Struggling with debt? Ask a stepchange debt adviser a question

StepChange_Aidan

icarus_69 said:

Hiya. I'm considering a DMP but want to understand what my best options are. I have just under £4000 debt spread across current account overdraft, paypal credit and a credit card. I am able to make payments, but what I want more than anything is to not be paying interest. What are my options? Would a debt management plan, managed by stepchange, mean I don't pay any interest? And how long would I not have to pay interest for? Would this be for just a month? Or longer?

Hi,

In a DMP most creditors will agree to stop interest and charges indefinitely, but as it’s an informal agreement we can’t guarantee that they will.

Please bear in mind that making payments through a DMP will affect your credit file and can make it more difficult to obtain credit in the future. If you’re able to manage your regular payments I’d recommend that you continue to pay the creditors directly, and if possible, aim to pay more towards the debts with the highest interest to get them cleared first.

Kind regards,

Aidan

StepChange_Aidan

ED17 said:

Hi, Hope this is the right page.

Im 24, living with parents and I don't really know how I've let it get this bad but something now needs to be done.

I've currently racked up £1250 overdraft with RBS (39%EAR) & a £2000(19%EAR) overdraft with Monzo. I also have a £7200 loan left of £8200 Loan from Monzo to pay.

I've seen the recent post about overdrafts about looking to get out of overdrafts with the rising interest rates. I don't know if I've done it right but It says I have 0% chance of bein accepted on any credit cards on your calculator.

I really don't know enough about what to do, so please can you explain what is the best way forward!

Hi,

Welcome to the forum.

The first step would be to put together a budget so you can work out how much you can afford to pay each month towards the debts.

You can contact your lenders to discuss your options, they may be able to help by lowering your overdraft limit gradually or they could remove the overdraft facility from your day-to-day bank account and allow you to repay the debt at an affordable rate through a Debt Management Plan.

I’m assuming that you’re referring to the calculator on the MSE website. StepChange can’t give advice on credit card eligibility, but if you would like to create a budget and review your options for dealing with the overdrafts and other debts, you can use the online debt advice tool on our website.

There’s some more information about overdraft debt here.

I hope this helps,

Aidan

StepChange_Aidan

ow100 said:

Hello!

I'm new to the site and have found the information on here really useful. Currently I am in £13,000 worth of debt. This includes 3 loans and two overdrafts that I have maxed out. Although I work full-time with a decent monthly pay I am still struggling to keep on top of these. I have barely any money left to spend once everything comes out. It is effecting my mental health and I am losing sleep just thinking about my future and how I'm going to keep up with all the money that I need to pay back. Only a handful of my friends know a bit about my situation, my family has no idea and my partner who I live with does not know either. I just can't bring myself to tell them and I feel embarrassed and ashamed that I have got myself into this situation.

I have made some lifestyle changes (this includes not going out as much, not going on many holidays in the year and generally just not overspending). I feel like this is helping but I still have nothing to show for it at the end of the month. 

I filled in a form for StepChange and they have advise that I go on a DMP. I'm worried this will affect my already wavering credit score and I just wanted to have some advice about going on one? In my opinion this really is the last resort as in the near future me and my partner would like to apply for a mortgage (his credit score is good and he has no debts). 

Any advice will be welcome - Thanks!

Hi,

Thanks for your post. I’m sorry to hear that you’ve been struggling, and I hope I can help.

The key thing to remember is that your health and your family’s living costs should be prioritised over paying off the debts. If StepChange have recommended a Debt Management Plan that would suggest that your budget shows that you have enough money to pay a reasonable amount to the creditors, but not enough to cover the regular payments.

In this situation, a DMP would be a good option so that you’re only paying each creditor a fair share of what you can afford, but the downside is that reduced payments and defaults will be recorded on your credit file, creditors may also note that payments are being made through a DMP. This doesn’t mean that you won’t be able to get a mortgage in the future, but it could make it more difficult or you may not get it at the best rate.

If you’re unsure about the advice, please give us a call so we can review your budget and discuss the debt solutions in more detail.

If you feel that you can, I’d recommend that you also talk about your situation with your partner, although I do appreciate that this isn’t always easy or possible. There’s a guide to talking to your loved ones about debt here.

