Starting DMP

RAS

You need three sorts of money.

Work out your budget, statement of affairs and have an account from which all your normal monthly living costs are paid. Some people like to split it into smaller pots that they can keep an eye on.

There are some costs that you pay, or should pay less frequently. You know when Christmas, birthdays happen, the car, contents insurance needs paying, if you are likely to visit family twice a year, go away for a holiday. Add up those costs, divide by 12 and add a bit. That sum is transferred from your ordinary account shortly after you are paid into a budgeting account. You know what you included in that sum, so only use it for those items. 

Anything else that would have gone to your creditors, goes into an emergency fund to cover real emergencies. Not you need new tyres, they are in the budgeting account, but a bust cooker, fridge, dead car. 

You can start the emergency fund by just transferring what you have been paying to your creditors into the emergency fund, because you won't be able to get credit in the future, at least not at a reasonable price. Even £500 helps as a starter. 

Some people do not really have enough income to cover both basic living costs and budgeting accounts, which is when you have to trim the budgets but still aim to put a little away for emergencies each month.

Beck50

To, sortingthisout2023 with my situation I was paying more than I earnt, so when Stepchange did my budget they worked out I would have around £235 left to pay my creditors,  so it's this that I have been saving, having that EF has helped because last week a stone hit my windscreen resulting in me having to pay an excess of £75, I am still receiving a rain forest worth of paper letters through the  post giving me deadlines to pay by, but am still holding out for defaults so I can then start my DMP.
Everybody's situation on here will be different but having the comforting support of others going through or having gone through debt and talking through these hurdles is a massive help to me.

RAS

Keep saving that £235 into your emergency fund.

And review your actual outgoings at the end of the month. Did you pay for anything that wasn't in the budget but is an irregular but not unexpected part of your annual spends? If so, adjust the budget to make a monthly allowance towards it.

Once you've got a decent emergency fund, then consider a budgeting pot for things like holidays, car repairs, tax etc. You can often save quite a bit by paying annually rather than monthly, and every little bit adds up.

Expect it to take at least 6 months for the defaults and remember the letters are computer generated and many are legally required to alert you to the financial consequences of not paying. 

sortingthisout2023

Thank you so much all for your replies. One of my creditors is natwest. I have an overdraft with them and also a small credit card. My wages get paid in to there. Should I open another basic bank account that my wages could get paid in to? 

RAS

Definitely, as soon as possible. Make sure the new bank is not associated with Natwest.

Do check with your personnel department when you need to tell them about the change of bank. It may be too late to do it this month, but you may be lucky. Speak to them tomorrow.

Do not do it as a switch, as that allows your creditors to just take money from the new account to pay authorised DDs.

sortingthisout2023

RAS said:

Definitely, as soon as possible. Make sure the new bank is not associated with Natwest.

Do check with your personnel department when you need to tell them about the change of bank. It may be too late to do it this month, but you may be lucky. Speak to them tomorrow.

Do not do it as a switch, as that allows your creditors to just take money from the new account to pay authorised DDs.

Thank you for the info as I more than likely would have done it as a switch! 

RAS

I'm not absolutely sure BUT that was the explanation given for DDs being taken from a new account on the BR forum.

sourcrates

If you switch accounts, all existing payments, DD`s/SO`s etc are also transferred over.

And you would need to cancel them all.

Opening a new basic account from scratch, with no switch involved, is the way to go.

sortingthisout2023

Thanks guys. Regarding my natwest overdraft do I just ignore it and let the fees add up?

sourcrates

sortingthisout2023 said:

Thanks guys. Regarding my natwest overdraft do I just ignore it and let the fees add up?

You can ask your bank to stop interest on your OD, this can be done from most banking apps.

Tell them your entering debt management, and once your banking is moved over, ask them to close your account.

Any debt will then go to collections, but it can take a while with bank accounts.