DMP mutual support thread part 13 !!

sourcrates

horizon1214 said:

Hi Sourcrates. 

Thank you for replying so quickly. So are you saying I should stop paying my debts? Stop paying the minimum payment on credit cards, cancel direct debits going to personal loans & save that money instead? 

What would I then do after 6 months of saving that money?

Yes, exactly that.

After 6/7 months, look at your accounts again, have they defaulted, have they been sold on?

If your not that bothered about your credit file, go for the DMP when ever you are ready, but please save some cash up first, as you will have no access to credit once the ball starts rolling.

Lots of people rush into debt management, then the washing machine breaks down, no money to get a new one, or even a cheap second hand one, panic stations, best to plan it all in advance first so you remain in charge, and not some faceless corporation.

horizon1214

Ok, thank you. 

I am also in my overdraft on my day to day/bills bank account. Regardless of what I do, I was going to open a new bank account, transfer all my essential bills & income to the new account so I have a 'safe bank account', should I also open a savings account with the new bank and put that money in there? From the research I've done my current bank account could use the 'right to offset' & take my money to bring debts up to date. As I said my current bank account is in its overdraft & I also have a credit card with them which is pretty much maxed out. 

The other thing that concerns me is interest & fees on my credit cards & loans etc if I stop paying them. My Payplan advisor has said that once I enter a DMP, the creditors I owe money to are likely to freeze interest & charges. Would doing what you have advised cost me more money in the end as by the end of 6 months, all my credit cards would have likely gone over the agreed limit so I would have 6 months of interest, 6 months of late payment fees & say 5 months of over limit fees. 

Is the advice you are giving me based on trying to save my credit file as much as possible? Wouldn't I have to enter a DMP at the end of the 6 months of not paying them anyway?

horizon1214

Sorry for all the questions - I did probably what 99% of people do which is go on Google, look at debt advice & straight away think I need a DMP. 

stu12345_2

imo its all to do with your emergency fund more than the date of defaults.
if you have no savings at all and you enter a dmp right away, you will struggle to pay big car repairs etc. cos on a dmp you will only be setting aside a small amount of money for emergencies per month.
 and also a creditor can't take you to court unless your account has defaulted. , so that gives you months and months of time to not worry and bank as much as possible in sn emergency fund. if you don't do a dmp right away

I did it wrong.got a dmp from step change immediately. but I had no emergency funds and got hit with numerous repairs etc that I could not afford.i had to reduce my payments to step change.they did allow that for a short time.
they wrote to the creditors explaining my predicament 

sourcrates

These things have been covered many times over in this and other threads.

Fee`s and interest may still be added yes, but you can complain about that, get refunds, or further down the line, make settlement offers, and make up the difference that way.

Try and read as much of this thread (exceptionally long granted) as you can, every question you can ever think of has been asked and answered many times over probably.

horizon1214

sourcrates said:

These things have been covered many times over in this and other threads.

Fee`s and interest may still be added yes, but you can complain about that, get refunds, or further down the line, make settlement offers, and make up the difference that way.

Try and read as much of this thread (exceptionally long granted) as you can, every question you can ever think of has been asked and answered many times over probably.

Hi sourcrates. 

So I've spent much time today going through this thread. It's been very reassuring & helpful. I still have some questions but I believe I have 2 options.

Option 1: Cut my losses & enter a DMP with SC. 

Option 2: Self-Managed DMP. 

I have gone through the NEDCAB website this evening and completed all the relevant information - I know the outstanding balances on all my credit accounts so I haven't sent the 'hold' letters yet. Filling out my credit balances, I&E, I have £848 a month for creditors. This will change when my partner is no longer getting her maternity pay (had our 2nd child last month). Due to a contract change in her job she was no longer entitled to SMP, we tried to fight this but didn't get anywhere so she only gets maternity allowance, this will stop come May 2024, at which point that £848 which drop dramatically. She's going to try and get an evening job which pays what she's getting now so hopefully nothing changes, however I need to prepare for worst case scenario. Through NEDCAB my monthly payment to creditors is around £100 less than what SC has said. I'm really considering going Self-Managed. 

