Continue DMP or self-manage?

StMatthias

Hi all,

Back in 2018/19 I was unemployed for nearly a year and (mistakenly I now realise) buried my head, didn't contact my creditors, etc., and wound up £13k in debt with a few credit cards. Last May (after getting a decent paying job) I got on a DMP with PayPlan and have been on the straight and narrow with that since then and making all my payments. I've just now got a new job with a substantial pay rise and am looking at managing my finances better. Looking at my DMP today, the creditor amounts look something like so: £81, £5963, £2700, and £2895. The £2700 is with Capital One and is high utilisation but is not over the limit nor in default but the others are all in default.

I am now considering whether I should continue with PayPlan or whether I should pay off the £81 next month and try to make arrangements myself with my other creditors to try and "snowball" paying off these debts. Importantly, the defaults are going to be there until 2026 anyway, so is it worth my trying to manage it all myself or should I just carry on with PayPlan and let them manage the payments?

Cheers,

Matt

Suseka97

I'd say 'go for it' - you've got nothing to lose.  In your position I would take control and start ticking them off one by one and you may find that you could start putting feelers out to see if any of your creditors would be up for a full and final offer.  If not now, then maybe a little further down the line - especially the defaulted ones. 

runforlife

If Capital One is not in default and remains a "useable" credit card then I'd focus on clearing that debt first. The other defaulted debts should be free of any more additional interest so there's no benefit financially (yes mentally perhaps) to pay then off any quicker. 

StMatthias

Suseka97 said:

I'd say 'go for it' - you've got nothing to lose.  In your position I would take control and start ticking them off one by one and you may find that you could start putting feelers out to see if any of your creditors would be up for a full and final offer.  If not now, then maybe a little further down the line - especially the defaulted ones. 

Thanks for this. With regards the full and final offer, is the idea with that to pay less than the full amount or...?

runforlife said:

If Capital One is not in default and remains a "useable" credit card then I'd focus on clearing that debt first. The other defaulted debts should be free of any more additional interest so there's no benefit financially (yes mentally perhaps) to pay then off any quicker. 

Thanks for this as well. I've spoken to a couple of creditors and they don't give a specific "minimum payment' value but rather use an affordability checklist (much like PayPlan). In that case, I am thinking to get a number from Capital One, add that as a bill and then work through the forms. Does that sound reasonable?

Cheers, 
Matt.

Suseka97

Yes, F&Fs can be a useful way of clearing debts for less than their 'book' value - particularly for defaulted accounts that have been sold on to a debt purchaser.  So, if it were me I would do as RFL suggested and focus on clearing the CapOne debt first then work on snowballing the rest (using F&Fs if you can along the way).