DMP application

Dan276

Hi All, I have decided to start a DMP with Stepchange today due to my debts getting more and more harder to deal with. 
I haven't missed a payment as of yet and I have about 45k with 7 different creditors,meaning 90% of my salary goes to debt repayments every month. Reading through the forum it looks like I made a mistake as if I should have defaulted on these accounts before setting up a DMP? 

Ex_welsh_borrower

Firstly well done in making a positive intervention over your finances

It's not a mistake and either way I suspect if you've only just contacted StepChange then the DMP is not up and running yet. The advice usually is to not jump into the DMP so you can stop making payments, let each creditor default the accounts which starts the 6 year clock before they are removed from your credit history.

While you wait for that to happen you live to your new budget and save the would be payments for an emergency fund as living with a DMP you'll have no access to credit lines and will have a budget each month to follow.

You don't have to do this though, you can just start the DMP it's up to you do you want to make a start on repaying the debt or ensure that your credit rating is impacted for the least amount of time.

You've come to the right place for advice so wait to see a few other responses too. Good Luck!

Dan276

Thanks for your reply Ex_welsh_borrower! I am very scared with the following consequences this may have, but also kind of relieved that I have made my first step towards becoming debt free. 

Grumpelstiltskin

Dan don't make the mistake of jumping into a DMP too quickly.

You really need to stop payments and let the debts default.

As already said save every penny of the money you would have paid into an emergency fund as you won't have access to credit and sure as houses something is going to need replacing/repairing in the future

sourcrates

Dan276 said:

Thanks for your reply Ex_welsh_borrower! I am very scared with the following consequences this may have, but also kind of relieved that I have made my first step towards becoming debt free. 

The consequences of non-payment are fairly low key at first, your accounts go to collections, who may then instruct a debt collector to write to you, the collection process can take a number of years sometimes, nothing happens quickly, only when your debts have been sold on, do the consequences of non-payment ramp up any, debt purchasing companies are usually the ones who instigate legal action if you continue to ignore them, doesn't normally tend to happen before this point.

Dan276

Well, I've already applied for a DMP earlier today and will see what happens. What's bothering me is I will have to remortgage in about 3 years. 

Grumpelstiltskin

Your remortgage shouldn't be a problem if you stay with the same lender.

With the DMP just tell Stepchange you want to delay it a few months.

Rob5342

It's down to you how you want to handle it. You can start repaying with Stepchange now, but it's likely you will get some arrangeent to pay markers which won't drop off until 6 years after the debt is repaid. Alternatively you can stop paying to start with and you'll be much more likely to get defaults which come off 6 years after the default date. The advice here is usually to get the defaults so your credit history is clean sooner. I started with Stepchange as I was new to it and concerned about the consequences, but as it turned out two of them defaulted me anyway and it was pretty inconsequential (they just sold them to debt collectors and I carried on paying them the same payments). After a year or so I stopped paying the non defaulted ones to get defaults on them, and having been through it all I wish I'd done that to start with.

Sly72

Rob5342 said:

It's down to you how you want to handle it. You can start repaying with Stepchange now, but it's likely you will get some arrangeent to pay markers which won't drop off until 6 years after the debt is repaid. Alternatively you can stop paying to start with and you'll be much more likely to get defaults which come off 6 years after the default date. The advice here is usually to get the defaults so your credit history is clean sooner. I started with Stepchange as I was new to it and concerned about the consequences, but as it turned out two of them defaulted me anyway and it was pretty inconsequential (they just sold them to debt collectors and I carried on paying them the same payments). After a year or so I stopped paying the non defaulted ones to get defaults on them, and having been through it all I wish I'd done that to start with.

So default first then get DMP. Re creditors I owe money to is it worth sending them a letter to say i am having issues paying and seeking advise?

sourcrates

Sly72 said:

Rob5342 said:

It's down to you how you want to handle it. You can start repaying with Stepchange now, but it's likely you will get some arrangeent to pay markers which won't drop off until 6 years after the debt is repaid. Alternatively you can stop paying to start with and you'll be much more likely to get defaults which come off 6 years after the default date. The advice here is usually to get the defaults so your credit history is clean sooner. I started with Stepchange as I was new to it and concerned about the consequences, but as it turned out two of them defaulted me anyway and it was pretty inconsequential (they just sold them to debt collectors and I carried on paying them the same payments). After a year or so I stopped paying the non defaulted ones to get defaults on them, and having been through it all I wish I'd done that to start with.

So default first then get DMP. Re creditors I owe money to is it worth sending them a letter to say i am having issues paying and seeking advise?

Hmmm, you can do, if you wish, the thing is, you're wanting defaults, if you write all nice and cheery telling them things are not too good just now, they are more likely to put your account on hold, or on an arrangement to pay, rather than outright default you.

This strategy requires you to think in a totally opposite way to what you are used too, you don`t get defaulted by being nice and informative, you get defaulted by not paying and ignoring all correspondence.

Your future dealings where creditors are concerned, are going to be with the companies that buy your debts, not those that currently hold them, that is what a default is, the end of the agreement, the end of the financial relationship between you, you are splitting up, going your separate ways, you should not care what the other side is thinking, do you understand what I mean now?

It can be difficult to get used to, but in the long run it will benefit you.

Rob5342

It's a bit of an odd sietup really. If you tell them you are struggling and want to make payments then they generally treat you far worse than far worse than if you completely ignore them (by putting arrangment to pay markers instead of defaults on your credit file)

Barclaycard were great with me, the defaulted me even though I was on a debt management plan and backedated the default to the day they got the dmp letter so I had the earliest possible default date. Virgin on the other hand were terrible, a year on a dmp and 8 months of not paying and they still haven't defaulted me.