DMP mutual support thread part 13 !!

Azza7

Just hope I am posting correctly.Have been reading other peoples stories and after some time of struggling to pay minimum payments and getting further into debt have decided to start a dmp with stepchange.They have calculated it will take 4 years 10 months of paying £360 a month to become debt free.My income is pension and a bit of housing benefit.I live in rented sheltered housing no assets.Since losing husband I have struggled each month to pay everything..So far I have...
Opened a new bank account (my main debts are with Barclays)
Written holding letters to my 9 creditors asking them to freeze everything for 2 months while I sort stepchange stuff out.
Arranged for pension to go into new account.
Swapped direct debits to new account.
M and S and Very have ignored/or not received my holding letters sent last week but I have had letters quote we notice you have missed a payment....etc.M and S charged me late pay fee.:(
Both asking me to ring but I am scared of pressure.Have had stepchages plan but hope to put off till June as I have no savings and need a bit of emergency fund.Stepchange budget to the bone:(But want to clear this within 5 years.
Is there anything else I should be doing?I actually feel a lot better now because even on a tight budget will be better off than I was before ...pension swallowed by overdraft each month and paying credit card minimum then using available credit to buy food.Wake up call came when an online calculator said if I kept going with minimums it wouldd take 37 years to clear!That would make me 107 ha ha.

Willing2Learn

rob797 wrote: »

I have £25k CC debt at varying interest (18 - 29%), £14k left of Zopa loan at 18.9%, an overdraft of £2k, and owe (thankfully understanding and patient!) people I know probably around £20k.

I am now signed up with StepChange and am in the process of getting 30/60 days grace of freezing interest + payments. MBNA have agreed and I am phoning the others tomorrow alongside sending off formal letters. I believe the best plan once I am back in work will be to proceed with a DMP, about which I am very nervous but it has to be done.

Hi,

Ideally you want your creditors to put a hold on your accounts for 3-6 months (preferably six months), as that will allow you to accumulate a reasonable Emergency Fund (EF). Having an EF is a vital component of any successful monthly budgeting system. It means when something crops up, you will have something put aside and won't need to use any form of credit. Most people are successful in having their accounts frozen for six months, as long as their creditors are kept fully informed in writing (via Royal Mail).

Willing2Learn

Azza7 wrote: »

M and S and Very have ignored/or not received my holding letters sent last week but I have had letters quote we notice you have missed a payment....etc.M and S charged me late pay fee.:(
Both asking me to ring but I am scared of pressure.Have had stepchages plan but hope to put off till June as I have no savings and need a bit of emergency fund.Stepchange budget to the bone:(But want to clear this within 5 years.

With Very, they will usually refuse to freeze the account and will instead continue to apply monthly interest (@ 39.9% APR I think). We have found that the best way to deal with Very is to totally withhold all payments to them, so that they are forced to default the account and pass it on to Debt Collectors. As soon as the account defaults, charges and interest will stop. Having a default is also good as it means the account will be removed from your credit files earlier.

I would ignore their requests to ring as having a conversation on the phone can easily turn pear-shaped if you feel panicked or flustered. Much better to continue to make all correspondence in writing, via Royal Mail. The letter you received from M&S was most likely generated automatically and is therefore nothing to get worried about.

Well done on your decision to build an Emergency Fund. If you can get your creditors to hold your accounts for six months, then that is even better as you will then have a sizeable EF in place.

Azza7

Thanks willing2learn...wow 6 months, dare I? And what would stepchange say they sent me the plan 3 weeks ago.I must say its scary to think im off on this 5 yr journey with no savings just the £25 a month I put for emergencies on my budget.Thanks for the advice about very....another reason to delay things a bit just worried now stepchange will think I am not taking this seriously.

Willing2Learn

Azza7 wrote: »

Thanks willing2learn...wow 6 months, dare I? And what would stepchange say they sent me the plan 3 weeks ago.I must say its scary to think im off on this 5 yr journey with no savings just the £25 a month I put for emergencies on my budget.Thanks for the advice about very....another reason to delay things a bit just worried now stepchange will think I am not taking this seriously.

Hello again Azza7 :hello: ,

To help explain the mindset required to put things on hold for a minimum three months but ideally for six months, and so that you have that safety net EF in place, then have a look at the thread linked below. Suseka97 and sourcrates explain it all perfectly

https://forums.moneysavingexpert.com/discussion/5889160/dmp

rob797

Thanks for the reply, I appreciate it! I didn't realise one could insist/ask for longer grace periods; I will proceed with this once the 30 day period is coming to an end. Is there any reason StepChange wouldn't advise pushing for longer periods of time for the CCs to be on hold, especially in the face of redundancy?

Willing2Learn wrote: »

Hi,

Ideally you want your creditors to put a hold on your accounts for 3-6 months (preferably six months), as that will allow you to accumulate a reasonable Emergency Fund (EF). Having an EF is a vital component of any successful monthly budgeting system. It means when something crops up, you will have something put aside and won't need to use any form of credit. Most people are successful in having their accounts frozen for six months, as long as their creditors are kept fully informed in writing (via Royal Mail).

sourcrates

rob797 wrote: »

Thanks for the reply, I appreciate it! I didn't realise one could insist/ask for longer grace periods; I will proceed with this once the 30 day period is coming to an end. Is there any reason StepChange wouldn't advise pushing for longer periods of time for the CCs to be on hold, especially in the face of redundancy?

Stepchange are funded by the banks, there sole aim is to get you repaying your debt by your chosen method, as soon as possible, they are not interested in your emergency fund, so you have to look out for yourself in that respect.

Suseka97

Azza7 wrote: »

Thanks willing2learn...wow 6 months, dare I? And what would stepchange say they sent me the plan 3 weeks ago.I must say its scary to think im off on this 5 yr journey with no savings just the £25 a month I put for emergencies on my budget.Thanks for the advice about very....another reason to delay things a bit just worried now stepchange will think I am not taking this seriously.

Hi Azza7.

Okay - in short, yes, you can

From what you said previously - your income is a pension and some housing benefit, and you have no savings. So for you it is crucial that you set aside a decent EF and I'd recommend at least 6 months. Very are a difficult bunch and I'd stop paying them anything so that you can try to force a default - so not paying anything whilst you build up that EF will help with that.

As for StepChange - again, just tell them what you intend to do. They may say that's okay and to send back the paperwork when you are ready - or they may say that there's no point filling in the paperwork now and to contact them again when you are happy to start the plan.

Above all - remember, a DMP is an informal arrangement and so you call the shots. Just make sure you keep your creditors in the loop (via good old Royal Mail) and let them know when you intend to start (in x month) and until then you won't be making any more payments. Instead save what you would have paid them into your EF.

I know it can all be a bit scary at the beginning, but you can come back on here anytime for advice and support. You will receive various standard/automated letters re missed payment, threat of default etc. that's normal and nothing to worry about. In the world of DMPs - a six month grace period is pretty normal and creditors will be used to it.

bristol2020

I have a question regarding my DMP with Stepchange. Im in a position where I could settle in full, but as my whole financial mess is a result of the payday loan merry-go-round im loathe to do so. I was completely unaware that I could contact the payday loan companies and ask for a refund on interest etc because of irresponsible lending, at least until January of this year when I fired off multiple letters etc.
As my PDL's were all over 6 years old its most likely going to be a long winded process before I see any redress, and most will have to go to the FO im sure.
So back to my current situation and my DMP with Stepchange. Do I ask them to negotiate on my behalf or should I contact my creditors direct? One lender makes up 90% of my current debt, and there are five other smaller debts with other lenders.
And if i do go direct and we reach a mutual agreement in writing (I assume i need to stipulate that the debt has not already been sold on or nor will it be after settlement), should I then get someone else to clear the debts on my behalf - i.e they pay and I give them the money, or is it ok If I pay on my debit card or bank transfer etc?
Thanks in advance

Azza7

Thanks so much Suseka7 this is a whole new world for me but thanks to this forum support am going from feeling a guilty victim to a responsible proactive person.Still scared though!:( Will start writing those letters and treat myself to a (budget)glass of wine this weekend.:)