DMP mutual support thread part 13 !!

ThirstyElephant

Hello, first post here.

Taken a massive step in to sorting out our spiral of debt and have started a DMP with StepChange. 

We have received an email to confirm that it’s set up and the first DD will be taken on 1st October. 

Should we make the usual monthly payments that are due between now and then? Or should the direct debits be cancelled?

Also, I read that we will need to set up a new bank account as it’s with Halifax and there are 2 x loans and 2 x credits cards with them included. Is that right? All our household bills are taken from that account and it seems like a mountainous task right now! 

Thanks for any advice in advance  

sourcrates

ThirstyElephant said:

Hello, first post here.

Taken a massive step in to sorting out our spiral of debt and have started a DMP with StepChange. 

We have received an email to confirm that it’s set up and the first DD will be taken on 1st October. 

Should we make the usual monthly payments that are due between now and then? Or should the direct debits be cancelled?

Also, I read that we will need to set up a new bank account as it’s with Halifax and there are 2 x loans and 2 x credits cards with them included. Is that right? All our household bills are taken from that account and it seems like a mountainous task right now! 

Thanks for any advice in advance  

Basic rule of thumb for those entering debt management.

Never bank where you have debts, its rare, but banks can use the right of set off to take back money you may owe them.

A new basic bank account, not linked to your debts, is now a priority for you.

Ideally you should not rush into debt management, taking a few months out to save up an emergency fund, using money that would have formed creditor payments, is normally advised,  but you are where you are, however you should not be making contractual creditor re-payments any longer.

The issue with stepchange is that they like to get you repaying your debts as soon as possible, this is because they are mainly creditor funded, and part of that arrangement is that clients start paying as soon as possible, its not always best for you though, any way you can delay starting your DMP until you have an emergency fund sorted out ?  

The debt collection process takes many months or years to kick in, so nothing will happen short term, its in your best interests to go about this in the right way that benefits you, rather than your creditors.

ThirstyElephant

sourcrates said:

ThirstyElephant said:

Hello, first post here.

Taken a massive step in to sorting out our spiral of debt and have started a DMP with StepChange. 

We have received an email to confirm that it’s set up and the first DD will be taken on 1st October. 

Should we make the usual monthly payments that are due between now and then? Or should the direct debits be cancelled?

Also, I read that we will need to set up a new bank account as it’s with Halifax and there are 2 x loans and 2 x credits cards with them included. Is that right? All our household bills are taken from that account and it seems like a mountainous task right now! 

Thanks for any advice in advance  

Basic rule of thumb for those entering debt management.

Never bank where you have debts, its rare, but banks can use the right of set off to take back money you may owe them.

A new basic bank account, not linked to your debts, is now a priority for you.

Ideally you should not rush into debt management, taking a few months out to save up an emergency fund, using money that would have formed creditor payments, is normally advised,  but you are where you are, however you should not be making contractual creditor re-payments any longer.

The issue with stepchange is that they like to get you repaying your debts as soon as possible, this is because they are mainly creditor funded, and part of that arrangement is that clients start paying as soon as possible, its not always best for you though, any way you can delay starting your DMP until you have an emergency fund sorted out ?  

The debt collection process takes many months or years to kick in, so nothing will happen short term, its in your best interests to go about this in the right way that benefits you, rather than your creditors.

That’s incredibly helpful, thank you. I’ve set up an account with Monzo and transferred my balance there, DDs to follow. 

I’ve cancelled my two loan DDs, I’ve always proactively paid the credit and store cards myself, so will stop making payments now. 

I have some money coming in soon from my parents (they are just waiting to straighten out some other stuff first to make sure they’re not left short), it’s not enough to cover my outstanding debt but I am hoping to offer some settlement payments. Do you think it would be worth stalling with StepChange for now? My payment will be £240 so if I can save that back for 6 months at least £1400 emergency fund. 

I needed to make a step because I was losing sleep and felt like I was drowning, the weight that’s lifted from even doing this has helped immensely. 

I say ‘I’ as they’re all in my name, but my husband is joint on the DMP as his salary is more than double mine. If I did it alone, the suggested options were an IVA or Bankruptcy. I have two kids and the prospect of selling the house etc frightened the life out of me!

Thanks again 🙏🏻

sourcrates

Lots of people do tend to rush into these things thinking they are doing the right thing.

