Starting DMP with no emergency fund

SuperFrank88

Hi,

I have been in touch with StepChange and they have advised me to start a DMP. I have contacted all my creditors this week and they have put my accounts on hold for 30 days while the DMP is set up. I have filled in the debt remedy form with SC and it comes out that I will be paying £579pm with it taking 3 years to clear all my debt.

I’ve been reading some of the posts on here and lots seem to be starting their DMP a few months after they have been in touch with their creditors so that they can build up a emergency fund. Should I be considering this? SC have not mentioned anything to me and my first payment is scheduled for the 1st Feb.

My thinking is, if the creditors are going to default the accounts anyway, does it matter if I start paying in February or wait until say April/May so that I can get a emergency fund behind me?

Would be great to hear your opinions. Thank you 😊

Carrot007

I would say do not start a DMP until they default. UNless you do many will default years later. Barclaycard will just register you as on arrangement to pay for 4 years and then probably sell the debt on and default you then for instance.


Of course it all depends on how hard faced you can be for a bit,really nothing is likely to happen, they will default long before court and you will engage after they have. And of course weather you want to have "good credit" sooner rather than later.


Stepchange are great but far to "fair" (as they call it) with companies who will not be fair with you.

sourcrates

Stepchange won`t tell you all the little things you need to know about debt management, that benefit you, and not your creditors, their job is to get you repaying your debt ASAP, but that`s not always a good choice, an EF is vital to a successful arrangement, have a look here for everything you need to know about debt management (its an exeptionally long read, but worth it) :


https://forums.moneysavingexpert.com/discussion/5897083

SuperFrank88

Thank you both for the quick replies.

I wish I had seen that thread before sending back my direct debit mandate form to SC on Friday.

I didn’t want to have any defaults and didn’t think I would because I am up to date with everyone at this moment but I have 12 creditors in total so I am guessing I will definitely end up with at least 1 default, after reading the first page on that thread, I would prefer all of them to default so that they are off my file quicker.

I am confused now on what approach I should take. Do I phone SC in the morning to ask them to change my start date of the DMP so that I can build a emergency fund? Or should I cancel my set up with SC until the accounts default then get back in touch with them (will they even allow this?)

Obviously I want to be debt free ASAP but I don’t want my credit file to be worse off if that makes sense.

Sorry to ramble, trying to get my head around it all. I think I have acted on impulse (story of my life) by setting it up too quickly while potentially shooting myself in the foot.

Willing2Learn

You can cancel the direct debit and advise SC that you no longer want the DMP to start in February. I recommend you contact SC again in May 2020 so that the new DMP start date would be in June. That should give you the time needed to build up a sizeable EF, whilst having the added benefit of your creditors all (hopefully) defaulting your accounts

SuperFrank88

Ok I will do that. So once I have done that, what do I do with the creditors? Do I get in touch with them all again and ask for them to default the account? I know I am going to get bombarded with calls/letters. Do I ignore them?

I really do appreciate all this help & guidance.

Willing2Learn

Whatever way you do this, you will still get bombarded with auto-generated letters. But you can safely ignore them...However, I always suggest writing to creditors, keeping them updated with your plan to start the DMP in May/June. Just say that the delay is while you seek advice. It is just 'polite' to keep them 'in the loop'.

Larac

Hi - would agree that you do need some sort of buffer in terms of an emergency fund. I have been with SC since 2012 and next year I finally finish my DMP . What I would say is make sure your budget is something you are comfortable with. Over the years I have re-set my budget as you need to be able to deal with the ebb and flows of 'life'. If you are in for a long haul - you also need to consider that you also need to live as well. If you are not careful you will end up with a budget which takes all the excess cash for the month and you have no flexibility (for anything).

SuperFrank88

Larac wrote: »

Hi - would agree that you do need some sort of buffer in terms of an emergency fund. I have been with SC since 2012 and next year I finally finish my DMP . What I would say is make sure your budget is something you are comfortable with. Over the years I have re-set my budget as you need to be able to deal with the ebb and flows of 'life'. If you are in for a long haul - you also need to consider that you also need to live as well. If you are not careful you will end up with a budget which takes all the excess cash for the month and you have no flexibility (for anything).

Congrats on reaching the home straight :T

Yes I have done a lot of work on my budget over this weekend and I am going to use the budget to zero method. I’m scared and excited at the same time! Scared about having to deal with all the BS that will come from the creditors constantly chasing, excited to finally stop living Paycheck to Paycheck and also to finally start getting closer to that end goal, when ever that may be, of becoming debt free!

One thing I have learnt so far is that this site is priceless, and will be a godsend when undoubtedly the times get tough. Knowing I can reach out and there will be someone here willing to support and give advice is quite comforting.

Jeez, Getting a bit deep & haven’t even had a drink! :rotfl: