Considering a DMP but concerned my creditors will pursue further legal action

RebeccaO26

Hi everyone, 
So I'm currently looking to move onto a DMP and I wondered if anyone had any insight into whether any of the below lenders had been difficult or problematic when you'd looked into setting up your DMP?  

Current Debt:
Vanquis £816.00
Marbles £1,068.00
RBS £2,000.00
Very £1,151.00
Studio £585.00
Capital One £257.00
Lendable £5,265.00
Creation £658.00
Total £11,800.00

I am really concerned that they'll take action beyond just selling off the debt and that I could end up with court orders against me.  

sourcrates

Hi,

Dosen`t really work like that Rebecca, creditors are obliged to treat you in a fair and considerate way, and for the most part they do, if they do not, there is a complaints process to follow,usually they will fall into line.

Original creditors do not take legal action as a general rule, that is why debt collectors exist, they can`t be bothered with  chasing bad debts, so get them to do it instead.

What exactly concerns you about legal action ?
All it means is that a court rubber stamps what we already know, that you owe a debt to someone. 
All a CCJ does is order you to pay the debt, either in full, or by installments, you can also apply for an installment order if one was not arranged by the court, so as long as your work won`t suffer because of it, legal action is nothing to fear, you don`t normally go to court, you can defend the claim, and its all done online and by post.

It is also a last resort option, rather than a first response, and usually only happens when 3rd party debt purchasers become involved, and you ignore them for a couple of years.

As you will be paying via a DMP, legal action is extremely unlikely to happen, ever, as you are already paying what you can afford to the debts, and that is all a court would demand of you, so stop worrying.

RebeccaO26

Thank you.  I think I'm just feeling so overwhelmed by everything right now that i'm not thinking straight.  

I really do appreciate your advice and your response.  

Galloglass

The list of creditors you give above is one commonly seen with people on very low income, using high cost credit to get by. Very are very expensive. Are you sure a DMP is the best option for you?

Why not put up a Statement of Account and there may be another solution available to you.

RebeccaO26

Galloglass said:

The list of creditors you give above is one commonly seen with people on very low income, using high cost credit to get by. Very are very expensive. Are you sure a DMP is the best option for you?

Why not put up a Statement of Account and there may be another solution available to you.

Hi Galloglass, i'll post an SoA later today.  

I used the stepchange website and they suggested a DPP (I live in Scotland) or a DMP - I think the DMP is the better of the 2 options to be honest as my income fluctuates a lot.  I do have a permanent part time job which I've factored in for my income section but also occasionally pick up work tutoring and I'm actively looking for a second job to help me build up an emergency fund that I can use for emergencies and to hopefully get my creditors to the table in a couple of years for full and final settlements.  

The DMP should last approx 7years 1month on my current income which is okay but I also know that with a DMP they've no obligation to reduce the interest etc and will more than likely sell my debts on.  I am totally fine with that as I can negotiate (or ask SC to negotiate) with the DCAs and the interest at that point should stop even if the amount on the account increases. 

I don't owe enough for a trustdeed and I'm also really keen to avoid getting sequestered.  I'm only 26, I'm just about to graduate uni with my masters and I'd always just assumed I'd have a graduate job following on from my course that would allow me to pay everything back but thats not happened and I'm at the point where I'm not eating or sleeping properly at all.  I called the Samaritans last night because I was in such a state and keep thinking I've totally ruined my life.  

I should say as well that I'm not in debt just due to irresponsibly overspending (though that definitely part of it).  When I was 19 my mum got really sick and I had to look after everything at home financially while only earning £13k p/a.  I ended up in a lot of trouble with payday loans which lead to credit cards being used to pay down that debt which spiralled into loans to pay off those.  The catalogue debts are mostly from the last few Christmases as I want to see my family happy but I've been really irresponsible about how I do that.  I'm at the point that, when all is said and done, I have £17 left over after all my essential outgoings and min repayments go out every month to buy food etc and thats clearly completely unsustainable.  

I guess it doesn't really matter how I got to this point, all that matters is I work out a way to get myself out of this mess and move forward and I do think that a DMP is the best option for me.  I don't anticipate that I'll stay in my part time role forever, I am good at what I'm doing and opportunities to progress into areas I'm interested in should open up within the next few years too.  I guess the flexibility to end the DMP at any time should my income increase (and I'd anticipate with a promotion into a full time role it would double) is part of the appeal - the annual reviews would allow me to adjust the plan as necessary and hopefully reduce the length of time I'm paying into it.  