Its always best to just take a step back, do your research, and make sure all the bases are covered.

There is an official "breathing space" scheme, that gives you 60 days free of creditor collection activity, now really 60 days isn`t that much, you can quite easily extend that yourself to as long as you need basically, debt collection has various stages, that take a long time to work through.

You are at the very beginning of this process, all you have to do is tell stepchange you need a little extra time to determine your position, and you will contact them when you are ready.

Similarly, if you get a lot of collection letters/calls etc, just tell them the same thing, they will put accounts on hold for you, ideally you need a good emergency fund, if you want to make settlement offers at some point in the future, your accounts will need to default and be sold on to get the best deals, but for now, take it slow.

ravergirl1992

Hi everyone, I am considering a DMP as I've gotten myself into a debt spiral these last couple of years and can't see another way out. Living off of my credit card now as my outgoings are higher than income. I'm so embarrassed as I'm on a good salary and have recently purchased a shared ownership home that I am now terrified of losing. We have one young son with another on the way.

My husband also has debts and I'm considering talking to him about a DMP so we can both get out of debt. I have spoken to Step Change and they have said I have about £308 left to pay my creditors. Is there anything I need to do or is recommended to do before going ahead? I have an emergency fund however it's in a Lloyds account and is linked to two of my loans, shall I move this to another account?

Floss

The best thing to do is to put Stepchange on pause, to build up an emergency fund and allow your debts to default. You probably won't have £308/m spare when you're on mat.leave (congratulations BTW!)

Open another "clean" account such as Monzo - DO NOT use the switching service - and cancel all direct debits & standing orders for your debts, then put the money you haven't spent on your debts into a Monzo pot called Emergency Fund. Transfer your salary & bill payments to this account as soon as possible.

Then post your SOA here, so suggestions can be made for savings. Good luck!

ravergirl1992

Thank you so much, the thought of stopping my payments terrifies me somewhat! There seems to be conflicting advice as to whether I should speak to my creditors when I stop paying them. Could you offer me advice on that please? Also can you elaborate on why I shouldn't use the switching service? 

sourcrates

ravergirl1992 said:

Thank you so much, the thought of stopping my payments terrifies me somewhat! There seems to be conflicting advice as to whether I should speak to my creditors when I stop paying them. Could you offer me advice on that please? Also can you elaborate on why I shouldn't use the switching service? 

The switching service can only be used for current accounts, and it moves all payments etc automatically, you don`t really want any of that, you want a new, basic account, with no borrowing facility, and no swap over of current payments etc.

Another current account is ok, as long as its not connected to any of your creditors.

It can be strange for someone used to paying bills on time, to stop paying credit debts, but debt management requires a whole different way of thinking, the creditors you have now, probably won`t be the ones you start paying your DMP payments to, its likely most will have either sold the accounts, or passed them over to a collection agency, so talking to them is pointless, just let the collection process do its thing.

But you do need an emergency fund, and so it makes sense to save up what you would have paid to creditors.

Usually about 6 months worth is a good start, you may be bombarded by calls, and what on the face of it would appear to be scary worded letters, but its all just normal collection activity, and that will continue for quite a while before the risk of further action becomes apparent.

It also gives your debts time to default, which is a bonus for you as all interest will stop, and you get a clear 6 year window till your credit file heals.

happytimesahead

Hi all,

I’m in the process of building up an emergency fund/ waiting for defaults prior to starting a DMP, which I’m hoping to do self-managed.
I’ve missed 2 payments so far on a loan with Lendable, and they’ve sent me an email this week stating:
“We'll visit you at home next week

You're falling behind with your loan repayments. 

If we do not hear from you or receive a payment within the next 7 days, we will instruct our representatives, Fieldcall Limited, to visit you at your home address to reconnect with you.”

I didn’t think they’d have people sent out to my house before defaulting to be honest so this is a bit of a surprise! Has anyone else had this?

I’m happy to block/ignore letters & calls whilst I wait for the defaults so I can get the DMP started, but having people knocking on the door is a bit of a step up, so I’m not sure whether to keep holding out for the default, or just bite the bullet and start reduced payments before they default the account. 

Any advice would be appreciated, thanks! 

Atribecalledquest

Hi everyone 

First post after reading through the whole thread 

In exactly the same position as the poster above - 2 months in , 2 missed payments and I’ve had the same email from lendable 

What’s the best course of action here

Thanks