Advice re: starting DMP journey

anonymouswife

Looking for some advice…

Helping my husband set up his DMP at the moment.  All debts are in his name only, and we aren’t financially linked (as my credit rating is screwed too, but that's a different story!).

We’ve been reading and reading this forum, but we’re boggled by all the information on offer.  Can I just ask a couple of questions regarding putting the DMP into place?

Am I right in thinking to begin with we notify creditors of financial difficulties by letter, and then cancel all direct debits?  All debts are classed as non-priority.

He wants an emergency fund in place before starting the DMP – is it simply a case of then not paying for a few months and then setting up the DMP? With the hope of defaults kicking in? Or do we do token payments?  Or apply for “Breathing Space”?

Total debt repayments stand at almost £900 a month, and with a fair budgeted I&E, we’ve worked out a repayment of £380 a month (with the DMP to run for approx. 5.5years).  He’s already spoken to Stepchange who have confirmed a DMP is his best option, but before diving in we just wanted to check those above questions.

 

Thank you all.

adamj1984

I can't answer the questions, fellow newbie here, but thought I would say good luck, fingers crossed in six years you will be putting a post on the debt free hall of fame

enthusiasticsaver

Yes the best thing is to default asap as the defaults drop off after 6 years so cancelling the direct debits is a good first step.  If you have an overdraft which is to be included in the DMP then you will need a new basic bank account with a bank you do not owe money to.  Write to your creditors telling them what you are doing and let stepchange sort it out from there.  

As he will have no access to credit (you may also have difficulties if you are financially linked) then saving up an emergency fund is the first step and this will give the debts some time to default.  If you have a mortgage obviously continue with those payments and you will still be able to move to better deals when your current one expires (assuming you not on SVR) providing you stick with the same lender.  Moving lenders will be difficult though. 

anonymouswife

Hi! 

Thanks for responding.  We are not financially linked - that was separated many moons ago when I hit difficulties.  We also only rent (both 37 and stuck in that renting rut) so no re-mortgage worries.

Letters are prepped to go tomorrow, and we'll relook at Stepchange in a few months then, once the emergency fund is a little healthier.

Thank you @enthusiasticsaver

sourcrates

Non payment of non priority debts will undoubtedly trigger a flood of calls/letters/emails/texts what have you.

You can choose to write and tell your creditors of your situation, you may get accounts put on hold for 30 days or so, or just keep it to yourself for now, either way, your accounts will eventually follow the collections process, which can take quite a while as different departments go through their standard range of collection letters with you.

They may pass your accounts to a debt collector, ideally they will sell the debts onwards, hopefully defaulting you along the way.

Legal action is rare, and usually only taken once an account has been sold, and ignored for a good length of time, there is a pre-action process to go through first, so plenty of warning.

Always save that EM first, and push for defaults, then start your DMP.

Saving a good cash pot allows you to make full and final settlement offer further down the line.