DMP mutual support thread part 13 !!

dave10hull

Hi all


About nine months into my DMP with SC and all has been going well. 9 debts at £26k, all defaulted and even had a few offers of partial settlements.


My question was I have come into a lump sum of money (£7k) I am wondering if it would be of any benefit to leave SC and self manage, pay off a few creditors in full so my total balance is below £20k and then apply for a DRO.


I believe I would qualify based on the criteria however I am unsure if this would make any difference to my credit file in the long run, does this 'reset' the six year period on my credit file? Based on my current repayment plan, I will clear my debt in 12 years so I was going to start accepting settlements as I approach the end of the six year default period. Would this be more beneficial or would a DRO be better?


Any advice would be great.


Thanks

sourcrates

dave10hull wrote: »

Hi all


About nine months into my DMP with SC and all has been going well. 9 debts at £26k, all defaulted and even had a few offers of partial settlements.


My question was I have come into a lump sum of money (£7k) I am wondering if it would be of any benefit to leave SC and self manage, pay off a few creditors in full so my total balance is below £20k and then apply for a DRO.


I believe I would qualify based on the criteria however I am unsure if this would make any difference to my credit file in the long run, does this 'reset' the six year period on my credit file? Based on my current repayment plan, I will clear my debt in 12 years so I was going to start accepting settlements as I approach the end of the six year default period. Would this be more beneficial or would a DRO be better?


Any advice would be great.


Thanks

Hi,

Both options ruin your credit file for 6 years, the DMP would have 12 years to run, but a DRO would clear your debt in 12 months.

No brainier to me, just make sure you distribute the 7k fairly, otherwise the IS will not look favourably on it when you come to apply for the DRO.

Cheesephetamine

Willing2Learn wrote: »

Hi and welcome to the forum

Two things:

• We recommend that everyone delays the start date of their DMP by 3-6 months, so that you have the breathing space to build an Emergency Fund (EF). This is because an EF is a vital component of any successful monthly budget.
• With the joint account. Your husbands credit file will be negatively impacted due to the financial association between the two of you. Solution: Remove your name from the joint account so that it becomes a sole account in your husbands name only.

Thank you for this advice but: my husband does not use any credit nor is he interested in ever getting credit (that is how he was brought up) and also getting my name off those accounts would mean giving a LOT of explanations I do not wish to do. He has never checked his credit score, i dont think he ever cares. in 42 years he has never had credit, owed money or the like, he saves, he buys, if he doesnt have the money he wont buy!
I cannot wait to make a emergency fund as i have literally 0.7 left and its one week for payday. how am i supposed to save. WIth the DMP my monthly payments come down from 1000 to 500. Then i will be able to save, i also plan on doing overtime to pay off the DMP ASAP (I cant do overtime atm for personal reasons i dont want to explain but i will be able to do so soon).

Let me please copy and paste the email i have sent to step change, maybe you can answer some of the questions while i wait for their answer!

Email to step change:
"Hello!
I plan on sending you my paperwork on Monday by post, I have opened a clean current account in a new bank just to put my income in and to pay your direct debit. I would like to know when do I have to cancel all my current direct debits with my lenders. I have some coming in on the next week or two. Do I have to wait until I have the clear from you and my direct debit from you set up from you to cancel any payments?

My second question is… I do not want to EVER use any of my credit cards or loans etc, should I cut and dispose of my cards? Can the lenders be asked to NOT let me use the accounts again? Kind of like freezing the cards/accounts? This would really help with the tempation.

Third question is.. how will I keep track of what I own? Do you send me an statement of what is being paid to whom, how much is left, interest I am paying etc? I want to keep track of everything.

Am I allowed to put any extra little cash I might have at the end of the month (I doubt I will have any now at the beginning but I plan on doing a lot of overtime) in a ISA to have an emergency found of around 1000-2000 just in case I have something unexpected happening? I don’t want to be completely living paycheck to paycheck cos if something bad happened I will need to borrow more money and this then will be a disaster! I am afraid my lenders will ask for my emergency fund… After I have my emergency fund I plan on saving the rest towards paying off my DMP faster.

Also and the most important question of all. I have two joint current accounts with my husband from which we pay bills. No overdraft on them. No debts in his name or on both names. Will he ever know I am in a DMP?? He does not know of my debts. All debts are solely in my name. I intend for this to carry on being this way, Will by law any lender be allowed to take money off my joint accounts and/or notify my husband?

I am not late with any payments. I am just absolutely overwhelmed I can hardly breath. I have 0.70 cash left and one week until my next payday

Thank you"

Willing2Learn

Hi Cheesephetamine,

If it were me, I would cancel my DDs straight away, whilst simultaneously sending holding letters to all the creditors. A letter template is linked below:
https://www.nationaldebtline.org/EW/sampleletters/Pages/Hold-action-on-your-account-%28sole-name%29.aspx

Again, if it were me, and I knew I might tempted to spend on a card, then I would just cut up/shred the cards.

