Struggling with debt? Ask a stepchange debt adviser a question

StepChange_Aidan

Sholx said:

Good afternoon. I’m sure this information would be out there somewhere but I’m struggling to find. I am in a position where a DMP would be beneficial to my situation. What I am looking to find out is the real impact on credit file mainly. 

How would a DMP affect renewing my mortgage, for example? 

Hi,

Thanks for your post and welcome to the forum.

You’ll be paying a reduced amount towards your debts in a DMP, so will normally be recorded on as a partial payment on your credit file each month. Creditors can also add a marker to your account to indicate that you’re making payments through a DMP, and the accounts will normally default after three to six months.

You can still remortgage, but it may be more difficult, and you may not get the best deals. I would recommend getting qualified advice from a mortgage advisor if you’re intending to remortgage while on a DMP.

Most debts are removed from your credit file six years after the default date, and when the DMP has completed you’ll be able to improve your credit history.

There’s some more information on how a DMP can affect your credit file and mortgages here.

Kind regards,

Aidan

CMD79

Hi,

I have somehow managed to get myself into about £19,000/£20,000 debt (not including the car finance!!) and I think it's gotten that high because each month I've managed to get more debt to pay the previous debt...

It's now at breaking point. I can't get any more credit (I've tried EEEEK!!) and so finally, I've come to the realisation I need to reduce the debt to get out of debt rather than increasing the debt to pay the debt! That sunds really stupid when you say it like that... but here i am!

I'm married and there is a mortgage with my name on it. However, my husband pays most of the household bills and he doesn't know I'm in trouble. Talking is not an option. We're not in a good place and this would be the final straw. It does leave the problem though that I am limited in my options as i can't afford for him to find out.

Can I ask my creditors to pause interest to enable me to make some dents in my debt?

StepChange_Aidan

CMD79 said:

Hi,

I have somehow managed to get myself into about £19,000/£20,000 debt (not including the car finance!!) and I think it's gotten that high because each month I've managed to get more debt to pay the previous debt...

It's now at breaking point. I can't get any more credit (I've tried EEEEK!!) and so finally, I've come to the realisation I need to reduce the debt to get out of debt rather than increasing the debt to pay the debt! That sunds really stupid when you say it like that... but here i am!

I'm married and there is a mortgage with my name on it. However, my husband pays most of the household bills and he doesn't know I'm in trouble. Talking is not an option. We're not in a good place and this would be the final straw. It does leave the problem though that I am limited in my options as i can't afford for him to find out.

Can I ask my creditors to pause interest to enable me to make some dents in my debt?

Hi,

I’m so sorry to hear about your situation. Normally I would suggest letting your husband know about the debts so you can tackle the problem together, but I’ve read through your other thread, and I understand if you have your reasons for not wanting him to find out.

There’s some more information on talking to loved ones about debt, and advice on what to do if you feel you can’t here.

Please don’t be so hard on yourself. You’re quite right that it’s not possible to borrow your way out of debt, and it’s positive that you’ve realised this. Based on your circumstances, an informal debt solution such as a Debt Management Plan (DMP) may be suitable, to allow you to pay a reduced monthly payment towards the debts. Most creditors will agree to freeze interest and charges while you’re in a DMP. However, please be aware that if you have a joint mortgage, your credit files will be linked, so a record of missed or reduced payments on your file could potentially affect your husband if he applies for credit.

You mentioned in your other thread that you were going to call StepChange today for a debt advice session. I hope we were able to help but if you have any further questions, please let us know.

Kind regards,

Aidan

doma1982

Hi I'm looking for some advice, I've got debt on credit cards of £15k and a personal loan of £12500 am also in my overdraft each month. My question is would I benefit from a consolidation loan or to pay off my existing debt (I receive extra money some months which I normally just spend) which will reduce my monthly payments I've honestly lived beyond my means my whole life and I really want to be debt free but now with the cost of living rising I feel a little lost with what to do for the best. 

Thank you for you help. 

