Overdraft dmp

I'm not the brightest spark I know but I feel completely lost now, I've been living in my overdraft for so long I'm right at the limit each month, so when payday comes around I'm only a few hundred pound out of it, so by the following week I'm already back in it, dud to dds. Now I honestly thought (now embarrassingly thought) when I included my overdraft into the dmp I would be able to transfer the limit  all over to the new bank I would be setting up, before any dmp payments would go out. So now having been told this can't happen I'm at a loss. Almost feels like I need a month's wage before I can consider going into it a dmp.. I'm ashamed, so please be nice with feedback 
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Comments

  • InAPickle76
    InAPickle76 Posts: 82 Forumite
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    Are you planning on using a DMP provider eg StepChange or going self managed? More often than not, the advice is to stop paying your creditors and use the money to build up an emergency fund for at least 6 months before starting any DMP payments.
  • Ross891
    Ross891 Posts: 13 Forumite
    First Post
    Really 6months? I never looked at it like that 
  • sourcrates
    sourcrates Posts: 28,805 Ambassador
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    edited 31 May 2023 at 7:47PM
    The whole idea of debt management is so that you can live within your means, you budget what you need for the month, and what`s left, your disposable income, is what you pay towards your debts.

    You should not need an overdraft, the whole point of a DMP is so you don`t need to borrow, that`s why they exist, to get you out of debt, not perpetuate it.

    If your saying you can`t live on what you earn, even with nothing for debt repayments, then you need to look at your budget again.
    I’m a Forum Ambassador and I support the Forum Team on the Debt free wannabe, Credit file and ratings, and Bankruptcy and living with it boards. If you need any help on these boards, do let me know. Please note that Ambassadors are not moderators. Any posts you spot in breach of the Forum Rules should be reported via the report button, or by emailing forumteam@moneysavingexpert.com. All views are my own and not the official line of MoneySavingExpert.For free non-judgemental debt advice, contact either Stepchange, National Debtline, or CitizensAdviceBureaux.Link to SOA Calculator- https://www.stoozing.com/soa.php The "provit letter" is here-https://forums.moneysavingexpert.com/discussion/2607247/letter-when-you-know-nothing-about-about-the-debt-aka-prove-it-letter
  • InAPickle76
    InAPickle76 Posts: 82 Forumite
    Name Dropper First Post
    To be honest - most creditors are pretty understanding. As long as you keep communicating with them. We went self managed after a few years with StepChange and honestly it was the best decision we made as we felt more in control. We just sent an income and expenditure sheet to all creditors every year with details of what we could afford and they were happy. We used templates off Nedcab initially which were really good. Just explain that you need to ensure you are paying your priority debts so cannot afford the non priority debts at the moment so will be pausing payments for the next x amount of months but will update them as and when your situation changes. I am sure @sourcrates or @fatbelly or the other knowledgeable peeps on here will explain it much better than me!!!
  • Grumpelstiltskin
    Grumpelstiltskin Posts: 4,232 Forumite
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    Ross don't rush into a DMP.

    You need to understand exactly what you are doing.

    You stop paying all your unsecured debts and use the money to save for an emergency fund as when you are in your DMP you won't have access to credit, no overdraught, no credit.

    You need to open a BASIC bank account with no overdraught in a bank that isn't connected to any bank you owe money to.

    Transfer your wages and DDs for utilities, mortgage/rent, council tax etc. to this account but no unsecured debt.

    Then wait for your debts to default before you start the DMP.
    If you go down to the woods today you better not go alone.
  • Ross891
    Ross891 Posts: 13 Forumite
    First Post
    I'm living in my overdraft, I don't want an overdraft with my new bank account, I just thought that when I listed my debts, loans, cards and overdraft to the limit, that is what it was based on.. So say for instance I'm a thousand pound in my overdraft. And the dmp have it down as a debt of 2000, I would have been able to transfer the other 1000 over to the new account on where my wages were going in, knowing that all creditors would still be getting paid
  • sourcrates
    sourcrates Posts: 28,805 Ambassador
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    edited 31 May 2023 at 8:08PM
    Ross891 said:
    I'm living in my overdraft, I don't want an overdraft with my new bank account, I just thought that when I listed my debts, loans, cards and overdraft to the limit, that is what it was based on.. So say for instance I'm a thousand pound in my overdraft. And the dmp have it down as a debt of 2000, I would have been able to transfer the other 1000 over to the new account on where my wages were going in, knowing that all creditors would still be getting paid
    Ross,

    Your all mixed up and not understanding the concept here.

    The idea of a DMP is to be able to live, and pay your debts.

    To do that, you work out a budget to live on, and what is left, is what you pay to your creditors, it allows you to repay what you owe, at a reduced monthly amount, and still be able to put food on the table.

    You do not keep paying creditors at contractual rates, you pay whatever your disposable income allows you to pay so you don`t need an overdraft any longer.
    I’m a Forum Ambassador and I support the Forum Team on the Debt free wannabe, Credit file and ratings, and Bankruptcy and living with it boards. If you need any help on these boards, do let me know. Please note that Ambassadors are not moderators. Any posts you spot in breach of the Forum Rules should be reported via the report button, or by emailing forumteam@moneysavingexpert.com. All views are my own and not the official line of MoneySavingExpert.For free non-judgemental debt advice, contact either Stepchange, National Debtline, or CitizensAdviceBureaux.Link to SOA Calculator- https://www.stoozing.com/soa.php The "provit letter" is here-https://forums.moneysavingexpert.com/discussion/2607247/letter-when-you-know-nothing-about-about-the-debt-aka-prove-it-letter
  • Ross891
    Ross891 Posts: 13 Forumite
    First Post
    So basically I need a good amount of money in my account before I enter the dmp
  • RAS
    RAS Posts: 32,611 Forumite
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    Ross

    How much do you earn each month?

    How much do you spend each month, excluding repayment of debts?

    So basically, rent, CT, utilities, food, clothes, holiday, Christmas and birthday savings, media, travel to work, car maintenance etc? 
    The person who has not made a mistake, has made nothing
  • Grumpelstiltskin
    Grumpelstiltskin Posts: 4,232 Forumite
    Name Dropper First Post First Anniversary
    You should put your emergency fund in a separate savings account, in your current account you will find it just disappears.

    Please do as much research as you can before you enter a DMP, you really need to be sure you know exactly what it entails and what you are doing.
    If you go down to the woods today you better not go alone.
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