Stepchange DMP

ForwardisForward

One question if you don't mind.....if I don't enter a DMP immediately and save what I can, won't those 'savings' need to be sent to the creditors when I start a DMP. Surely if you have 'savings' they will have to be paid over?  

fatbelly

For ordinary credit debts we don't see court action by the original creditor. 

What happens is they they sell the debt to a debt buyer (Lowell, Cabot, PRA group). If it's getting near the six-year point then to protect their 'investment' they will often start a court claim and that stops the statute barred clock from ticking.

By that time if you're on a dmp then there is no point in a creditor taking action because you are acknowledging the debt each month and so the debt is not going statute barred. Also the courts would look at the whole picture and should order you to pay what you are already paying, i.e. the whole process would be a waste of time.

Grumpelstiltskin

ForwardisForward said:

One question if you don't mind.....if I don't enter a DMP immediately and save what I can, won't those 'savings' need to be sent to the creditors when I start a DMP. Surely if you have 'savings' they will have to be paid over?  

No you need those savings, what happens if your washer packs up? No going to your credit card to pay for a new one, your savings or emergency fund is to cover such events

RAS

ForwardisForward said:

One question if you don't mind.....if I don't enter a DMP immediately and save what I can, won't those 'savings' need to be sent to the creditors when I start a DMP. Surely if you have 'savings' they will have to be paid over?  

No, a DMP looks at your income and expenditure, not your assets. "Savings" at their most basic mean you can afford to buy a stash of tinned goods when they are on offer, rather than paying 40% more to buy one a week.

There are, in my mind, two sorts if "savings".

1. We all know when Christmas and family birthdays happen and millions of Brits get themselves in debt regularly because they haven't budgeted for these annual events. Likewise, we know when insurances are due for renewal, the car needs it's MOT, and regularly get into debt because we haven't budgeted for them.

In many cases paying the annual cost as a lump sum is cheaper than paying monthly. Inflation has just added 10%+ to our costs, why add another 10%? 

Add up the cost of all those expected annual bills, add a bit and divide by 12 (or 52). Put that into a budgeting account when the wages come in and you can now manage your irregular expenditure without going into debt.

2. SHTF when the cooker breaks down, the plumbing develops a leak, even worse the roof, and we get into debt. We know the white goods need replacing at least every ten years, some more frequently. It's cheaper to get the gutters cleared than to deal with ruined plaster and decor. 

So we need to save something towards them and as a householder you need an emergency fund if you are not going to get into future debt. Some of this is for big ticket spends we know are needed at some point in the not so distant future, some is "self-insurance", making sure you can deal with the minor disasters rather than go into debt again. And if we know the oven's dodgy and a ring's failed and see a bargain, we can buy that cooker and save potential costs.

sourcrates

ForwardisForward said:

One question if you don't mind.....if I don't enter a DMP immediately and save what I can, won't those 'savings' need to be sent to the creditors when I start a DMP. Surely if you have 'savings' they will have to be paid over?  

What on earth makes you think that ?

Debt management is an informal solution to repaying your unaffordable debt, there are no rules or regulations to follow with this method of debt repayment, even in bankruptcy you would not be expected to just hand over your emergency fund to creditors.

This is not some 3rd world communist state, we live in, we have freedom to do as we see fit under the law, and there is no law that says ForwardisForward has to hand over there savings pot to anyone, so put all thoughts of that nature out of your mind.

Your savings pot is yours to use in emergencies, which you will have, creditors have no rights over things such as this.

Credit agreements contain standard wording which sets out the steps a creditor “could” take to recover money owed.

Much like any contract, it’s usually the cheapest option they opt for, in 99,9% of cases, that involves your debt being assigned to a debt collector, either equitably or legally.

As fatbelly outlined above, it’s only once sold and you continue to ignore that legal action may become necessary.

Rob5342

It can se daunting at first but it's usually pretty straightforward once you get gping.

I stopped paying to get some defaults. I received threaten everything letters but they just got sold to debt collectors who I paid my payments to. Virgin still haven't defaulted me after 9 months. I just told them what I could afford, none of them suggested I should pay more and one asked me if I was sure I could afford it.

ForwardisForward

Wow. So much information and thank you all so much. Best of luck to Lillypoo too.

With regard to savings I guess I thought that because the Stepchange form asked if we had savings so I just wasn't sure so thanks for the explanation.

ForwardisForward

Morning, more questions....

I note the comment regarding not using a switch service when I change banks but I have cancelled the two DD that are active. The rest I pay manually and the overdraft charges are obviously taken straight from the bank account. Would it therefore be ok or is there another reason I shouldn't do it?  I have lots of DD and First Direct are offering £175.

Next, do you start a DMP once the first creditor has defaulted you because you presumably can't pick and choose who you pay, you need to treat them all the same?

Finally, how do I respond to letters when I'm paying nothing. I know how to when paying just what I can afford but when I'm not even sending a pound, how do I explain that?

Hope you all have a good day.

Grumpelstiltskin

' Next, do you start a DMP once the first creditor has defaulted you because you presumably can't pick and choose who you pay, you need to treat them all the same?'

Don't think about starting your DMP until you have built up your Emergency Fund.
Hopefully by that time most will have defaulted.

There is no need to keep contacting your creditors once you have explained you are having problems.

Grumpelstiltskin

Right I think you need to go back to the beginning with this as you are still panicking and not doing what you should be doing.

Firstly read and digest this thread.

Debt-Free Wannabe Sticky - Provit & Statute Barred Letters, Defaults, Help and Guidance, All Here... — MoneySavingExpert Forum

Work out your SOA and post on here so people can see exactly where you are.

Then open a basic bank account ( no over draught ) with a bank that isn't connected with any of your debts.

Transfer all your direct debits for essentials, Council Tax, Utilities etc. no debt direct debits.

Open a savings account and put as much as you can afford each month in it.

Then it will be much clearer.