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Question About TPP

Hello,

I have been on a TPP since last September. I want to renew. I would like to stay on the TPP for the maximum amount of time possible. 

I hit a snag with the budget review. I have 4 agreements, of which I am still within the contractual agreement. I haven't defaulted and this will not happen. I have 5 defaulted accounts, and I am paying £1 toward each balance, every month. The person conducting my budget review seemed to think that I had to close my "good" agreements to stop the interest accruing. To be honest, I don't want to do this. I don't see why it would be necessary? The agent said that it would be seen as "preferential treatment" and those creditors could "possibly take further action."

The approximate balances are:-
£3300
£1300
£950
£700
£85

I don't want to lose my flat or get a CCJ, so I have set up a £25 per month repayment for each balance. Would I be able to do this through a DMP without defaulting my other agreements? In an ideal world, I would go another 12 months at least with the TPP, if I may.
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Comments

  • fatbelly
    fatbelly Posts: 21,596 Forumite
    Part of the Furniture 10,000 Posts Name Dropper Cashback Cashier
    TPP = token payments i presume

    You are now proposing to pay everyone £25 per month?

    Might be esier to do this yourself

    Why not split the £125 on a pro- rata basis?

    Ps court action is very unlikely. I'll be bold enough to say it won't happen. What would they stand to gain?

    Why would you lose your flat? Is one of those accounts rent arrears?
  • Conan1Sett
    Conan1Sett Posts: 114 Forumite
    Fourth Anniversary 10 Posts Name Dropper
    fatbelly said:
    TPP = token payments i presume

    You are now proposing to pay everyone £25 per month?

    Might be esier to do this yourself

    Why not split the £125 on a pro- rata basis?

    Ps court action is very unlikely. I'll be bold enough to say it won't happen. What would they stand to gain?

    Why would you lose your flat? Is one of those accounts rent arrears?

    No rent arrears. 3 credit cards, an overdraft and PayPal Credit.

    I was hoping to continue with the TPP for longer. 

    I think the agent at the debt charity didn't really understand what she was doing. 
  • Which debt charity did you speak to?

    As Fatbelly says you can do this yourself.

    If you go down to the woods today you better not go alone.
  • Conan1Sett
    Conan1Sett Posts: 114 Forumite
    Fourth Anniversary 10 Posts Name Dropper
    Which debt charity did you speak to?

    As Fatbelly says you can do this yourself.

    It was Step Change. 

    So do I contact each creditor directly and propose to pay £1 per month? 
  • RAS
    RAS Posts: 33,826 Forumite
    Part of the Furniture 10,000 Posts Name Dropper
    edited 18 August 2023 at 8:30AM
    You've got a little over £7k debt.

    As you are paying £1 each month, all your debts are likely to have Arrangement to Pay (AP) markers. These aren't much better than defaults, but they damage your credit rating for much longer. It could take you 10 years to clear your biggest debt at £25 per month, so the AP markers will damage your credit rating for the next 16 years. And the creditor will keep charging interest, so it could be longer.

    If the debt is defaulted, you know that the default will come off after 6 years and the fees and interest are frozen.

    So you pay less if you default and your credit record would improve a lot sooner.

    Debt charities running a DMP will take your total debt and share the monthly payment pro rata. So they'd pay c45% of the monthly payment to your biggest creditor, not £25. And less to the smaller creditors. And they'd insist that any other creditor with whom you currently have debts that aren't currently in arrears was in the DMP. And you'd not be allowed to use your other accounts to run up more debt.

    However, it does make sense to clear the smallest debt on an AP marker ASAP as that's one less AP marker dragging you down. 

    If you do your own DMP, you can do what you want but if you just pay your biggest creditor £25, they might go for CCJ as they'd get more money faster. At least they'd have to default the debt first so it would clear from your credit record sooner. 
    The person who has not made a mistake, has made nothing
  • fatbelly
    fatbelly Posts: 21,596 Forumite
    Part of the Furniture 10,000 Posts Name Dropper Cashback Cashier
    Well you can do that. But your first post says 'I have set up a £25 per month repayment for each balance.'

    So it's going to look a bit odd that you say 'I can afford £125' and then propose to pay £5.

    Am I getting confused between the four accounts where you want to continue paying contractually and the five you only want to pay £1 to?

    You might be best to post a statement of affairs and look at the whole situation afresh

    https://www.lemonfool.co.uk/financecalculators/soa.php
  • Conan1Sett
    Conan1Sett Posts: 114 Forumite
    Fourth Anniversary 10 Posts Name Dropper
    RAS said:

    Debt charities running a DMP will take your total debt and share the monthly payment pro rata. So they'd pay c45% of the monthly payment to your biggest creditor, not £25. And less to the smaller creditors. And they'd insist that any other creditor with whom you currently have debts that aren't currently in arrears was in the DMP. And you'd not be allowed to use your other accounts to run up more debt.

    However, it does make sense to clear the smallest debt on an AP marker ASAP as that's one less AP marker dragging you down. 

    If you do your own DMP, you can do what you want but if you just pay your biggest creditor £25, they might go for CCJ as they'd get more money faster. At least they'd have to default the debt first so it would clear from your credit record sooner. 

    So I would not be allowed to continue my contractual repayments with my other creditors, with whom I have not defaulted?

    What actually happens with a CCJ? How would they get their money faster? 
  • Look put CCJs to the back of your mind, they are not going to happen.

    If you stopped paying everything now it would be months before things started to move and then only slowly.

    Put your SOA up here with details of the debts and interest rates and we will advise you on the best way forward.
    If you go down to the woods today you better not go alone.
  • Look put CCJs to the back of your mind, they are not going to happen.

    If you stopped paying everything now it would be months before things started to move and then only slowly.

    Put your SOA up here with details of the debts and interest rates and we will advise you on the best way forward.

    Well, I have this:-

    Personal Loan
    Personal Loan
    Credit Card
    Klarna

    All four of these are within monthly contractual repayments. 

    I have five default accounts.

    In total, that is 9 creditors. Would all 9 of them need to be on the DMP? As in, a mandatory requirement? 
  • You really need to give us much more detail before we can advise you.

    If you fill out an SOA  (link in Fatbellies post)

    Format it for MSE.

    You need full details of debts, interest rates, defaults etc.
    If you go down to the woods today you better not go alone.
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