Struggling with debt? Ask a stepchange debt adviser a question

StepChange_Aidan

Truckered said:

Some quick advice please. 

Separated from partner in April and moved into rented flat. 

Got a part time job contract for 19.5 hrs a week but can work up to 30 quite easily if want. 

Just been looking at all debts ie credit cards mobile phones and such plus penalties from hmrc all in all total around £19K 
Now I’ve been looking at changing jobs and could start earning around £700 a week take home. 

So with this in mind should I go bankrupt now while on low income and stick it out for the year or start new job and take 2-3 years to clear all debts, which would probably have same outcome on my credit file but take a couple years longer by paying off over the years. 

Hi,

Thanks for your post.

I’d need more details to be able to say which is the best option for you. However, in general if it’s possible to increase your income now and repay the debt over a few years I would usually recommend that over insolvency.

Bankruptcy would show on your credit file for at least six years and is more likely to have an impact on your ability to obtain credit than any missed or reduced payments to your debts.

You may also have to make a monthly payment towards the bankruptcy for a three-year period (known as an Income Payment Agreement) if you have more than £20 left over each month after your essential living costs. This can start at any time until you’re discharged.

There may be other debt solutions that are more suitable for you. I’d recommend putting together a full budget and getting debt advice before you make a decision. If you’d like to do this with StepChange you could use the online tool on our website or give us a call to speak with an advisor.

I hope this helps.

Aidan

PurpleMouse5

Hi, how long does it take for my DMP payment to get to creditors please? I paid the direct debit on the 1st and my landlord hasn't been paid yet for my rent arrears.

Thanks

StepChange_Allen

PurpleMouse5 said:

Hi, how long does it take for my DMP payment to get to creditors please? I paid the direct debit on the 1st and my landlord hasn't been paid yet for my rent arrears.

Thanks

Hi there

Thanks for posting.

We distribute payments within 5 working days, so the payment should be there now; it could just be a crossover in terms of when they've communicated with you and when the payment was received.

If they still don't have it, please give our Client Support team a call and they'll look into it for you.

I hope this helps.

Allen

bamgbost

I have recently started a plan with stepchange.  

Many of my creditors have written to me with a default notice. 

If they will default me for 6 yrs anyways even with the agreed payments via stepchange.  What's my incentive to pay back... When I can wait 6 yrs and allow It all drop of my credit file..?

I was hoping that using stepchange would prevent defaults. 

StepChange_Allen

bamgbost said:

I have recently started a plan with stepchange.  

Many of my creditors have written to me with a default notice. 

If they will default me for 6 yrs anyways even with the agreed payments via stepchange.  What's my incentive to pay back... When I can wait 6 yrs and allow It all drop of my credit file..?

I was hoping that using stepchange would prevent defaults. 

Hi there

Thanks for posting.

A default notice is a letter issued to warn you of the impending default that will be issued, and yes, that will then be on your credit file for 6 years. Any debt where you're not making the contractual payments that you agreed to will default, a debt management plan (DMP) won't stop that, and I'm confident we would never lead anyone to believe it would.

If you completely stopped payments there's a fair chance your creditors would take further action against you. If they were to get a CCJ, which is common for unpaid debts, the debts would never be written off and they could then enforce the debts using an attachment of earnings or by using bailiffs (enforcement agents). It makes no difference if the debt drops off your credit file if it's still legally enforceable, they can still get you to pay something affordable. If you were recommended a DMP over the phone, the advisor should have explained the majority of the above. If you did your budget online, your personal action plan booklet talks you through it.

If it was that easy to leave a debt for 6 years and nothing happened, a lot more people wouldn't pay.

If you have any further questions about this I'd recommend giving us a call and speaking with a debt advisor.

I hope this is helpful.

Allen

PurpleMouse5

Hi just an update in case anyone else has the same problem. Stepchange send payments to landlords by cheque, and I hadn't realised so I'd told them to expect a bank transfer.

PurpleMouse5 said:

Hi, how long does it take for my DMP payment to get to creditors please? I paid the direct debit on the 1st and my landlord hasn't been paid yet for my rent arrears.

Thanks

jools1985

I've been in a DMP with Stepchange for almost 4 years now and only have my final payment to make on the 10th of September. I'm so relieved it is almost finished. My Direct Debit is £1348 per month but I now only owe £1287 before all debts are paid.

My question is will my final Direct Debit be for what I actually owe - ie £1287 or will Stepchange still collect £1348? I don't know if I should cancel the Direct Debit and advise Stepchange that I'm doing so and just pay the final month's balance to all my creditors via bill payment. Any advice please?

StepChange_Aidan

jools1985 said:

I've been in a DMP with Stepchange for almost 4 years now and only have my final payment to make on the 10th of September. I'm so relieved it is almost finished. My Direct Debit is £1348 per month but I now only owe £1287 before all debts are paid.

My question is will my final Direct Debit be for what I actually owe - ie £1287 or will Stepchange still collect £1348? I don't know if I should cancel the Direct Debit and advise Stepchange that I'm doing so and just pay the final month's balance to all my creditors via bill payment. Any advice please?

Hi Jools,

Thanks for your post.

Your final direct debt payment will be automatically reduced to the amount left to pay on the debts.

If you have any further questions about your DMP or need to review the payments, please get in touch with our Client team.

Congratulations on being nearly debt free!

Aidan

TimSynths

I've been on a DMP since 2008, I currently only pay £30pm but come Oct/Nov I'll have to stop it to put towards the gas and electric. None of the debts are on my credit file any more, what is likely to happen?

StepChange_Aidan

TimSynths said:

I've been on a DMP since 2008, I currently only pay £30pm but come Oct/Nov I'll have to stop it to put towards the gas and electric. None of the debts are on my credit file any more, what is likely to happen?

Hi Tim,

I’m sorry to hear about your situation.

Although the debts will have dropped off your credit file six years after the default date, they will still be enforceable if you’ve been making payments.

Creditors are likely to write to you again asking you to make payments or in theory could still take court action to recover the debts. Please bear in mind that this is a process that could take months or years and you still only be expected to offer what you can afford.

The process is different depending on where you live in the UK. There's some more information on debt collection here.

In any case, remember that your essential bills (such as gas and electric) and living costs will always take priority over making payments to unsecured debts.

If you feel that you’re not going to be able to afford the DMP payments, I’d recommend updating your budget on the Online DMP portal or you could give our Review team a call to discuss your options going forward.

I hope this helps,

Aidan