I hope this helps,

Aidan

StepChange_Aidan

susiemoney said:

I am struggling financially, I have about £30,000 of debt across various cards and loans. I have had my head in the sand for a while, ignoring calls and letters. But I've now worked out an income and expenditure statement as best I can (I have just started freelancing and so far have earned £0 some months and £4,000 gross others). Most creditors are being supportive with a token payment agreed for now.

One creditor - Link - has already passed the details to a law firm Kearns. Which I think is their in-house firm. I know this is my fault for sitting on it for so long. I called Kearns last week to go through the income / expenditure. They took details of my rent, utilities and council tax, and travel. They didn't ask about health expenses (I receive PIP as I have limited mobility), food and household costs, communications costs or anything other than the basics. Then they told me I have £200 a month surplus income. I asked how they had arrived at this figure and it seems they have taken the standard 'allowances' for things like food.

The person I spoke to wasn't able to complete a full assessment with me. I have to complete a form and they will 'decide if they will accept any other expenses'. I'm assuming I just need to fill in the form at this stage, but any further advice would be great, especially if they challenge any of my figures (none of which are excessive).

Hi,

Welcome to the forum.

Usually, when you ask a creditor to accept a reduced or token payment, they will ask for a budget so they can review your financial situation. It’s best to be honest as possible and make sure that all your priority bills and living costs are accounted for. Certainly, any income from PIP should be ringfenced to cover any health or disability related expenses.

Remember that the creditors can only ask you to pay a share of what you can afford. Please don’t be pressured into paying any more.

If you’re self-employed, I’d recommend contacting Business Debtline, who’ll be able to give some specialist debt advice.

Kind regards,

Aidan

StepChange_Aidan

1stTimer said:

Hi

I have a DMP open with Stepchange since 2019 and want to firstly thank you and your company so much for all the support and help, I was sinking in debt and my anxiety was through the roof. Since the day you took over I have been able to breathe again so will be forever grateful:-)

I am now brave enough to go self managed and tackle the final creditors myself so have gone ahead and cancelled my account with you. Do you send me details of who I owe and amounts? I’m afraid I may have been a bit quick. I took screenshots of the companies and amounts but have no idea how I go about contacting them now with the little details I have.

Hi,

Thank you for your kind words, I’m glad to hear that you’re in a better position.

I believe that when a DMP is closed you should receive a letter which confirms the outstanding balances for your debts. In any case, if you need any further details, please give our Client team a call.

Kind regards,

Aidan

indebtmum

Hi

I hope someone out there is able to help me. I’ve been reading these forums for a while and feel comforted that I’m not alone in this situation however I am feeling really so low and struggling mentally with the pressure and shame all the debt I’ve built up brings. 

I have always had extremely good credit, until I bought my first home with my partner and had a baby (thus going on stat mat pay) all in the space of a few months at the end of 2021. I have had to rely on loans to buy furniture and credit cards to buy food/nappies etc. Now, I’m in a situation whereby I’m in 35k+ of debt. My partner is aware, and also has a smaller amount of credit card debt in his name too (around 3-4k). 

We are on payment holidays for most of these creditors and still struggling to make ends meet. I work part time, and my partner works full time. We pay about £550 a month on nursery fees alone and it’s crippling us. 

I have looked into a DMP or a TPP for us both through Step Change. I’m pretty much ready to enter into one but I just have a few questions/reservations I’m hoping somebody can help with. I’m not even sure if these plans would help us as we’re not even paying much towards debt at the moment anyway?

- Is it better to let my debts default before entering into the DMP/TPP? 

- How does being on a DMP affect moving/selling our house? I am seriously unhappy in our home as it’s over an hour away from any friends/family, I’m completely isolated as my partner is working as much as possible to try and make ends meet and I really wish I had never even got on the property ladder in the first place as this is where the whole debt problem has stemmed from. We chose an area further away as we were in a rush, due to baby, and our county (Herts) was even more unaffordable for us. 

I was hoping to not stay in this house long and move back towards my hometown however I’m worried if I enter into a debt solution plan I’ll be unable to remortgage/move and stuck
in this house for the foreseeable future. 

Based on the above, should we just cut our losses and sell the house? We also took out help to buy to get the house so I’m not even sure if we’d make enough in the current market to pay that back + more to put towards debts. 

If anyone has any advice at all I’d truly really appreciate it. 