StepChange_Allen

doma1982 said:

Hi I'm looking for some advice, I've got debt on credit cards of £15k and a personal loan of £12500 am also in my overdraft each month. My question is would I benefit from a consolidation loan or to pay off my existing debt (I receive extra money some months which I normally just spend) which will reduce my monthly payments I've honestly lived beyond my means my whole life and I really want to be debt free but now with the cost of living rising I feel a little lost with what to do for the best. 

Thank you for you help. 

Hi there

Welcome to the forum and thanks for posting.

Debt consolidation can work for some people in some circumstances, but more often than not from what I see, it can just lead to further debt. For example, to consolidate £27,500 of debt, you may end up paying well over £30,000. Now of course you probably have interest on the existing cards too, so it's not that simple, but it's one thing to bear in mind.

It may also be difficult to get an unsecured loan for that sort of amount of money, or even one just to clear the cards; it depends on your income, monthly commitments and credit rating. I can't say that it definitely isn't a good or viable option, but it may be tricky and not necessarily the best option. You can check out 'cheap personal loans' in the borrowing section of the main MSE site to explore this a bit more.

Here at StepChange we assess people's finances to see whether a debt solution would be best. Debt solutions are things like debt management plans (DMPs), IVAs, debt relief orders and bankruptcy. Any of these would affect your credit rating though because you'd no longer be paying your contractual payments any more. 

If you register with us, we could give you some advice and ultimately if you didn't want to go ahead with a solution, there's absolutely no obligation to. 

Please visit www.stepchange.org.uk for details of how to get started.

I hope this is helpful.

Allen

Hols2021

Hi,

I wonder if anyone can help me, my husband and i have made the decision to enter a DMP and try and manage it ourselves. We have £68k between us, i can'tbelieve the mess we have gotten into. We live in Scotland and my husband has a loan with the CU for £11K. We are really worried now as we have read that they follow a different process from your banks and instead of defaulting can/will serve an Inhibition on him? Could anyone help please?

StepChange_Patience

Hols2021 said:

Hi,

I wonder if anyone can help me, my husband and i have made the decision to enter a DMP and try and manage it ourselves. We have £68k between us, i can'tbelieve the mess we have gotten into. We live in Scotland and my husband has a loan with the CU for £11K. We are really worried now as we have read that they follow a different process from your banks and instead of defaulting can/will serve an Inhibition on him? Could anyone help please?

Hi there

Thank you for your post. 

It sounds like you've taken a brave step to deal with your debts but I understand how worrying the collections process can be.

For any debts regulated by the Consumer Credit Act, creditors in Scotland still have to send you a default notice and give you at least 14 days before they start court action. 

An Inhibition can only be used by a creditor who has already obtained a decree and the Inhibition would stop someone selling their home until the debt is repaid, I hope this helps a little.

You can find out further information about the collections process here. 

Please get back in touch if you need anything else.

Patience
 

Rob5342

I've been with Stepchange for about a year now, I made some CCA requests to some of my creditors but none of them have replied yet. Would you be happy for me to stop payments for those I have asked or would they need to send me a letter saying it was enenforcible before you would stop paying them? 

StepChange_Allen

Rob5342 said:

I've been with Stepchange for about a year now, I made some CCA requests to some of my creditors but none of them have replied yet. Would you be happy for me to stop payments for those I have asked or would they need to send me a letter saying it was enenforcible before you would stop paying them? 

Hi Rob

Thanks for posting.

I'd recommend getting some confirmation from the creditors that they'll no longer be chasing the debt, otherwise they might still pursue you if they stop being paid. If you get this, please contact our Client Support team that is managing your plan, and they'll be able to remove those debts for you.

Best wishes

Allen

czkoudy

Hi,

I have been with StepChange for few years now.

I have recently ask PRA Group for CCA request. Today i have received this via email.

Hi ,

Thanks for your reply. 

We have contacted Barclaycard and Barclays Bank to ask for the information you are looking for, however, we cannot provide a timescale as to when we will receive a response from them regarding this. 

We will be back in touch as soon as possible.

Would you like me to remove StepChange from your accounts if you are looking to stop payments at this time?

What would be the next step, please?

Thank you