First Steps

RAS

In the short-term, there's nothing to stop you paying a £1 per month to those who have defaulted.

Regarding the emergency fund, it very much depends on your circumstances, but at least a month's spends. More if a dead car would prevent you going to work, or there's a risk of works you can't avoid if you're in a leasehold flat.

And there's nothing to stop you talking to the debt charities now, to find out their procedures and requirements but taking a while to actually start the process. My guess is that creditors who haven't defaulted will probably come round a bit easier if they get the DMP details through a debt charity.

kimwp

I know this stuff is worrying and scary, but you need to remember that you are in charge. If anyone proposes anything you aren't comfortable with or sure about, ask questions and defer a decision (and get advice here if needed) until you are comfortable that you are doing the right thing. Asking questions up front is great, but don't feel paralysed into inaction by not knowing everything ahead of time.

TheAble

Just get a "starter" emergency fund in place for now. £1000's not a bad amount, though you have quite a chunky mortgage payment so perhaps £2000 would be better.

A few months down the line you probably want to get this up to £10,000.

bon007

Thank you so much ,  I just don't want to get anything else wrong . Being new at all this and trying to get my head around the default process is my biggest fear .

bon007

The reason I ask this is I was so concerned about not having no Emergency Fund and was worried something could go wrong so I kept paying the minimum payment on one account as there was plenty of credit available for any Emergency so this has gave me time in which I now have a healthy Emergency fund of £1500 . I never accessed any of the credit available to me on this card during this time but when I stop the payments now I know this will take a few months .

Have I gone about this wrong way ? 

RAS

Hi bon007, there is no absolutely right or wrong way, except when it comes to legal process.

Keeping an emergency line of credit open isn't often an option here as many have maxed out their limits. If it gives you time to build up your emergency fund, that's fine. Looking at your SOA, I'd be inclined to keep doing what you've been doing until you have enough to cover a full month's spends saved.

Have you sat down with the missus and started to identify where to make savings? I'd suggest losing the tuition and looking at ways to get your gas and electric usage down, as that's huge and the price is going to rocket. Maybe easier to get the kids used to wearing jumpers and turn the thermostats down now.

TheAble

bon007 said:

The reason I ask this is I was so concerned about not having no Emergency Fund and was worried something could go wrong so I kept paying the minimum payment on one account as there was plenty of credit available for any Emergency so this has gave me time in which I now have a healthy Emergency fund of £1500 . I never accessed any of the credit available to me on this card during this time but when I stop the payments now I know this will take a few months .

Have I gone about this wrong way ? 

Sorry I'm not following. Do you mean you have a £1500 emergency fund in cash, or do you mean you have £1500 of available credit on a particular card?

To be clear, your emergency fund should be in cash.

bon007

Hi yes we have now sat down and started reducing everything down . No it’s £1500 in cash, I  have not touched  the credit available to me as I just kept paying the minimum on one card so I knew if a problem occurred there was that as a back up but now I have started with the emergency fund I was going to stop payments on that card & continue to build the Emergency fund .  

sourcrates

Good afternoon.

I have replied on your other DMP thread, but I sense you still are very wary of what`s going to happen here, so lets try and remove some of those fears for you shall we.

We always advise you to get accounts defaulted for two very simple reasons, (1) all interest and charges stop instantly when an account defaults. (2) the default will stay on your credit file for 6 years from the date its registered, so you have a clear 6 year window when you know it will be gone.

If you start debt management too early, then you are at risk of "AP" markers (arrangement to pay) being added to your credit file instead, these markers stay for 6 years after the debt is settled.

If you decide to start a DMP straight away with any of the free to use debt charities, they will insist you start as soon as possible with repayments, they do not take into account how your credit file is marked, only if repayments are affordable or not, for some this is not a problem, but for others it can be, it can feel like you have no control over events, so dictating how this goes down, and how best it can work out for you, is a valuable asset to have, its a small thing granted, but it can boost your confidence going forwards.

Having said that, Stepchange/Payplan/CAB etc all do an excellent job, but you cannot beat self management and the freedom it gives you.

Ok, default notices, I agree, a very official looking document, but, read it carefully, its not about what it says, its about what it doesn't say, they use words such as "we could do this" or "we may do that"........they do not say exactly what they will do, just what they "could" do.

You usually have a 14 day time limit to return your account to order, or one or more of the things listed "may" happen.

Blah, blah, blah.........Ok, sounds scary, but its not, this document must be sent in order for the creditor to comply with the consumer credit act, essentially they are simply ticking the boxes, nothing more.

The time limit will pass, after which the account will usually be defaulted, but not always, the debt may then go one of 3 ways, it may be sold, it may go to internal collections, or it may be passed to an external debt collector, very occasionally nothing will happen, sometimes accounts slip through the net and are never chased, don`t hold out for that one though, its almost certain to be one of the 3 routes above.

They will write to you in due course, and tell you what the situation is, don`t expect any of this to happen quickly though, from stopping your payments, to actually getting a default, can sometimes take many months, or years even.

Expect to have the same thing happen for all your debts, nothing happens quickly, for every argument they give you, there is always a counter argument, you have to prove nothing, they have to prove everything, and that you are the debtor.

Going self managed on a DMP means you are in it for the long haul, so learn all you can about the process, and don`t forget, an emergency fund is an absolute essential here, don`t fall at the first hurdle, and most of all, this is also essential, yes debt can be a very serious matter, but try and retain a sense of humour, and enjoy being in control of things again.

Good luck, and apologies for the long and tedious post.

bon007

Hi Sourcrates just sit and read your post thank you so much for the support and explaining it so well . Self managed definitely seems the way forward as the one her accounts seem like they will default at different times . The three that have defaulted , I now understand I wait for there next response after the 14 days period   then make my offer to them  once they send there next correspondence . I am getting this correct ? 

I know everyone worries as it is a big deal to everyone but your excellent advice and guidance to help a newbie is amazing and I am very grateful .