DMP Lump sum - which should I pay first? How much in an EF?

Ktaylor86

Hi All, 

Thanks for your help so far in the forum, I wish I came here before I set up the DMP to get my ducks in a row!

So quick back story I have currently circa £36K in debt across 10 creditors, I started a DMP through Stepchange in March was first payment. 

I did not consult this forum when I set up this DMP so I didn't have a emergency fund set up. Struggled massively over the last few months with bills such as car repairs, dentist (even though we are lucky enough to have NHS dentist!), and we need eye tests too! 
I posted previously in the DMP support thread and have reviewed my budget with stepchange who have lowered my monthly payments and I am now paying £280 which is much more manageable. 

So to my questions - 
I had a collection that I had been collecting for almost 10 years but not added to much at all in the last few years, anyway long story short I sold up my collection, and was amazed at how much I managed to raise - £5,000! 
I did not realise how much some of my collection was worth and turned out to be a fantastic investment. 

So having a lump sum like this will never happen again, I want to use some for an emergency fund and some to pay some debt off. If I am honest I would also like to save some for my three year old, to be able to take him on a holiday. I can't help feeling I have made his life miserable by not being able to do much! 

So how much should I keep for emergencies? 

How much should I allocate to debts and which ones? My thinking was to clear 2-3 smaller accounts and prioritise those not yet defaulted to prevent further defaults?
Or should I try a full and final settlement with ones passed on... is that likely to be successful? 

All have interest frozen apart from the loans, but I will provide the full breakdown of debts and creditors as it stands currently and I appreciate any advice to maximise this opportunity. 

Barclaycard Credit Card - Defaulted Feb 2023 - Passed to PRA Group May 2023 - £6729.58

Nationwide Credit Card - £3880.30 (not defaulted or passed on)

Nationwide Overdraft x 2 accounts - both defaulted April 2023 - £928 between them (not passed on). 

Natwest Overdraft x 2 accounts - merged to one account and passed to Wescott but not defaulted - £1880 total 

Zopa Loans (I have 3 loans as below all Zopa) 
Loan 1 - £6,157.22 (I received a demand for payment but no default notice, but online account shows default) 
Loan 2 - £11,626 default notice received in June 
Loan 3 - £5192.70 default notice received in June 

Studio catalogue account - £578.68 not defaulted or passed 


Many Thanks

R.j.Belcher

Hi I have been in a dmp for 2 years with now £28k paying £260pm. My mum passed away last year and left me with about £12k. I put £5k in my emergencey fund, got a new bathroom fitted, carpets, and did the garden fence. I had a couple of small debts that I paid off c£1.5k. Personally I would save the whole £5k as your emergencey fund etc. Within a few months our £5k has gone down to £3k after work on my wifes car and a water leak needing a new tank. Paying a couple of thousand off that amount will matter little in the long term.
Rob

RAS

Save the whole £5k into your emergency fund. Don't worry about the holiday for a three year old. He'll get more out of a holiday in a couple of years time.

An odd beach day if you are within decent travel time. The top seat of a bus on an interesting route, a local activity based museum in cooler weather. Locally, there's a little river taxi, £1 each way, and little ones might even go free.

You may now understand how your previous budgeting made it hard to keep out of debt? Get that embedded in your life style and then think about full and finals.

Not least as that the defaults are so new that you won't get any sort of discount yet, and could in a couple of years. 

I'd put £2k in easy access, and the rest into a notice account paying a better rate. Maybe three month? Or 6 month. Look at your defaults and finances in 18 months, give notice and see if you can get F&F discounts then.