DMP

Beck50Beck50 Forumite
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Hi, can anyone tell me, I'm about to sign up for a DMP as this is what stepchange recommended,  I'm also just starting breathing space, but do I still make payments to my creditors as with new month around the corner some are due or do I stop and wait for my stepchange plan to start?
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  • edited 30 August 2022 at 9:18PM
    SusieTSusieT Forumite
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    edited 30 August 2022 at 9:18PM
    If you are starting a DMP it is normally advised not to pay anyone (and do not start the DMP) until the debtors have issued defaults. Save any payments you would have been making so that you have an emergency fund that you can use instead of credit if the washing machine breaks down or similar.
    The reason being that if you start a DMP your credit history will show AP (arrangement to pay) markers until you have finished paying in full, then they will stay on the file for 6 years from then. If you default first, then the account will go from the credit file 6 years from the default date regardless of there being a balance still outstanding or not. So if for example the DMP were to run for 7 years, the accounts would be gone from the credit file before they are all paid, whereas with AP markers they would be there for another 6 years, so in this case 13 years in total.
    It is possible to get defaults backdated, but it is not guaranteed that it will happen. 
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  • Beck50Beck50 Forumite
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    Thanks glad I asked now so don't pay anyone until I default on payments and then set up the DPM, should I cancel my direct debits that 2 loans get paid by credit cards are paid by myself when due.
  • RASRAS Forumite
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    Yes, cancel your direct debits and stop the payments to the CCs. If that leaves you with any surplus after paying for essentials, set up a new "budgeting" account for things you currently pay monthly or annually to help you manage better and a saving account for emergencies. 

    The budgeting account allows you to save for things like Christmas, birthdays, clothing as insurance, holidays (known planned costs) etc. The emergency account is for replacing broken kit, unexpected funerals (SHTF events) etc.
    The person who has not made a mistake, has made nothing
  • sourcratessourcrates Forumite
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    The reasons why we recommend defaulting first, are twofold.

    First of all, once defaulted, all interest and charges automatically stop. 

    Second, it gives you a clear 6 year window till your credit file recovers, if you get arrangement to pay markers instead, they will stay on file for 6 years after the debt is repaid, so potentially quite a long time.

    Stopping payment also allows you to save an emergency fund as well.
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  • Rob5342Rob5342 Forumite
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    I'd suggest stopping all repayments now, and and start living on your dmp budget and putting what you will be paying to the dmp into a savings account instead. Once the debts have defaulted then start the dmp. That way you will have been living on the dmp budget for a while and will know if it's workable or needs adjusting, and will have some money to fall back on if necessary.
  • gizmo111gizmo111 Forumite
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    Make sure that you have a bank account where you do not have debt also. 
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  • bamgbostbamgbost Forumite
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    Hi Guys... Sorry to jump on this thread but..
    I have started a DMP, but totally the opposite to what you are all saying. Now im worried.
    I would rather they default me now... and take the 6 yrs than to do double the time, as being implied above.

    What can I do now? Stop the DMP?
  • Beck50Beck50 Forumite
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    Your not alone, I'm still worried as today I should have paid MBNA, but I haven't and I'm hoping they'll default me but my bank took their  loan payment today so that can't default until next month so I can't start my DMP now until next month, but I'm on breathing space and it's meant to be reviewed in 30 days and I don't want to appear as I'm not dealing with my debts, I wasn't aware of all this until I started the thread, maybe you need to ring who ever your DMP is with and check, 
  • edited 1 September 2022 at 7:58PM
    SusieTSusieT Forumite
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    edited 1 September 2022 at 7:58PM
    Beck50 said:
    Your not alone, I'm still worried as today I should have paid MBNA, but I haven't and I'm hoping they'll default me but my bank took their  loan payment today so that can't default until next month so I can't start my DMP now until next month, but I'm on breathing space and it's meant to be reviewed in 30 days and I don't want to appear as I'm not dealing with my debts, I wasn't aware of all this until I started the thread, maybe you need to ring who ever your DMP is with and check, 
    Try to relax, nothing will happen until the first payment does not go through. After that you will get letters, scary letters with big bold black font, then scary letters that may have big bold red font, and they will tell you all the terrible things that could/may/will happen if you do not pay them immediately or call them. When you ignore these, and normally after at least 3 missed payments they will at some point default you. At that point interest and charges will stop, and if you have been living on the budget that you are going to use when you start your DMP (and by then it will include the price increases for utilities) you will have put away what you would have been paying to Stepchange (or whichever charity you are going with), so will have a small emergency fund to fall back on if a machine goes bang or similar, rather than have to use a credit card.
    It is a marathon rather than a sprint, and you could be looking at up to 6 months before you get defaulted, so no rush, just wait for now and when the defaults come in that is the time to start the DMP. To the card companies you are not a person, you are just a number among tens or hundreds of thousands of other numbers on a database or spreadsheet who are not paying. They will not be looking at the debt and saying ooh that Beck50 is not paying us, its just an account number that is progressing along the columns until it hits the "Send default" date on the computer. Most of us here have had the jitters, panic and horrible feelings when letters arrive, but the default one is wanted rather than dreaded as the credit companies would like to have you think. You can do it, and they will get their payment, it will just take a bit more time if they do not default early.
    Credit card debt - NIL
    Home improvement secured loans 30,130/41,000 and 23,156/28,000 End 2027 and 2029
    Mortgage 64,513/100,000 End Nov 2035
    2022 all rolling into new mortgage + extra to finish house. 125,000 End 2036
  • Beck50Beck50 Forumite
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    Thanks for the info SusieT, like you say they know how to play this were as I'm knew to this, during covid my bosses made us remain open and we made them a lot of money, as it was a timber yard so everyone was doing DIY, and during all this they said to all the staff when things calm down we will sit down and sort wage increases out, 2 years on and nothing so cost of living has pushed me over the hill like many other people on here, so any advice is much appreciated. 
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