Debt assistance

fatbelly

Well I did say earlier

If they get a longer term deal then that might allow you to default and do a debt management plan or bankruptcy. Either way you will be making payments for three years and have rubbish credit history for six. But then it's out of the way and the debt is gone.

Considering you are hoping to clear your debts by dmp within 40 months and an IPA in bankruptcy lasts 36 months, it's close between the two options.

But as we have got to know you a bit, I would tend to the dmp because you will need to focus more and be more engaged with the process, which I think will be helpful for you.

Edit: I think a self-managed plan, with full & final settlements to finish it, would work better than letting stepchange do it.

Willing2Learn

fatbelly wrote: »

… I think a self-managed plan, with full & final settlements to finish it, would work better than letting stepchange do it.

If you are thinking of a self-managed plan, then I would recommend delaying the start date for between 3-6 months, making either token or zero payments during this time. It would give you give you some breathing space and allow you to save a decent Emergency Fund, to cover you against the unknowns during your DMP journey. It will also 'encourage' all your creditors to default you nice and early...

onthefencepost

Willing2Learn wrote: »

If you are thinking of a self-managed plan, then I would recommend delaying the start date for between 3-6 months, making either token or zero payments during this time. It would give you give you some breathing space and allow you to save a decent Emergency Fund, to cover you against the unknowns during your DMP journey. It will also 'encourage' all your creditors to default you nice and early...

Step change informed me that DMP wont necessary occur defaults - however this isn't guaranteed. is there any benefits getting them nice and early? I agree on delaying so I can a pot of money set up - good plan!

Also I'm gong to clear off my Tesco card and keep it for emergencies and my Amex, 1 as the amounts are clearable and 2 id like to have a option if I really hit a brick wall - although going forward its debit card all the way for out goings! The advisor also told me not to use the cards for atleast 12 months or early in the DMP as it could terminate the agreement with creditors.

onthefencepost

fatbelly wrote: »

Well I did say earlier


Considering you are hoping to clear your debts by dmp within 40 months and an IPA in bankruptcy lasts 36 months, it's close between the two options.

But as we have got to know you a bit, I would tend to the dmp because you will need to focus more and be more engaged with the process, which I think will be helpful for you.

Edit: I think a self-managed plan, with full & final settlements to finish it, would work better than letting stepchange do it.

I'll have a good read tonight - with some pro's and cons - thank you for putting up with my questions / concerns!

I'm not going to lie setting up a DMP by myself is going to be tricky and my finances are already keeping me up most of the night and its in the forefront of my mind everyday to the points its normal! For my well being and ease Stepchange are better doing it.

Willing2Learn

onthefencepost wrote: »

Step change informed me that DMP wont necessary occur defaults - however this isn't guaranteed. is there any benefits getting them nice and early?

The alternatives to a default are an AP marker (Arrangement to Pay), or a DM marker (Debt Management). A default, AP marker or DM marker will all mean that you have broken your original agreements with your creditors, and therefore are considered pretty toxic data to have on your credit files. The advantage of a default is that it will be automatically removed six years from the date of default, whereas an AP or DM marker will remain on your file for six years after the account is closed or settled. The toxic data is therefore automatically removed years earlier with a default.

onthefencepost wrote: »

Also I'm gong to clear off my Tesco card and keep it for emergencies and my Amex, 1 as the amounts are clearable and 2 id like to have a option if I really hit a brick wall - although going forward its debit card all the way for out goings! The advisor also told me not to use the cards for atleast 12 months or early in the DMP as it could terminate the agreement with creditors.

If you have a sizeable EF saved, then you won't need to use your Tesco or Amex cards for emergencies.

Edit: If you are deciding to take the SC DMP, I would still recommend delaying the start date by 3-6 months. SC may advise against this, but we MSers mostly recommend that you save an EF first. Quite simply, an EF is a vital component of all successful monthly budgets.

onthefencepost

Thanks for the info on the EF fund I completely agree having such fund in place can only help and further motivates you to add to the fund and ensure that you use it as a last resort!

In regards to defaults moving away from your file in 6 years does this still apply if your paying towards them via your DMP?

Willing2Learn

onthefencepost wrote: »

… In regards to defaults moving away from your file in 6 years does this still apply if your paying towards them via your DMP?

Yes. So if you were to set the start date of your DMP to 09/12/2019 then with a bit of luck, all your creditors would default the accounts before the start date. You would finish your DMP sometime during 2023 and the defaults would be automatically removed during 2025. If the accounts were not defaulted, but instead marked with either an AP or DM marker, then these toxic markers would not be automatically removed until six years after the account is settled or closed, which would be during 2029. I hope this makes sense lol...It basically means your credit file would be cleaned up years earlier with defaults instead of AP or DM markers.

katsu

Why do you need an extra £350 for the mortgage and "other things"? You already had rent in your SOA.

I suggest you take a look at the real budget you want and how long you would then take to clear your debts (you can assume all interest stops being charged tomorrow even, it is just to help you think about this all). I am concerned that you are saying you need some extra cash because you have expenses that aren't entirely budgeted for, and you need the amex and a credit card for the same reasons. You don't want to end up in a bigger debt mess.

onthefencepost

katsu wrote: »

Why do you need an extra £350 for the mortgage and "other things"? You already had rent in your SOA.

I suggest you take a look at the real budget you want and how long you would then take to clear your debts (you can assume all interest stops being charged tomorrow even, it is just to help you think about this all). I am concerned that you are saying you need some extra cash because you have expenses that aren't entirely budgeted for, and you need the amex and a credit card for the same reasons. You don't want to end up in a bigger debt mess.

In a nut shell cards are for emergency's I like to have a plan b/c/d if required.
In reference to extra cash its simple - helping to pay parents house in the coming years ultimately its my roof in years to come.

[Deleted User]

andydownes123 wrote: »

Double check the rules on transferring your parents mortgage to yourself. I believe they have to stay and pay rent for seven years for you to avoid tax issues.

This isn't correct. Purchasing the parents' home will open the OP up to SDLT and CGT. I think you're thinking about IHT and the 7 year rule for gifts. If the value of the parents' estate was above the threshold then paying rent for just 7 years wouldn't mitigate IHT. They would have to pay market rate rent for the entire time they lived there, not just for 7 years. However, based on the figures provided by the OP it's unlikely the parents' estate will be anywhere near the threashold for IHT to kick in. Something that should be considered is deprivation of capital should the parents require care in the future.