Struggling with debt? Ask a stepchange debt adviser a question

Line_In_The_Sand

Hi, apologies if this has been asked before. My husband and I have had a DMP with StepChange since 2019. Our annual review is coming up, and I think we're going to have to massively reduce our StepChange payment this year. We've been running on a bare-minimum budget for four years, but it isn't sustainable anymore. Is there a point at which StepChange say the amount we can offer isn't enough, and what happens then?

Sly72

Line_In_The_Sand said:

Hi, apologies if this has been asked before. My husband and I have had a DMP with StepChange since 2019. Our annual review is coming up, and I think we're going to have to massively reduce our StepChange payment this year. We've been running on a bare-minimum budget for four years, but it isn't sustainable anymore. Is there a point at which StepChange say the amount we can offer isn't enough, and what happens then?

2 thoughts:

1. Have all your accounts been defaulted?
2. Have you requested a CCA? - https://www.nationaldebtline.org/fact-sheet-library/credit-agreements-getting-information-ew/
3. Have you considered going self managed

Line_In_The_Sand

Thanks for answering Sly.

1. They haven't all been defaulted. 
2. I haven't requested a CCA, although I'm not sure what the benefit of doing that would be - I know what we owe across the board. (Editing to add - I've just done some reading and I think I understand now - requesting CCAs would show whether any of the debts are unenforceable).
3. Yes, I'm wondering if going self-managed is the best option. From reading other people's experiences, it sounds like we'd have the flexibility to make a lower payment if we did that. (I've got the NEDCAB resources, and have had a look through, and it seems relatively straightforward as long as I stay organised about it).

StepChange lifted an enormous weight off my shoulders when we first set everything up, but I'm at a point now where making a grocery list feels stressful and panic-inducing because there simply isn't the money to do it. We opted for StepChange to start with because it seemed the less stressful route, and it's definitely lived up to that promise. But my understanding is that you need to have £100 'spare' money to put towards it, and there is no way of jiggling my numbers to make that happen at the moment. Realistically we don't have the £145 we've been paying this last year, but we've managed it by putting off essentials to the point where it feels like the house is held together by duck tape. So maybe the stress of going self-managed is better than the stress of endlessly using the "emergency" meal plan and being unable to get the shower repaired.

StepChange_Aidan

Hi,

Thanks for posting.

I’m glad to hear that your DMP has taken some of the stress of dealing with the debts, but please bear in mind that the amount that you pay is flexible and can be amended when your circumstances change.

If you’re struggling to afford the current payment or need to budget more for groceries and household repairs, you don’t need to wait for the annual review. At any time, you can update your plan through the Online DMP portal or call us for a review.

As a minimum for a DMP, your budget would need to show that you can afford to pay at least £5 per month to each debt. However, our recommendations tend to be based around whether you can repay the debts in a reasonable amount of time. For example, if your updated budget shows that you would take more than ten years to clear them, we may suggest insolvency options to write off some or all the debt.

I’d recommend giving our Client team a call as they will be able to review your budget, update your DMP and discuss other debt solutions with you.

I hope this helps,

Aidan

Line_In_The_Sand

Thanks for your reply. I'm going to get the review sorted, and then give them a call, because I know it won't go through with the numbers I have. It's not actually £5 per debt as a minimum though is it? I think it's worked out on percentages - we're paying £5 to our smallest debt currently, and all the others are more.

fatbelly

I think Stepchange does have a minimum payment.

Sounds like it is £5

StepChange_Aidan

Line_In_The_Sand said:

Thanks for your reply. I'm going to get the review sorted, and then give them a call, because I know it won't go through with the numbers I have. It's not actually £5 per debt as a minimum though is it? I think it's worked out on percentages - we're paying £5 to our smallest debt currently, and all the others are more.

Hi,

In a DMP, your creditors receive a percentage of your monthly payment based on the original contractual amount, but the minimum paid to each one is £5.

There’s some more information on how StepChange DMP payments are worked out here.

Regards,

Aidan

tnicholas_uk

Hello.  I'm not sure if this thread is still active as the last comment/post was back in July.  Anyway I have question in relation to Debt Relief Order which I'm eligible for.  I know that when the Insolvency people look into your finances there can be an issue if they consider any of your spending (which added to the debt) before applying to be "wreckless".  I suffer with severe Seasonal Affective Disorder in winter to the extent that I'll have regular suicidal thoughts and cant work.  Having a winter holiday is therefore so important for my health.  If I was to go on a holiday before requesting the DRO and paid for it either a) on credit card (increasing my debt) or b) from savings (I have 3.5K saved), do you think the Insolvency guys would consider either of these "wreckless spending" and if so what impact could it have on my DRO application? Surely paying out of savings wouldn't be considered as bad because at least I didn't increase my debt? Thanks.

fatbelly

Well let's see what stepchange think but it may look like you have deliberately lowered your assets to below the 2k threshold in order to apply for a dro

StepChange_Patience

tnicholas_uk said:

Hello.  I'm not sure if this thread is still active as the last comment/post was back in July.  Anyway I have question in relation to Debt Relief Order which I'm eligible for.  I know that when the Insolvency people look into your finances there can be an issue if they consider any of your spending (which added to the debt) before applying to be "wreckless".  I suffer with severe Seasonal Affective Disorder in winter to the extent that I'll have regular suicidal thoughts and cant work.  Having a winter holiday is therefore so important for my health.  If I was to go on a holiday before requesting the DRO and paid for it either a) on credit card (increasing my debt) or b) from savings (I have 3.5K saved), do you think the Insolvency guys would consider either of these "wreckless spending" and if so what impact could it have on my DRO application? Surely paying out of savings wouldn't be considered as bad because at least I didn't increase my debt? Thanks.

Hi there

Thank you for getting in touch, we're still here to help.

I'm sorry to hear that you struggle with severe Seasonal Affective Disorder, if you don't have support in place already, Mind would gladly support you to look at your options.

If you were to go on holiday before applying for a Debt Relief Order (DRO) or potentially increase the amount you owe by using a credit card, there is a risk that your application may not be approved.

If you have £3500 in savings at the moment, you may not be eligible for this solution as the limit for this solution is £2000 for this type of asset. I'd recommend seeking some impartial debt advice. 

StepChange provide free and impartial debt advice and would gladly have a look at your circumstances. You can find out how to contact them here. 

I hope this helps. 

Patience