I am fully aware that just by entering a DMP I ruin my credit for 6 years but if i don't it'll be ruined anyway and, to be honest, given how hopeless I've been feeling, I don't think I'd last another 6 months let alone 6 years if I don't do something.  

Galloglass

That makes a lot more sense in that you'll be expecting your income to increase significantly once you have completed the Masters.

I used the stepchange website and they suggested a DPP

Did you actually talk to them or just use their automatic system. SC are well respected but it is better to get them to confirm it is the correct advice rather than assume the computer is correct. The other advantage of getting SC to confirm the way forward is their staff will be FCA regulated but the computer will not be.

RebeccaO26

Galloglass said:

That makes a lot more sense in that you'll be expecting your income to increase significantly once you have completed the Masters.

I used the stepchange website and they suggested a DPP

Did you actually talk to them or just use their automatic system. SC are well respected but it is better to get them to confirm it is the correct advice rather than assume the computer is correct. The other advantage of getting SC to confirm the way forward is their staff will be FCA regulated but the computer will not be.

I used the automated system however I have set aside some time on Monday to give them a call to confirm that this is the best way forward for me.  I think for me the main issue is that I know that within a year or so at work, I've got a good chance of being promoted.  I had a really good chance before I started panicking about this and addressing some other issues from my past however, my performance has taken a bit of a dip (my boss says I'm still doing great but I need to reset and regain my focus) so I imagine it will take about 12 months to reset and work my network to gain me the experience that I need in order to ace the interview for the promotion but of course, I have to wait for the vacancy to arise.  In the meantime I'm looking for a second job so I can put that income into savings and work on either getting the F&F settlements agreed by my creditors or just growing that emergency fund for when things go wrong and credit isn't an option.  

Any other solution is much more permanent and I think the flexibility of a DMP is what I need.  After the debt is gone, every spare penny will go into a savings account and I'm going to start saving for my future.  When I'm free of this there is absolutely no way I am ever going back again.  Its not worth the sleepless nights and the constant fear I've felt this last few months.  

Suseka97

Firstly, I just want to say well done for taking grip of the situation and making a plan to get yourself into a better financial position in the future.  You've clearly given this a lot of thought and I imagine when you speak with SC they'll simply confirm what the online tool suggested, although they may tweak some of the expenditure lines.  Whilst 7 years sound a long time, in reality it isn't - you'll just settle into the rhythm of things and your DMP will disappear into the background.  If you can get a second job that would be helpful to allow you to put some money aside for those future F&Fs and also in case anything unexpected crops up.  

One piece of advice I'd like to offer is not to rush into setting up your DMP too quickly.  Of course SC will want you to get it up and running as quickly as possible, but if you head over to the DMP Mutual Support Thread you'll find we tend to advise folks to give themselves around 6 months of making no payments to allow for that, ever so important, emergency fund.

You could get SC to send you all the paperwork and just sit on it for a while, or see what SC recommends and then say you'll get back to them when you are ready to get things going.  Don't be panicked into jumping in too quickly - and I say that reading how worried you've been.

The wheels in DMP land turn very slowly and that's a good thing.  All you need to do as a first step is to write a letter to each of your creditors letting them know you are in a finanical crisis and that you are seeking help from one of the debt charities.  Tell them you intend to stop all payments whilst you consider the best way forward.  Yes, you may get a flurry of letters - but that's pretty much all it'll be.

Once you've spoken to SC - pop over to the DMP thread and have a read through.  It's a lengthy thread, but has a lot of really useful information for people like you, at the start of their debt busting journey.

Best of luck.

RebeccaO26

Suseka97 said:

Firstly, I just want to say well done for taking grip of the situation and making a plan to get yourself into a better financial position in the future.  You've clearly given this a lot of thought and I imagine when you speak with SC they'll simply confirm what the online tool suggested, although they may tweak some of the expenditure lines.  Whilst 7 years sound a long time, in reality it isn't - you'll just settle into the rhythm of things and your DMP will disappear into the background.  If you can get a second job that would be helpful to allow you to put some money aside for those future F&Fs and also in case anything unexpected crops up.  

