In need of help

Bloomers83

Hi 

Following a lot of advice from here from good people I have decided to go down the route of a DMP just setting everything up, still scary in itself but the start of the road to becoming debt free. I have a couple of queries if any one could help.

My main bank account is with nationwide it has the overdraft as well as a credit card that will be included in the DMP. I have been advised to set up a new account which I have done and am moving all direct debits over to that. I have however in Nationwide 3 kids savings accounts for my 3 kids all under 10, can Nationwide take that money from those accounts to cover the debt left behind by me? Not much in them but its kids birthday money Xmas money and would hate for it to get taken off them.

I have now cancelled my direct debits for credit cards loans and am in the process of sending letters to them all to ask to freeze interest etc and that I'm getting help from step change. How long does it usually take until the account defaults? As I've been told its a good thing for this to happen.

And just to say a massive thank you to everyone that's helped so far. And if anyone is reading this like I would have been for months previously thinking I should ask the questions don't hesitate to do so 

fatbelly

If the savings accounts are in the children's' names they will be OK.

I assume your new current account is with someone other than Nationwide

Defaults usually happen after 3-6 missed payments. Keep an eye on your file because you don't want 'arrangement to pay'

sourcrates

If the accounts are in your name, then its possible, if in the kids names then no, they can`t.

A lot of people enter debt management far too quickly, we always recommend holding letters to be sent, and non payment for a good few months, this encourages defaults, and of course once defaulted all interest and charges stop permanently.

If you charge straight in, then creditors can mess you about stopping/re-starting interest on a whim, it can cause a lot of problems, so its best to get those defaults, and ideally have the debts sold on as well, then start debt management.

Creditors plough there own furrow with regard to defaults, some default quickly, others drag their feet, its having the confidence to wait it out.

Bloomers83

My new account is with another bank so should be OK. The kids accounts are in there name but with them being minors we the parents are attached to the accounts.
I thought with the DMP Is to hold it out but thats where mixed messages come through. If I hold out and don't semd the letters for mayne a few months bank an emergency fund then go back to stepchange to implement the DMP.

Curious what is arrangement to pay? Never come across that, 

Thank you

sourcrates

An "arrangement to pay" is an agreement you come to with a creditor to repay your debt, without your account defaulting.
This is what happens when you enter debt management too soon, and is not good for a number of reasons.

(1) AP markers stay on your credit file for 6 years AFTER you have repaid your debt, so potentially a very long time, a default is gone in 6 years.
(2) Interest can be re-started at the creditors whim.
(3) With arrangement to pay deals, the debt will not become statute barred for a very long time.

Its something you should avoid if you can.

Suseka97

If you think about it... all different debt solutions are in effect some form of 'arrangement to pay'.  But when it comes to how these things are reflected on your credit file - if the account has either AP or AR markers listed against its record (which in credit history terms means arrangement to pay), then that's going to have an impact on your file for much longer than a DMP will (as sourcrates explains).

It's true to say that some creditors can be pretty stubborn about recording an account as in default.  More often than not its because they will insist that by not defaulting the account they are actually 'helping' you - when the reality is, they are not.  Some will be a bit bloody minded about it and know full well that by not defaulting it will impact your credit history for far longer than it should.  Which is why you need to hold firm and not make payments until they default you and be prepared to pester and complain if they don't.  

Bloomers83

Thank you,

So I take it the best way hold firm for a few months not paying the debts move my salary and all direct debits into my new account and leave the overdraft where it is, if I then write to the creditors in 3 months is to say I'm seeking advice from step change (I already have a budget plan online with them but have not spoken to anyone from step change yet) and hope that they may default before then?

I assume as mentioned if I write to them now they may freeze payments but not default the accounts for a lot longer?
How would you go about asking the creditors to default your accounts?

Thank you again for advice

sourcrates

Bloomers83 said:

Thank you,

How would you go about asking the creditors to default your accounts?

Thank you again for advice

Dear creditor, 

My account with you has remained unpaid as I am currently in financial difficulty, this is likely to be a long term problem, and obviously the same also applies to my other credit accounts.

In order to clarify my position, and to lessen the time this will affect my credit reference file, can I ask that you default my account as soon as possible, this will give me a clear 6 year window for my file to be expunged of this information, and allow me to repay my debt without the burden of interest or any charges.

My situation is unlikely to change, and defaulting the account is the best solution all round.

Yours sincerely

Bloomers83