HELP DMP OR SECURED LOAN

Suseka97

Bloomers83 said:

.........With the accounts wise if I default on them and build up an emergency fund, which would indeed be that will that not have an impact on the creditors accepting a DMP? ........

No, it won't alter what happens next with the DMP.   Frankly it doesn't really matter whether they choose to accept the DMP or not, if you go with SC they will simply pay them whatever the apportioned amount is.  What you'll more likely find is that if they don't want to accept the DMP they will sell the debt on - a lot of creditors just cannot be bothered with bad debt collection.  Some organisations have a department that handles debts and so the account gets closed and handed across and then eventually even those ones get sold on to a debt purchaser.   

Bloomers83

Thank you for the advice, I cant believe is even hearing from some of you on here that my mind is eased from how I felt yesterday after speaking to the broker. Still A scary step into the unknown but reading a lot on here is admitting to a problem and resolving it.
I assume that once on your DMP then your credit rating will drop through the floor? 
Was wondering if it is wise is to have a credit card before i go on a dmp without any balance. I currently have a Barclays credit card with a 1k limit on which I have not spent on it ever. I have read in certain threads that it is sometimes advised is to have a credit card in case of emergencies etc? will this be seen as a big no go when going onto a DMP? 
Also with my main bank account that has a large overdraft on that will be included in a potential DMP how do you go about moving everything over without the bank taking money owed first.

apologies again for the questions
Thank You

sourcrates

Bloomers83 said:

I assume that once on your DMP then your credit rating will drop through the floor? 
Was wondering if it is wise is to have a credit card before i go on a dmp without any balance. I currently have a Barclays credit card with a 1k limit on which I have not spent on it ever. I have read in certain threads that it is sometimes advised is to have a credit card in case of emergencies etc? will this be seen as a big no go when going onto a DMP? 
Also with my main bank account that has a large overdraft on that will be included in a potential DMP how do you go about moving everything over without the bank taking money owed first.

apologies again for the questions
Thank You

No, no credit whatsoever, you must address the reasons why you got into debt in the first place.

You cover emergencies by saving an emergency fund, usually by non payment of your credit debts for 3/6 months as stated previously, and making a regular contribution to it from your budget, forget credit cards.
Your credit rating is of no consequence when you are in debt, your credit file will recover with time.

Standard procedure is to swap to a bank with whom you have no debt, a basic bank account is offered by most banks, but you have to look hard for them, COOP/Monzo/Nationwide are but three of the best.

Banks don`t work that fast, they will not be aware of what you are doing, but, given time, they will become aware, and have the right to set off your debt, from any other account with them, held in your name, which is why the above advice applies.

enthusiasticsaver

As sourcrates says you cant use credit if you go on to a DMP.  You need to address your spending habits and get used to a life without credit. Asking for breathing space and letting the debts default allows you enough time to build up some emergency savings as it will take a while to get a DMP set up. 

There is a thread on here for those on DMPs and many people start debt free diaries.  A good start will be for you to do an soa  which can be found here http://www.stoozing.com/soa.php

Your credit record will be affected and it will take 6 years for the defaults to fall off your record. Still many people feel so much better for doing it as they are in control and the interest is frozen.  As others have said many of the debts will be sold on to collection agencies. 

Bloomers83

Makes total sense, thank you for the links will have a read if those. Wish I'd took the steps to sort it out years ago instead if getting deeper and deeper 

Suseka97

Pretty much all of us do (wish we'd sorted it out years ago), but now is the time to go full steam ahead and start dealing with it.  As has been said, get rid of the credit card and use what you would have been paying towards your debts to build up an EF for the next few (3- 6 months).

Do you work and is your salary, or if not, benefits paid into the bank with the overdraft?  If so the first step, while you get everything in place, is to open a new (basic) bank account not linked to any of your debts and I'd recommend Nationwide - assuming you have no debts linked to them.  Its really easy to open a new account online and within days you should have all you need to get your income paid into that.  In the meantime send off those letters to all but not your bank or debts associated to that and cancel the DDs (do not use a switching service).  Once everything necessary is moved across, then you can write to your old bank and let them know what you are doing and that they can expect contact from SC in due course.

Don't rush to fill in the SC paperwork, just gather all the info together and hold fire for a few months to save that EF.  Yes, you may get a few letters etc., but you can simply ignore/file them for now.  

Good luck, not that you need it - its just a process and all anyone needs is to be a little organised and stick with it  

[Deleted User]

This sic 27th January - is it too late to advise your employer NOT to pay your January salary into your existing account? If not, do so.

Bloomers83

I have an account with Barclay's already set up that no debt is associated with and transfer money in occasionally. typical my nationwide account is the one with the overdraft attached to it. Will this be suitable to move everything across its a standard bank account. Just missed my pay cut off this month but still will have time to cancel direct debits to the bulk of my creditors. Is it best to write to them first as my payments will be debited for my debts before a letter arrives to them?

Suseka97

Ah, well that's perfect then.  It doesn't matter that its a standard bank account, you are generally advised (by SC) to open a basic one, because then you can't run up an overdraft.  If this account has one, just be steely and don't use it.   Yes, get those letters off in the post and cancel the DDs as soon as you can so the payment gets stopped.  It may trigger a couple of 'missed payment' type letters which may cross in the post with yours explaining the situation, but that doesn't matter.

Then work on transferring the direct debits for your monthly commitments (mortgage, rent, utilities etc.) as and when you can.  I moved each of mine either before the DMP started, because I had time to - or as soon as that months payment left the account I was closing.  It was a bit of a faff, but doable and necessary.

Bloomers83

Thank you so much for advice