!!!8217;s given me a better understanding and put my mind at ease a little. I understand about the loan so now plan to ad this to my self managed plan.
I!!!8217;ve seen people talk about sending cca requests, is this something I should be sending to creditors?

Time to get out of what feels like a deep hole, thanks for the great advice.

The_Analyst

Iwanttobefree wrote: »

Personally I found Step change (while I appreciate their help etc) to be of very little use unless everything goes as they suggest it might.

The entire reason I tried using them is that I was stressed to breaking point with my debts, and couldn't face trying to deal with the continual barrage of letters and calls from my creditors.

I wrongly presumed, the likes of Stepchange took all this stress off me.

They do take most of the stress off, IF and only IF the creditors agree to their proposals. Even then the creditors can still contact you to see if your circumstances have changed etc.

I can't remember the exact details now, but about 4+ years ago when I tried Stepchange, they told me what my monthly repayment would be and what my debt free date would be and it all looked totally rosy.

However, that was Stepchange presuming all my creditors would freeze the interest or not try to put other charges on etc.

When one of my creditors refused to freeze interest (three creation Finance accounts), I presumed one phone call to Stepchange and they would try to sort it all out.

But Stepchange simply said they cant force creditors to freeze interest (or words to that effect) and couldn't/wouldn't/aren't allowed to contact them on my behalf.

The end result, I was still dealing with some of my creditors myself, especially for the stressful stuff.

And within no time, other creditors sent letters asking for an update on finances etc.

At that point I simply did the DMP myself. Admittedly I used the same payment offer that Stepchange did for me, but it's no different to the plans various online sites provide for free (or your CAB will provide)

I've found it to be fine doing it myself with the exception of Creation Finance who have been a pain in the bum since the start, (I've contacted the Financial Ombudsman about them on an annual basis, (although that also was a complete waste of time, some of the FO conclusions beggar belief, then again they are financed by banks etc))

The other small problem I could see with using places such as Stepchange, is they have to fairly distribute all money around all creditors (the more money owed gets a higher percent), so if you say came into £3000, Step change would spread it between all of your creditors at what ever percentage they are paying your monthly repayments at.

If you managed it yourself, and you owed one company 5K, you could offer them a final settlement figure of 3K and if they accept, you've got rid of one of your debts. Or if they didn't accept it, and you had a few debts under £1000, you could clear them.

I owe Argos £400, apart from Creation, they have been the only other real pain, constant phone calls, constant letters etc etc etc. If I had £400 spare, I would pay it off just to get rid of that stress, however with Stepchange, (unless I've been informed incorrectly) they wouldn't do that, they would insist oin spreading it around all my creditors.


TLDR
Stepchange and other charities are great all the time creditors agree to freeze the interest, but if the creditors don't, you might as well deal with things yourself

I found StepChange totally unhelpful, but THANKFULLY it pushed me down the route of direct payments, a path that totally changed things for me. After spending 5 years in a DMP, paying off just under 50% of the debt, I moved to direct payments and in 6 months time will be debt free after 2.5 years of Direct Payments

In StepChange's defence, I think the rules on DMPs have been tightened up and there is a massive focus on I&E Forms/Affordability

The_Analyst

Suseka97 wrote: »

Don't fret about defaults - it'll likely happen anyway and whilst they do impact negatively on your credit file, it generally means interest and charges stop which freezes the balance at that point and you can start paying it down. In these cases you want to push for early defaults because they then fall off your credit file 6 years from the date the D is registered (irrespective of whether there is still an outstanding balance) - again good.

Also, don't worry if any of them hand the debt over to a company who may manage the debt on their behalf, or one who might buy the debt. All you do then is continue to pay the DCA whatever you were paying the original creditor.

As to whether you should continue to pay your loan as per usual and arrange a payment plan on your credit cards. That's up to you. But you will have to consider how you handle that when/if any of your other creditors request and income and expenditure statement. Maybe they won't -but if they do you wouldn't want them to see a loan repayment I imagine.

If it were me I'd put the loan into the DMP as well. Your credit file will be damaged now anyway, so one more potential default won't matter. Also, you will be paying interest on that loan. The aim here is to get all loans/CCs to stop interest and charges -so your money goes to paying the principle sum off, not interest.

Great advice. In the early days, I panicked about credit files and debt companies. I kept picturing heavy handed bailiffs turning up at my door demanding payment when the reality is a million miles away. Once your debt is with a debt company things become far simpler - they want you to pay what you owe - it's a simple as that. They want you to pay, but only at a rate you can afford