DMP mutual support thread part 13 !!

Willing2Learn

YorkieDave wrote: »

I'm hoping to set up a DMP with my creditors by myself. Long story short - my wife and I were both made redundant and are both now self-employed. The total debt, all in my name is £90k unsecured.

I'd like a bit of advice please :-)
I can afford a total of £450 per month for repayments. I can't go for bankruptcy for job reasons.
Has anyone had any success getting creditors to accept that level of repayment which will obviously mean many years to pay off? My hope is to be able to pay off at a higher rate in the future.
I'm planning to go to creditors with income / expenditure and repayment proposal based on size of debt and my disposable income. Is there anything else I need to send them?
Does anyone have any other advice re negotiating with creditors?

Hi YorkieDave and welcome to the forum

Yes, there have been people who have set up a DMP for the long-term (ie with a duration of more than 10 years

Are you planning to Self-Manage (SM) your DMP? Or are you planning on using the DMP management available from one of the free agencies (the CAB, StepChange or PayPlan)?

Regardless of which DMP route you are going to take, I would definitely recommend suspending payments to your creditors for six months, so that you can build an appropriate Emergency Fund (EF). This is because an EF protects from the unknown expenses that will pop up every now and then. You need to have the funds available for unknown car repairs, boiler maintenance or whatever else blights your debt-free journey. And besides, an EF is an essential component of any successful monthly budget and DMP

If you do decide to suspend payments for six months, then you will have to write to each of your creditors. You need to advise them of your plans, and you could include a line stating your scheduled DMP start date DD/MM/2020

sourcrates

DaveAllen wrote: »

Fantastic, thank you.

Just realised that the CCAs are around 20+ years old in some cases, even if the defaults are only around 10. I’ll see what comes back.

Extremely unlikley they will have any paperwork whatsoever in that case, however they may just suprise you, definitely send them as it will improve your position no end if they cannot produce them.

startingadmp

Hi all,

I've finally come to terms with the problem I currently have with existing debts, and am looking to start on a DMP in the very near future.

Currently I have just shy of £35k of debts, with the Stepchange Debt Remedy tool suggesting a £500 per month repayment; this is affordable, so really want to press ahead. (Reason for going with Stepchange rather than on my own is due to the number of creditors).

As a newbie to all this, just wanted to check if there's anything I've missed. A lot of payments are due on between 28/10 and 1/11 (due to payday) - I've cancelled all Direct Debits and in the process of cancelling CPAs. In addition, I'm in the process of opening a basic bank account, as I have a credit card and overdraft with my current account provider.

Ideally, I'm looking to hold off "officially" starting the DMP until January, in part to build up an emergency pot and in part to get Christmas out the way. I'm already on a repayment plan with two creditors (both unsecured payday loans), but for the remainder I've never missed a payment previously. Is this feasible?

In any case, what are the next steps? Should I wait for each cancelled payment to be missed and then send each creditor a letter saying that I'm speaking to Stepchange?

My plan was to miss payments on 28/10, 28/11, and 28/12 for most creditors, and to make payments to my current bank until the new basic account is sorted and wages transferred across.

Any advice would be great!

Willing2Learn

startingadmp wrote: »

Ideally, I'm looking to hold off "officially" starting the DMP until January, in part to build up an emergency pot and in part to get Christmas out the way. I'm already on a repayment plan with two creditors (both unsecured payday loans), but for the remainder I've never missed a payment previously. Is this feasible?

In any case, what are the next steps? Should I wait for each cancelled payment to be missed and then send each creditor a letter saying that I'm speaking to Stepchange?

My plan was to miss payments on 28/10, 28/11, and 28/12 for most creditors, and to make payments to my current bank until the new basic account is sorted and wages transferred across.

Hi,

You will need to hold off starting your DMP with StepChange until closer to the official start date. You say January, but I suggest April instead, as you may want to consider suspending your accounts, to build up a full six months-worth of savings toward your Emergency Fund (EF).

You would of course, have to write to your creditors, to suspend you accounts, advising that your DMP start-date will DD/MM/2020. Having three or even six months saved up in your EF, will cover you against unforeseen obstacles that will occur from time to time.

Other than your letters will be sending to your creditors, I think you have just about got most things covered.

startingadmp

Thanks for that Willing2Learn, really useful.

