DMP

messedup505

Hi, new here but finally had enough and need to sort myself out. Have roughly £20k of credit cards and Next debt. The interest is so high it’s never ending and this month I just cannot afford to pay everything plus our mortgage is going up by £165 per month from November. Need to speak to step change but nervous about making the call. Can I cancel the direct debits and put the amount into an emergency fund then call step change or do I have to speak to them? It’s payday tomorrow and the direct debits are due out next week but money is so short at the minute. 

Thanks in advance for any advice you can give me. 

owl1999

What direct debits are you paying? Is there any luxuries that you can cancel, like Netflix, Amazon Prime etc?

I have been in a similar position. Start by writing down your income for next month and all your outgoings including amounts you'd expect to spend on food shopping, fuel etc. From the outgoings what can be reduced? e.g. weekly takeaways, direct debits, any other luxuries? Have you got a way of making a few quid initially; sell a few clothes, old games, items in the house don't need on Facebook marketplace or Gumtree? If you've spent a lot of money in Next and they are in good condition they will likely sell

Small amounts add up, save the small regular amounts and you'll notice the benefit in time

Floss

messedup505 said:

Hi, new here but finally had enough and need to sort myself out. Have roughly £20k of credit cards and Next debt. The interest is so high it’s never ending and this month I just cannot afford to pay everything plus our mortgage is going up by £165 per month from November. Need to speak to step change but nervous about making the call. Can I cancel the direct debits and put the amount into an emergency fund then call step change or do I have to speak to them? It’s payday tomorrow and the direct debits are due out next week but money is so short at the minute. 

Thanks in advance for any advice you can give me. 

Yes, you can cancel the direct debits and save the money - you'd be advised to do that on here anyway.

It is difficult to ignore calls / letters etc, but if you can do so until your debts default (saving that money every month) you can then set up your DMP with Step Change.

You can also pull together an SOA (there's a sticky with a template) and post it on here so that any money-saving suggestions can be made.

Well done on taking the first steps! 

EssexHebridean

Sounds like cancelling the DDs for the unsecured debts as the first step is a good idea - if you already know that you can't pay everything, then there's not a lot of point in letting the companies take them and then either sending you into overdraft or just leaving you without enough to pay for priority stuff. 

Well done on facing the issue! 

RAS

Do you owe any money to your existing banking provider? Or to any bank in the same group? 

If so, you need to pay any DDs relating to those accounts this month, and set up a new unrelated bank account. Do not use the switching mechanism as that will also move the DDs you want to cancel.

Talk to HR urgently, ask them for the deadline for advising of the new account, and make sure it's set up to receive next month's salary. Manually set up the DDs for mortgage, CT and utilities, plus any other essential services.

gwynlas

You can cancel the direct debits and inform the companies that you are seeking to start a DMP. It is up to you if you try to self manage this or how quickly you contact Stepchange or another debt agency. Some people prefer the flexibility of paying off small debts first so that they see zero balnces whereas Stepchange scrupolously split payments across all debts in proportion.

sourcrates

Cancel your non priority direct debts, no need to be nervous, not been able to afford rocketing prices is not your fault, a lot of us are in the same boat, you simply state your case, it is what it is.

I`m guessing stepchange have heard it all before, from many other clients, it is par for the course to be in financial trouble in order to use their services, so you are not alone in this, the point now, is to take remedial action to turn this situation around, that involves stopping payments to non priority debts, saving a good emergency fund, and finding a way forward that works for you.

There is so much stigma about debt, it makes us paranoid, when really there is no need for this to be an issue, if current payments are unaffordable, you go into debt management and pay it off that way, its a long established method of debt repayments, that debtors and creditors alike are aware of, all you have  to do is set the ball rolling.

messedup505

RAS said:

Do you owe any money to your existing banking provider? Or to any bank in the same group? 

If so, you need to pay any DDs relating to those accounts this month, and set up a new unrelated bank account. Do not use the switching mechanism as that will also move the DDs you want to cancel.

Talk to HR urgently, ask them for the deadline for advising of the new account, and make sure it's set up to receive next month's salary. Manually set up the DDs for mortgage, CT and utilities, plus any other essential services.

Hi, thanks for your reply.  I have a couple of accounts with Lloyds one being the joint account where the mortgage and all household bills come out of. The other account I don’t use but one of the credit cards is with with Lloyds. My personal direct debits and salary get paid into Nationwide. Only have an overdraft on the Lloyds joint account. 

sourcrates

Never bank where you have debts, they can use the right of set off, to take money from any account in your name within the same banking group, to settle a debt you may have with them on another account, you need to bank with someone you have no debt with.

This does not happen very often, but it is a method the bank can use, if they so wish.

Rob5342

It's completely counter intutive but it's better long term to stop paying debts completely and wait for them to default before starting a DMP. The reason for that is because defaults drop off your credit report after 6 years, but if you enter a payment arrangement that stays on your credit report for 6 years after the debt is paid off.

Don't be worried about talking to Stepchange, it feels like a big thing to you now but they deal with people in similar situations. I've used them before and they were completely non judgemental. I felt ashamed and embrassed and put off contacting them for months, but once I had I felt completely different and could begin to see an end to things.