Step Change DMP actually increasing my debt! Questions.

fd1972uk

Hi All,


Been a while since I posted.


Long story short, lost my job just over 2 years ago and took me 5 months to get another job, tried to pay the full bills upto that point (think I managed around 3 or 4 months) and then was advised to goto a debt help company. So decided on Step Change.


Phoned them and got a DMP started, the debts in question amounted to around £27k unsecured. Prior to going on the DMP it amounted to around £800ish, on my plan I'm paying £577 (there was around 3 months I'm sure of the £1 payment to each of them) until Jan'17 when it started with the £577 plan.


Thing is one of the debts is a credit card, as advised it was originally on a 0% until July'18. It's around £2.3k at the moment, but using the calculator this will amount to around £600+ interest until it's paid back.


I phoned SC for advice and spoke to a lady who said she'd send them a letter to ask to stop the interest. I had asked at this time that I was considering moving my CC debt to my wife who would be able to put it on a 0% plan again, but was advised that this should really not be required. She also told me to call the said CC to discuss too.


So off I popped and spoke with them and was advised that due to the payment (£97 pm) that this was more than the minimum required therefore no agreement was in place as I could pay this sum. They also advised me that they had contacted Stepchange through a 'Portal' but never seemed to have had any response (wasn't sure what he was meaning). He said that I should go back and speak with SC.


So I went back on the phone and spoke with a chap, who said that this was quite unusual and because they had a 'good' relationship with the CC company surprised of this outcome. He then told me to wait and see what happened with the letter outcome, I advised him of my thoughts on the CC transfer of debt and he said it could be an option, but had to tell me that whilst it usually isn't the case it can mean that the 2 other creditors can actually start charging me interest should I do this after they notify them of the CC money being wiped from the plan.


So, just asking, has anyone had any similar experience of dealing with something like this?


Do I try the balance transfer?


Is this interest charge possible from the other creditors?


Just a bit miffed as SC were the ones making up the repayment figures and according to them their figures showed the correct amounts to pay.


FD

sourcrates

Hi,


One or two people on the DMP mutual support thread have reported the same problem, i think its down to how stepchange divide your disposable income between your creditors, they appear to use a different method from the normal "pro-rata" model.


Unfortunately stepchange are not going to change the way they work, I believe those on the DMP support thread were advised to go self managed, and put themselves back in control of who got what, as paying more than the minimum payment will not result in the stopping of interest or charges no matter how much you complain to them.


Going self managed is really easy, have you considered it ?


Why not ask for more information on that thread, its in the sticky section at the top of this forum.

TriggerHappy

The CC in question wouldn't happen to be Barclaycard would it?

I had a very similar issue, during my DMP the amount that I was paying to Barclaycard was more than 1% and as such they continued to charge me interest (albeit on a reduced rate).

I actually paid off my DMP a couple of years ago using a rebate on some payday loans and getting good settlement offers but I was a bit sneaky and spoke to Step Change to tell them that I had to slash my repayments due to essential maintenance and dental work...

I did this for 7 months and this meant that for that period the amount which went to Barclaycard went to something like 0.2% and they agreed to default the account which served to stop the balance.

In the meantime I'd been saving my DMP payments and was able to get a settlement of about 60% of the outstanding balance which I paid using what I'd saved and then updated my DMP and made a one off payment of the remaining amount.

Not for everyone, and it was quite stressful as obviously it meant that my debt was not going down as quickly as it had been but it served it's purpose - basically, it's not for everyone.

The problem is because your DMP is non-formal and prone to not going 100% the way you'd hope...

fd1972uk

Hi,

Thanks for the feedback.

I'm not sure of trying this myself, I'll take little look but with my luck something will enevitably go wrong and I'd have no backup which I think SC can at least assist with.

But I'll look into it.

No, it's Tesco. I'll see what comes back from their request and see how it goes. Other thing I'm wondering is if I do a transfer balance of some of it and then just advise later in a few months the amended total. Means I can transfer the bulk of it and then just made several payments and then say I'm done with that.

We are both on small wages, but my wife is getting a little more money soon, so that should mean we can cover any problems.

Guess with the SC advising of this possible interest charge from my other 2 creditors has got me a bit worried, knowing the way my luck is going.


Thanks.


FD

TriggerHappy

Hiya,

If you're nervous then I'd probably stick with Step Change until you're a little more confident in what you're doing. It's also nice to have a little bit of a 'holiday' from the stress of debt which letting SC do all the work for you

I think the best thing you can do is swing by the DMP Mutual Support thread as it's full of people who have much more recent experience of being on a DMP and may also have some tips on how to handle Tesco too, but I imagine the interest will be because of the size of payment which SC won't be willing to move on as they use a standard formula for everyone...

I can't comment too much on the idea of doing a transfer as it's not something I have experience of... But my gut feeling is to not do it as you're just moving your debt around and as your DMP will have dumped all over your credit rating then you might not be able to do this anyway(?).

Another option is to put in a complaint and just say that you feel it is unreasonable for them to charge interest as you're experiencing financial hardship etc and that you're considering approaching the FOS to challenge the interest you're still being charged. It may help twist their arm

Good luck!

fd1972uk

Yeah that is an option, maybe actually do that and see how I get on.

In terms of the balance transfer, it's my wife that would be taking on the balance, her credit rating isn't affected.


FD

tlc678910

Can you transfer to the 0% and spend £97 a month on groceries (e.g. online)?
I don't know if the statements go to you or step change.

fd1972uk

tlc678910 wrote: »

Can you transfer to the 0% and spend £97 a month on groceries (e.g. online)?
I don't know if the statements go to you or step change.

The statements goto me. They receive no statements as far as I'm aware.

I can edit the balance online to show the figures. That's why I was think of transferring around 75% of the debt to the 0% and let them pay off the remaining amount and then edit the figure (or maybe just pay it all off and say the wife had a tax rebate). The tesco debt is put under the plan but actually has never defaulted due to the high payment figure. I'm just a bit worried about the other creditors that the SC mentioned.

Not sure what you mean about groceries?


FD

tlc678910

fd1972uk wrote: »

Not sure what you mean about groceries?


FD

I just meant if you pay it off in full you could say nothing to step change and let them continue to pay the card at £97 each month. You could spend the £97 each month on the card. I suggested groceries as not wasteful spending. That way your other creditors won't be informed. it 's not what you are supposed to do but it's your money and hardly the crime of the century.

You would need to transfer enough to cover trail interest as your spending would only be interest free if the card is paid off in full.

sourcrates

You cannot use lines of credit that are subject to any form of debt management.

It’s unlikely the creditor would allow further borrowing anyway.

fd1972uk

Hmm, now I get you. Actually a good idea, although as said not sure if there are any issues with doing that.

Although I'm still thinking and after speaking with Tesco what position this card is in, as its never missed a payment.


FD