One other quick question - playing with the StepChange debt remedy tool, depending on the figures I put in for cost of living, I can sometimes be recommended an IVA, sometimes a DMP. Just out of interest, anyone know if there's a figure of what is likely to be granted a DMP?

For example, if you can pay at least 1% of your debt monthly, creditors may agree to a DMP, while if you can only pay 0.5-0.8% of your debt monthly, you'd have to go down the IVA/bankruptcy route.

Guess I'm just interested in what would make StepChange recommend an IVA as a solution as opposed to a DMP.

sourcrates

startingadmp wrote: »

Thanks for that Willing2Learn, really useful.

One other quick question - playing with the StepChange debt remedy tool, depending on the figures I put in for cost of living, I can sometimes be recommended an IVA, sometimes a DMP. Just out of interest, anyone know if there's a figure of what is likely to be granted a DMP?

For example, if you can pay at least 1% of your debt monthly, creditors may agree to a DMP, while if you can only pay 0.5-0.8% of your debt monthly, you'd have to go down the IVA/bankruptcy route.

Guess I'm just interested in what would make StepChange recommend an IVA as a solution as opposed to a DMP.

There debt remedy tool is a bit of a blunt instrument to be honest, you need to have sufficient disposable income for an IVA, there is a calculation they use to determine this, but for the life of me I’ve forgotten what it is.

There are other factors involved of course, although there are no limits, ideally you should have quite a large amount of debt if you choose the IVA route, as the fee’s you pay with this kind of arrangement are high, and are paid before the creditors get their cut, they amount to around 6/8k on average, and can be more than this, so your monthly payment has to be enough to cover the fees, plus what eventually will go to the creditors.

IVA’s are unsuitable for smaller debts, because even though you may be approved, you could end up paying back the full amount plus fees, with no debt written off, wear as with larger debt amounts, there is likely to be a substantial balance left at the end of your arrangement, which is then written off.

Many, many times people do not do there research correctly, and end up with something they do not understand, paying more than they thought, and not knowing why.

mhendel86

Hi - I have just come for some advice on starting a DMP please, as I am currently undecided on the best approach?

I am in a situation where I have ~£62k debt [mixture of loans and credit cards] with monthly payments of around £1100. This is just about manageable each month, although leaving things very tight, and sometimes things are popped on a credit card - I have an average credit rating and no defaults or missed payments on any of my creditors. With all that stuff I am managing, I am struggling to see an end to paying it off at the moment.

I have spoken to Payplan for some advice, and after going through income & expenditure with them, they have offered to set up a DMP with a monthly payment of £682 - a monthly saving of around £400.

I am on the fence really with which way to go:
- stay as I am, continue the making minimum payments, maintain an average credit rating, manage things myself and pay off at some point in the future - my reserve is things tipping the balance and having to rely on the credit card more as I/E is right on the wire - possibly being worse in 6 months time
- enter into DMP now, let Payplan manage things - take the defaults that I'll get and the hit on my credit rating - but allow myself a more comfortable monthly life

Having now actually written that in black and white, it seems starting the DMP makes more sense for physical amounts and mental reasons!

Any advice would be gratefully received. Thanks

startingadmp

Thanks for all the help so far!

Final question hopefully (for now )

I have cancelled direct debit payments but ideally don't want the DMP to start until January, in order to build up an emergency fund. However, aware StepChange wouldn't be too keen on this. In addition, some creditors have CPAs in place; the bank was very unhelpful when attempting to cancel these, but have said they have been (I'm not 100% convinced).

When should I send a letter to creditors? Before the payments are attempted, or after the first isn't paid? What should it say? How can I stretch non-payment out 3 months before actually starting the DMP formally?

YorkieDave

I’ve never hear of an EF before. Is it common practice and accepted by creditors to set up an
EF before starting a DMP? Do all creditors accept this and not try to take you to court before 6 months is up?

Two of the loans I set up were for my business but in my name, with Shawbrook and Zopa. Will a DMP on those affect my business at all?

sammy_Beebee

So I have just received my first default notice from Tesco Bank (Credit Card balance £1347. Letter sounded scary but I'm assuming in the grand scheme of things the default is actually a positive. My DMP is due to start on the 1st November and I have heard back from most creditors saying that they accept my payment plan and my account has moved to collections department, presumably this will lead to further defaults?