Debt management questions

Houndog6105

So I'm looking at using a debt management scheme as I'm 21k in debt with numerous credit cards and catalogue's and as I've recently lost my job due to becoming disabled I'm going to find it hard to keep up with all the payments. My question is if I use a debt management place then what happens to my credit cards once paid off? Do I still have them to use or do they get closed? 

Also does using a debt management scheme have any negative effects towards my credit file?

I should point out I have never defaulted on any of my cards and catalogue's but like I said it's going to get difficult now as I lost my job

Any advice would be appreciated
Thankyou

Carrot007

1. They will likely be closed unless you keep to the terms. Many will also close when on a plan even if you are keeping to the terms.

2. Yes, and you want it that way. Avoid stepchange and a plan untill they have defaulted (stop paying them until they do).

Don't worry. Stop paying. Wait for defauts. Then start a plan. (build up some savings now instead of paying them for whatever may happen).

enthusiasticsaver

You won't be able to use the credit cards etc if you default and go onto a DMP.  Usually it is best to save up some emergency savings while waiting for all the debts to default.  Yes your credit record will be affected but the advantage is that usually interest is stopped and repayment is set at an affordable amount.  It is certainly best you no longer use credit anyway if you are unable to work and have a vastly reduced income. 

sourcrates

If you have no income, then you cannot enter debt management, as that requires you to pay something toward the debt, however little that may be.

Maybe you should use this opportunity to check out one of the insolvency options instead, I`m thinking that a DRO (Debt Relief Order) assuming you meet the qualifying criteria of course, may be better suited to your circumstances.

Stepchange covers it here -

Debt Relief Orders. Eligibility & How To Apply. StepChange

Read up all you can on it, other option may be Bankruptcy, but for 21k, its a tad extreme, look at a DRO first, if your period of unemployment is likely to last a while, then insolvency would be the better choice, if on the other hand, you get a new job fairly quickly, then you can look at debt management again.

As a temporary measure you can write to each creditor explaining your situation, also whilst on the stepchange website, look at "breathing space" a new initiative to give you two months with no collection activity whilst you take debt advice.

Or just ignore everything until defaulted, then look at your options, that way all interest and charges cease for good, there are many ways, and many different options available to you to deal with this, in the end its what suites you best that matters.

Lots to take in granted, but the options to deal with this exist.

Good luck.