Can I move from DMP to token payments?

damo6666

Hello all,

I never thought I'd be in this situation, but me & my partner accrued a combined debt of £26,000 with Credit cards, loans, and Catalogues.

When minimum payments for all combined were about £1000 per month combined, and balances weren't reducing, we had to get in touch with Stepchange & have been on a DMP (Debt Management Plan) since late June.

Some of the Creditors claim they've not received the proposals from Stepchange (PayPal & Zopa) despite them being sent out 3 times, but the remainder are receiving payments.

Anyway, to cut a long story short - I've heard that there can be benefits moving to token payments, as debt can be written off or balances reduced in the long run with settlement offers as debt devalues.

Some of my Creditors are now defaulting me, and apparently I should have waited for defaults before contacting Stepchange to arrange a DMP - but I've only just found this out.

Anyway, is it possible to move to token payments from my DMP?

Circumstances here have changed recently & income has reduced.

I'm not sure what to do.

Many thanks.

sourcrates

Basically you can do whatever you choose, it is a free country after all.

Token payment may encourage your creditors to sell the debts on quicker than maybe they would normally have done.

Debt purchasing companies will continue accepting whatever you can afford, get saving an emergency fund for those settlement offers further down the line.

damo6666

Many thanks for your response, Sourcrates.

I phoned Stepchange just a couple of hours after publishing this topic, and asked - "when the creditor defaults me, and my debt is handed to a debt collector, is it OK for me to just make token payments of say £1 per month to them".

Stepchange responded, saying - "no, you must go through us as it's a breach of our terms".

As Stepchange are being like this, would you suggest I depart from them when I default with most of my creditors & just token pay the debt collectors as previously mentioned?

As mentioned, I've only been with Stepchange a little while, but there are default letters trickling in already.

fatbelly

Everyone on a dmp should re-evaluate their payments in October as energy costs will be going up so much.

That is an opportunity for you to present your creditors with a new scenario where you can only afford a token offer to them.

I think that's more easily done by you doing that yourself.

Edit: Just noticed you also said that your income has reduced. If you continue trying to make the agreed dmp payments based on an income that doesn't exist anymore you will quickly be back in the situation where you were when trying to make the contractual payments on the debts. Maybe scrap that dmp and restart after October

gwynlas

Stepchange have a good reputation with creditors because of their equal treatment to all therefor you cannot change to token payments with some but not others. What you can do is inform Stepchange that you need to review agreed arrangements due to income drop.

sourcrates

DMP`s through the debt charities mean you must follow their rules, doing it yourself means you follow your own rules, the point fatbelly makes about utility bills is a good one to note.

damo6666

Thanks so much for all the replies.

I can carry on paying the Stepchange DMP until October when energy bills increase. That's no problem.

As soon as the energy increase is evident, I'll inform Stepchange I'm departing, then contact the Creditors (or Debt collectors by then) individually to offer token payments.

This sounds like the best option to me, and I'm grateful for all the input.