Self Managed DMP

fatbelly

It doesn't do any harm to send them something like the first letter from this selection 

https://www.stepchange.org/debt-info/dealing-with-debt-problems/sample-letters.aspx

Rob5342

Like lots of people I started with Stepchange and then moved to manging it myself. Stepchange were good but they take a fixed approach of simply splitting the money you have available between your creditors (which isn't surprising as they are funded by creditots). Doing it self managed was a lot more flexible as I could stop paying some of my debts to make them default, pay extra off the smaller ones to get rid of them, and also stop paying ones that I found were unenforcable.

Definitely let them default first, I didn't and 18 months later my Virgin and Aqua ones are still on arrangement to pay so they'll be on my credit file for 18 months longer than they need to be. 

Makingabobor2

@Fixmeup...yes, we were already way behind with payments and robbing Peter to pay Paul. Best thing we ever did, no more sleepless nights and it will get paid, when it gets paid. Most of the defaults are past the 6 years now, so slowly disappearing from the credit file. The number 1 tip I would give you, is to write to your creditors and tell them you will NOT engage with them by phone and they must write or email you. If you get letters asking you to ring them.......don't.

Fixmeup

I've now cancelled all the DD for the cards and loan, however, having never missed a min payment I'm starting to get the fear. It all feels very unnatural to do this and in my head I just want to get on with the DMP. It's really hard to think long term and the benefit of making it worse before making it better. If I default, I'm assuming there will be a load of additional charges and interest added before I start the DMP. How long does it normally take to get the default and start?

Rob5342

It does seem unnatural, but once everything is defaulted it ties thing down a bit and you have a definite date when your credit report will be clear. Once you have that then it clears your mind a bit, instead of the debts occupying your mind constantly you can treat them more like a mortgage - pay them at the beginning of the month and then just focus on staying in your budget.

I think 3-6 months is the normal sort of timeframe, but it depends on the lender.

Fixmeup

Rob5342 said:

It does seem unnatural, but once everything is defaulted it ties thing down a bit and you have a definite date when your credit report will be clear. Once you have that then it clears your mind a bit, instead of the debts occupying your mind constantly you can treat them more like a mortgage - pay them at the beginning of the month and then just focus on staying in your budget.

I think 3-6 months is the normal sort of timeframe, but it depends on the lender.

Thanks @Rob5342. It's reassuring but still left with this feeling its getting worse before better. If they add interest and charges in those 3-6months its potentially adding thousands to the amount I need to repay which could add months if not a year to what my DMP will be.

Rob5342

They will continue to add interest but you can work out how much that will be worst case and how much that would extend your dmp by. Then you can make a choice between a shorter dmp and negative marks on your credit fiile for a lot longer, or a dmp that's a bit longer but with negatives marks on your credit report that will drop off a lot quicker. One other thing to consider is that the sooner the debts are defaulted, the sooner they are likely to be sold to debt collectors. Debt collectors will be more likely to accept full and final settlement offers so if you can do that it may offset some of the extra interest you paid.

It's down to you how you handle it, the important thing is that you consider everything now so you don't get half way down the road with one approach and then wish you'd taken another.

sourcrates

Fixmeup said:

Rob5342 said:

It does seem unnatural, but once everything is defaulted it ties thing down a bit and you have a definite date when your credit report will be clear. Once you have that then it clears your mind a bit, instead of the debts occupying your mind constantly you can treat them more like a mortgage - pay them at the beginning of the month and then just focus on staying in your budget.

I think 3-6 months is the normal sort of timeframe, but it depends on the lender.

Thanks @Rob5342. It's reassuring but still left with this feeling its getting worse before better. If they add interest and charges in those 3-6months its potentially adding thousands to the amount I need to repay which could add months if not a year to what my DMP will be.

It balances itself out later on, when they start making settlement offers to you.

What you may pay initially in added interest etc, you save later when you settle for 50% of what's owed etc.

SusieT

In addition to the above comments, you need to remember that although they maybe  charging interest until they default you, once they have defaulted the interest will stop and it will therefore be an awful lot less interest long term when the DMP starts. 

BlueJ94

sourcrates said:

Fixmeup said:

Rob5342 said:

It does seem unnatural, but once everything is defaulted it ties thing down a bit and you have a definite date when your credit report will be clear. Once you have that then it clears your mind a bit, instead of the debts occupying your mind constantly you can treat them more like a mortgage - pay them at the beginning of the month and then just focus on staying in your budget.

I think 3-6 months is the normal sort of timeframe, but it depends on the lender.

Thanks @Rob5342. It's reassuring but still left with this feeling its getting worse before better. If they add interest and charges in those 3-6months its potentially adding thousands to the amount I need to repay which could add months if not a year to what my DMP will be.

It balances itself out later on, when they start making settlement offers to you.

What you may pay initially in added interest etc, you save later when you settle for 50% of what's owed etc.

I second this.

one loan I had I owed £800 they settled for £200 
more recently 118 I had £1880 and I asked them what they would accept and they came back with 50% and they even said I could pay it over a few months!