DMP Advice

alvysinger

Hi all, 

I've been reading through loads on posts on here this morning so was inspired to post myself. I've got a DMP with StepChange, having cleared about £19k of debt with a previous DMP a few years ago (and then almost immediately, stupidly, getting myself straight back into debt, lesson to be learned for next time I manage to get debt-free). It's currently standing at £3k and I pay off £375 a month, which is do-able most months, others I can struggle. This month for example is proving to be an expensive one and I'm already not sure if I'll be able to pay it. My main problem is that I used to be able to top up my earnings by around £1k a month through freelance work, which has dried up. 

I've seen talk on here about it being good practice to default on debts before getting a DMP, which I didn't do and I'm not totally sure what it means. I'm due a DMP review, but when I put my updated costs and income in, I just get told I need to call them, presumably because it would mean taking my payments down. I guess I should call them but before I do I wondered if there's anything else I'm missing that I could be doing here. Any advice?

Floss

Have you thought about going self managed? Then you could adjust your budget to your needs.

Also, do you have Arrangements to Pay markers on your existing debts? If so then you really need to stop payments & allow them to default (stash the money into an emergency fund). AP markers stay on your credit file for 6 years after the last payment but defaults drop off 6 years from the default date.

RAS

Get all of your credit reports (for free) and find out now whether your debts are marked default or AP (Arrangement to Pay).

Defaults fall off your credit record 6 years after the default date. 
AP markers stay on your credit account for 6 years AFTER the debt is paid, so it can be much longer.

If you've got AP markers I'd be inclined to self manage and sort them out ASAP and pay the defaulted debts over time.

And you might just get full and final settlement on some defaulted debts.

alvysinger

Thanks for the advice. Looking at my credit report and looks like I did default on the various accounts last May which was when I took out the DMP and used Breathing Space. I can't see any sign of AP markers.

Grumpelstiltskin

Right the amount you pay on a DMP is entirely under your control.

If you are not happy with the amount Stepchange want you to  pay then go self managed and then you can tell the creditors how much you will pay them.

Rob5342

You should only be paying what you have spare to the DMP, so if your income has dropped you should be paying less towards it. If they have defaulted the interest should have stopped and they will drop off your credit report 6 years after the default date, so there is no reason to try and get them paid off soon

I self manage mine and there's nothing to it, I just set up standing orders to each creditor. It's much more fleexible as I can choose the amounts as I like.

Sly72

Rob5342 said:

You should only be paying what you have spare to the DMP, so if your income has dropped you should be paying less towards it. If they have defaulted the interest should have stopped and they will drop off your credit report 6 years after the default date, so there is no reason to try and get them paid off soon

I self manage mine and there's nothing to it, I just set up standing orders to each creditor. It's much more fleexible as I can choose the amounts as I like.

I am going self managed do as accounts have almost defaulted and been sold on, are creditors funny about the amount you pay them, do they all get the same amount each month, any advise would be good.

RAS

The traditional charity method divides the payment pro rata depending on how much you owe the creditor. If you Bloggs twice as much as Twissel, you pay Bloggs twice as much.

The self managed one, you decide how much to pay, although the creditors may blench if the amount goes up and down all the time.

Better to pay a fairly consistent amount to each, and occasionally make an additional payment, or try for full and finals on the older debts, assuming you've checked they are valid.

Rob5342

It's up to you what you pay them. I carried on with the Stepchange amount with most of them, but paid more to the lowest one as I'd had a pay rise. When I'd paid that oneoff I added those payments to the next lowest etc.

They happily take anything at the moment from what I understand. The only one to question the amount I ogger d asked if I was sure I could afford it.

alvysinger

How do you go about becoming self-managed?

Rob5342

You just need to tell Stepchange that don't want to use them any more and cancel the direct debit, and then contact the creditors telling them that you will be managing it yourself and set up payments to them. It might be easier to do it just after this months payments have been sent.

I suggest writing to the creditors rather than phoning them so you have everything recorded. I also suggest that you set up payment by standing order so that you are in complete control. The often like you to set up direct debit or debit card payments so they are in control of taking the money, but you should be able to get their bank details to set the the standing order.

I used this website to generate the letters and financial statement, but DMPs are informal arrangements and you can say and pay whatever you want.

https://nedcab.cabmoney.org.uk/dmp.asp