As we were speaking earlier I have £0 put away currently, so no EF. What should I do? Contact my creditors now & make them aware of my financial situation by sending them the hold letters & stop all DD's? Do I then attempt to delay my first payment from my DMP until say March, giving me 3 months worth of debt money to create a EF? 

I'm assuming that if I contact them now with hold letters & make them aware they will default the accounts? 

Or do I do what you originally said - Cancel all DD's & let nature take its course & once they are defaulted start my DMP negotiations, perhaps offering settlements to the smaller debts I have etc as I could take from the EF/Savings - in 6 months time I would have built up a fair bit of money. 

I have already opened a new bank account today & savings account with a bank not linked to any of my debts. My wages are moved & 50% of essential direct debits are moved. I will be doing the rest tomorrow. 

Thanks in advance. 

nbamaster

Hello everyone,

I've been on DMP with StepChange for nearly 2 years now. Is it worth getting credit building CC to improve my score or would that not do me any good?

sourcrates

@horizon1214,

I much prefer self management, it means you remain in control, you decide who gets what and when, and its much more flexible, that would be my choice.

I would also go with your last option, 

"Or do I do what you originally said - Cancel all DD's & let nature take its course & once they are defaulted start my DMP negotiations, perhaps offering settlements to the smaller debts I have etc as I could take from the EF/Savings - in 6 months time I would have built up a fair bit of money". 

By the time you have saved an emergency/settlement fund, the situation with creditors will most likely have changed.

The collection process will be in full swing, you will likely find the original firms you owed money too have assigned or sold your accounts to 3rd parties, debt collectors, or debt purchasing companies, all have good websites these days, payment plans/settlement offers, can all be made online, no need to exchange details or provide income/expenditure, it can all be done online.

stu12345_2

my top tip is once you get on to these debt companies websites or if they have sent you a paper bill., look for details of their  account and sort code , only pay via standing order.
do not select any of their methods.
eg recurring debit card, direct debit 

get their account and sort code numbers via live chat, emails.or on the  back of any paper bills or their website 

then set it up at your bank. pick a price that suits you.!!! a monthly amount. use their full business name as the payee and your debt reference number to show where the money is to go to 

 I'm repaying at a price which is only 50 to 60,% approx if what a debt management company like step change said I could afford.

.the creditors will only get suspicious if you offer them nothing or £1 a month. and may then  ask for full financial details.

I'm doing that % in order to create a healthy emergency pot and a pot for reduced full and final offers..mines is at £750 in only 2 months !!! and it will keep growing and growing.

then tell them via email,live chat ,what you have done, then say bye bye.dont get into conversation eg, you must fill in our income , expenditure form
ignore that demand. just do as I suggest
I've done it that way

hjbp81

Hello,

It's my first time commenting on this very helpful thread and I'm looking for some advice with regards to my situation.

From November, I have been unable to keep up with my minimum payments across multiple creditors, I went to Step Change (contrary to advice here and something I learned after that) and their advice was a DMP over 4 years which I have set up and is due to begin in February. I have 15 accounts across 9 creditors with a total around £65k. After my SOA, I have £1220 a month to pay towards debts. Around 4 of these accounts I could likely pay off in full each month for the next 4 months as their balance is relatively low, i.e. less than my £1220 but that would mean the rest of my creditors do not receive a payment, or receive a low token payment of £5.

Would this be a wise approach? Paying the lower balances off in full over the next few months and then entering a DMP with the remaining accounts around May time? Or is it better to cancel my DMP, continue to save, allow to default and then pay. Any advice greatly appreciated, I feel I should pay now to get some accounts settled earlier and reduce impact to my credit and I feel an approach of lumping most of the £1220 towards a single debt while paying token payments over a few years on the rest would get things cleared up quicker?

Thanks