Thanks,
An overwhelmed stressed mumma 

StepChange_Aidan

indebtmum said:

Hi

I hope someone out there is able to help me. I’ve been reading these forums for a while and feel comforted that I’m not alone in this situation however I am feeling really so low and struggling mentally with the pressure and shame all the debt I’ve built up brings. 

I have always had extremely good credit, until I bought my first home with my partner and had a baby (thus going on stat mat pay) all in the space of a few months at the end of 2021. I have had to rely on loans to buy furniture and credit cards to buy food/nappies etc. Now, I’m in a situation whereby I’m in 35k+ of debt. My partner is aware, and also has a smaller amount of credit card debt in his name too (around 3-4k). 

We are on payment holidays for most of these creditors and still struggling to make ends meet. I work part time, and my partner works full time. We pay about £550 a month on nursery fees alone and it’s crippling us. 

I have looked into a DMP or a TPP for us both through Step Change. I’m pretty much ready to enter into one but I just have a few questions/reservations I’m hoping somebody can help with. I’m not even sure if these plans would help us as we’re not even paying much towards debt at the moment anyway?

- Is it better to let my debts default before entering into the DMP/TPP? 

- How does being on a DMP affect moving/selling our house? I am seriously unhappy in our home as it’s over an hour away from any friends/family, I’m completely isolated as my partner is working as much as possible to try and make ends meet and I really wish I had never even got on the property ladder in the first place as this is where the whole debt problem has stemmed from. We chose an area further away as we were in a rush, due to baby, and our county (Herts) was even more unaffordable for us. 

I was hoping to not stay in this house long and move back towards my hometown however I’m worried if I enter into a debt solution plan I’ll be unable to remortgage/move and stuck
in this house for the foreseeable future. 

Based on the above, should we just cut our losses and sell the house? We also took out help to buy to get the house so I’m not even sure if we’d make enough in the current market to pay that back + more to put towards debts. 

If anyone has any advice at all I’d truly really appreciate it. 

Thanks,
An overwhelmed stressed mumma 

Hi,

I’m sorry to hear about how you’re feeling. There’s no need to feel ashamed.

I would normally suggest entering a DMP straight away, as most accounts will default after 3-6 months of reduced payments. However, there is a risk that in a DMP the creditors could decide to record it as an arrangement to pay and delay adding a default, which would extend the amount of time the debt affects your credit file. If you wanted to avoid this, you could wait for the debts to default first before starting a payment plan.

A DMP won’t have any effect on your ability to move or sell your home, but a history of missed or reduced payments can make it more difficult to get a mortgage or remortgage in the future.

I can’t say whether or not you should sell your home (you may need specialist advice), but it's an option you could explore if it's right for you and your family. You shouldn’t have to stay where you are if you’re unhappy.

If you’re uncertain about the DMP/TPP and want to discuss your options in more detail, please give us a call.

I hope this helps,

Aidan

Grazia41

Hi,

I am about to enter into a DMP.
I have read these forums in great detail and now I feel a bit panicked about any of the creditors still going down the CCJ route and maybe even putting a CO on my property! Am I right in thinking this would be unlikely?

My husband doesn't know about my debts and we have a lovely home on a joint mortgage.

Thanks 

StepChange_Patience

Grazia41 said:

Hi,

I am about to enter into a DMP.
I have read these forums in great detail and now I feel a bit panicked about any of the creditors still going down the CCJ route and maybe even putting a CO on my property! Am I right in thinking this would be unlikely?

My husband doesn't know about my debts and we have a lovely home on a joint mortgage.

Thanks 

Hi there

Thanks for getting in touch.

I'm sorry to hear the collections process is causing a bit of panic for you. Forum's can be a great source of information, but please try and remember it's not advice that's personalised to you and your situation.

Creditors can apply for county court judgements (CCJ's) as part of the collections process, but there are steps they need to take before it gets to this point. It's a long and set process which you can find out more information about here. 

The hope would be that with you making regular payments and keeping in touch with your creditors, they won't take these next steps but we can't make this guarantee.

I hope this helps.

Patience

watermelonx

I have a DMP with stepchange.. my circumstances are going to change in the next 1-2 months due to maternity leave/pay. I understand I can update my budget to reflect this but my question is when exactly to update this? I know the date I’ll be affected from, but do I have to wait until my income actually changes to update my budget? TIA