One piece of advice I'd like to offer is not to rush into setting up your DMP too quickly.  Of course SC will want you to get it up and running as quickly as possible, but if you head over to the DMP Mutual Support Thread you'll find we tend to advise folks to give themselves around 6 months of making no payments to allow for that, ever so important, emergency fund.

You could get SC to send you all the paperwork and just sit on it for a while, or see what SC recommends and then say you'll get back to them when you are ready to get things going.  Don't be panicked into jumping in too quickly - and I say that reading how worried you've been.

The wheels in DMP land turn very slowly and that's a good thing.  All you need to do as a first step is to write a letter to each of your creditors letting them know you are in a finanical crisis and that you are seeking help from one of the debt charities.  Tell them you intend to stop all payments whilst you consider the best way forward.  Yes, you may get a flurry of letters - but that's pretty much all it'll be.

Once you've spoken to SC - pop over to the DMP thread and have a read through.  It's a lengthy thread, but has a lot of really useful information for people like you, at the start of their debt busting journey.

Best of luck.

Hi Suseka,

Thank you for this - I called StepChange this morning and I still think a DMP is the right way forward.  I've done a budget, reviewing my spend before my income dropped and reviewing my spend on the new budget and I've only got £60 less than before.  I know I can 100% live on this, reviewing my budget I can cut back on a few things across the course of the month without really even noticing it.  

I have about £1000 set aside in an emergency fund already that will hopefully help me if anything unexpected comes up during the course of my DMP and I am hoping to save what I can from my budget and put that into the Emergency Fund too.  

Today I called all my creditors (apart from RBS) and passed on the details from StepChange and all have agreed to a 30 day holding period on my account and have stopped my direct debits.  I get paid on Friday and following on from that I'll change my bank details at work and transfer all my money across from my old bank account to my new account.  I will call RBS on Monday next week and will make them fully aware of my current situation.  

I think my biggest worry/concern is that if my creditors keep adding on interest or fees etc then I am going to end up in a situation where, what should take me 7 years to pay off, may end up taking considerably longer and that is a genuine source of concern for me.  

Despite this, I am really hopeful that something will come up soon on the 2nd job front and I can start saving towards those full and final settlements that will get me out of this mess and hopefully end the agreement before the 7 year point.  

This has literally spiraled out of control so quickly and I'm still reeling from it all.  I cannot shake the feeling that I've completely ruined my life over this and I have all this shame, anxiety and hopelessness just living inside me right now.  I know I have to push forward but genuinely, I feel so low emotionally that pushing forward is really hard.  

Willing2Learn

RebeccaO26 said:

… This has literally spiraled out of control so quickly and I'm still reeling from it all.  I cannot shake the feeling that I've completely ruined my life over this and I have all this shame, anxiety and hopelessness just living inside me right now.  I know I have to push forward but genuinely, I feel so low emotionally that pushing forward is really hard.  

Nearly all of us who regularly post on the DFW have been down your road.  Some of us more than once.  It is not shameful at all.  Sometimes life just throws the unexpected and the unplanned at you.  Things go pear-shaped and before you know it, you have built a considerable amount of debt.  Nothing to be anxious about, and definitely nothing to feel hopeless about.  You have a plan to move forward and your debt-busting journey will pass in no time. 

You may find your journey easier emotionally if you start a DFW diary.  Keeping an eye on your progress via diary can really relieve the pressure for some people. 

https://forums.moneysavingexpert.com/categories/debt-free-diaries

sourcrates

RebeccaO26 said:

I think my biggest worry/concern is that if my creditors keep adding on interest or fees etc then I am going to end up in a situation where, what should take me 7 years to pay off, may end up taking considerably longer and that is a genuine source of concern for me.  

  

Once an account defaults, that is it, the balance is frozen, no further interest or charges can be added, as technically, the financial relationship between you and the creditor has broken down irreconcilably.

This is the aim of everyone in DMP land, to get all their accounts defaulted, as soon as possible, it brings you two benefits, not only do charges and interest stop, but the 6 year countdown begins till it falls off your credit file, now some creditors are better at this than others, and default you pretty quickly, others just threaten it, which is no good to anyone, so you have  to be pro-active, if they won`t or don`t default you, stop paying them till they do, its sometimes the only way.