It would be good for you to set up a spreadsheet, to keep track of all your spending and repayments. There is a budget planner template available from MSE. The link for the planner is below:
https://www.moneysavingexpert.com/banking/Budget-planning/?_ga=2.123379467.1253246478.1557241668-686301347.1557241668#bplanner

You can include an Emergency Fund in your SOA/Income & Expenses form. I don't believe that this would be a problem for SC, but then I self-managed my DMP so I cannot be certain.

You need to write to all your creditors making it clear that you will only accept correspondence by Royal Mail. Clearly state that you do not consent to telephone calls and that communication by phone would be considered harassment. This may protect you from your husband finding out, (although I would actually recommend you confide in your husband). As far as I am aware, your creditors cannot use setting-off rules to take money from your joint account. See the setting-off rule explanation linked below:
https://www.moneysavingexpert.com/banking/setting-off/

Cheesephetamine

thank you so much, im considering eventually telling my husband, but it will take time. i already confessed to him i have a problem with shopping. step by step. this is really hard.

I will await and see what SC say but i will have your advice very much in sight

ps: as for budgeting im using YNAB and excel spreadsheets

Cheesephetamine

I have taken your advice and told my husband. Not about the DMP but about my debts. He is well... absolutely awestruck but he said that he new I had money problems (as in being addicted to spending) but did not imagine the size of my debt. He is such and amazing man. I cried and cried and cried for hours and afterwards I told him that I understand if he wants to divorce or separate from me. He said no. I love you. I’m just... surprised and trying to come to term with the news.

All in all you guys I feel extremely ashamed and relieved at the same time

Suseka97

Cheesephetamine wrote: »

I have taken your advice and told my husband. Not about the DMP but about my debts. He is well... absolutely awestruck but he said that he new I had money problems (as in being addicted to spending) but did not imagine the size of my debt. He is such and amazing man. I cried and cried and cried for hours and afterwards I told him that I understand if he wants to divorce or separate from me. He said no. I love you. I’m just... surprised and trying to come to term with the news.
All in all you guys I feel extremely ashamed and relieved at the same time

That wouldn't have been easy, but it was the right thing to do - because now he can support you on your DMP journey.

Please do take W2Ls advice re delaying the start of your DMP - stop all non priority debt payments now, send them letters to explain you are working with SC to formulate an affordable repayment plan and expect it to start in xx month (give yourself at least 3 months grace). I see you intend to work OT at some point and if you do manage to earn yourself a little extra - put that money aside for full and final settlements (F&Fs) at some future date. I know you've asked SC for some answers, but really all they do is act as your intermediary.

Once your DMP is up and running you'll find that SC do not send statements, but you will have access to your online account. So you can monitor your account balances. Your creditors (and eventually DCAs) should send you annual statements - so that's another way to stay on track. You can also set up a spreadsheet, or write things down in a notebook.

It will be down to you to monitor any interest and/or charges your creditors may apply - some will stop doing that fairly quickly, others may take longer and you might find some won't stop unless you complain (and even then they may not). SC have no sway in terms of what creditors do or don't do with regards to interest charges.

Cheesephetamine

Thanks. It was really hard to do. I’m creating letter to send all my creditor and will send them on Monday. I have stopped all DD but my NatWest loan. I intend to it that one and try to pay the minimum on the rest by debit card and let SC deal with the rest once I have thevok from SC I’ll stop the NatWest loan DD. For some reason if find it very hard to stop the bank Dd. I have never missed a payment in anything i just can’t breath at all. It feel wrong to miss a payment. I wish I could clear everything tomorrow

Broke_Bear

Thank you for the advice Willing2Learn. I have been into my bank today (I oddly somehow, don't owe them any money but was looking to change as they charge me £18 per month for my account ... NOT VERY MSE!!) Anyhow, I checked online and none of my CC's are affiliated to my bank so I am staying with them and have moved to a no overdraft current account with no fee. (just incase I have made a mistake, I bank with Nat West and my debts are with Barclays, MBNA, Tesco, Virgin and Lloyds...all credit cards)

I have also done the very scary think of cancelling all of my direct debits to the CC companies and will be writing my letters tomorrow, I think I will be looking to start making payments in October so will not send the forms back to SC just yet.

I have requested a CQ book from my bank so I can send token payments to creditors so I hope this comes during the week.

Suseka97

Cheesephetamine wrote: »

Thanks. It was really hard to do. I’m creating letter to send all my creditor and will send them on Monday. I have stopped all DD but my NatWest loan. I intend to it that one and try to pay the minimum on the rest by debit card and let SC deal with the rest once I have thevok from SC I’ll stop the NatWest loan DD. For some reason if find it very hard to stop the bank Dd. I have never missed a payment in anything i just can’t breath at all. It feel wrong to miss a payment. I wish I could clear everything tomorrow

I completely understand - as will many others. We had never missed a payment, until we reached that crisis (lightbulb) moment and then bam... everything came crashing down (or so it seemed at the time). I found it hard to accept we could no longer service our debts (due to a significant and unexpected cut in income) and felt it was just wrong to stop paying our creditors. But we, like you, had no choice and over time we just came to terms with it. You have to change your mindset now and just focus on the fact you are doing what you need to do and eventually you will breathe more easily. Trust me on that