Mortgage with same bank as credit card About to start a debt management plan

Shropshiremum72

My partner and I are about to enter a debt management plan but I have a credit card with the same mainstream bank as our mortgage is with. We are currently on a fixed rate but worrying about the credit card being included in the dmp but unable to leave it off either. Has anyone been in this situation please and what happened? 

Thanks 

sourcrates

Make sure you have a "clean" bank account to use, not one that is associated with your debts.

Your mortgage, as long as payments are maintained, will be perfectly fine, they are two very different forms of borrowing, one will not affect the other in any tangible way.

With whom are you entering debt management?

One of the debt charities hopefully, you can go self-managed you know, then you can run things however you choose.

Shropshiremum72

We have done our budget with Stepchange but haven’t yet missed a payment. Reading this forum it looks like we should get them defaulted first before starting to pay. 

Rob5342

Shropshiremum72 said:

We have done our budget with Stepchange but haven’t yet missed a payment. Reading this forum it looks like we should get them defaulted first before starting to pay. 

How you handle it is your decision. The reasoning for defaulting first is that once defaulted the debt will drop off your credit report 6 years after the default date. If you don't default first then you would get an arrangment to pay marker which doesn't come off your report until 6 years after the debt has been cleared. The chances are you will get defaults anyway before the debt is cleared, but it could well be a few years later than they would have been if you defaulted first. Also once they have defaulted they will be passed to debt colectors who will be more likely to accept a reduced full and final settlement offer, if you came into some money a few years down the line that could save you a lot overall.Waiting for defaults would mean getting phone calls, letters etc from your creditors chasing the missing payments. If you have been on a dmp for a while you can become confident enough to simply ignore them, but if you've just started and it's all new then it can cause quite a lot of worry.

The mortgage and credit card being with the same bank shouldn't make any difference, the mortgage will be classed as priority debt and the credit card as a non priority one. If you stay with the same mortgage provider then there is no problem switching to a new deal as it doesn't involve a credit check. I have four defaults on my credit file and got a new fixed deal with no trouble at all.

sourcrates

If you haven`t missed a payment, then how are creditors supposed to know your struggling ?

The way they normally know is because you have missed payments, if the wheels are about to fall off, much better to get it over with, stop your payments for a few months, save up that all important emergency fund, if you get defaulted, great, if not no matter, once you have a fund your happy with, start your DMP.