Is it time for a DMP or try to ride the storm?

Martico

One option for the next month may be to pay minimum +£1 on each card, and see what you can save to start building a buffer. That can tell you what's realistically possible. Keep any buffer in the highest interest instant access savings account that you can, and reassess in a month?

RAS

A few basics.

If you decide to do the DMP, you write to all the creditors and tell them to contact you in writing only. Remove the house phone numbers now as an additional safety feature.

What you need are defaults ASAP. So you don't do breathing space or token payments. You do stash every last farthing into your emergency fund, because you won't access to more credit. 

Creditors can't take legal action until they've defaulted the account. You will get letters demanding repayment of the whole sum, as this is a legal requirement before they default the debt.

Once the default is registered, you need to set up payments to the creditor. At which point they will usually calm down, maybe check in once a year.

But, you've got to start budgeting properly for everything. The car, insurance, MOT, a replacement car. Do you never buy your parents or friends a birthday or Christmas card or present? You know the dates and need to start putting aside a little each month to cover that.

Presumably, you've also got to buy a wedding present?

You're incredibly lucky to live with your parents and I'd suggest you increase your contribution to the household, financially and practically. You really don't want them getting fed up and you having to move out. Around here a room is £500 ish plus bills. You can still knock out the debt in less than 3 years.

You also need to make sure your mates know you can't afford expensive jollies, multiple rounds and meals out. At your age, there will probably be more weddings, so you may have to pick which you can attend. 

You then need to start saving towards moving out.

CurlyTop11

Martico said:

One option for the next month may be to pay minimum +£1 on each card, and see what you can save to start building a buffer. That can tell you what's realistically possible. Keep any buffer in the highest interest instant access savings account that you can, and reassess in a month?

That's basically what I did the last couple of months and hasn't really worked. I did have around £350 buffer not £250 and that has dwindled. Also really conscious that I don't currently have anything included in SOA for car maintenance/insurance.

RAS said:

A few basics.

If you decide to do the DMP, you write to all the creditors and tell them to contact you in writing only. Remove the house phone numbers now as an additional safety feature.

What you need are defaults ASAP. So you don't do breathing space or token payments. You do stash every last farthing into your emergency fund, because you won't access to more credit. 

Creditors can't take legal action until they've defaulted the account. You will get letters demanding repayment of the whole sum, as this is a legal requirement before they default the debt.

Once the default is registered, you need to set up payments to the creditor. At which point they will usually calm down, maybe check in once a year.

But, you've got to start budgeting properly for everything. The car, insurance, MOT, a replacement car. Do you never buy your parents or friends a birthday or Christmas card or present? You know the dates and need to start putting aside a little each month to cover that.

Presumably, you've also got to buy a wedding present?

You're incredibly lucky to live with your parents and I'd suggest you increase your contribution to the household, financially and practically. You really don't want them getting fed up and you having to move out. Around here a room is £500 ish plus bills. You can still knock out the debt in less than 3 years.

You also need to make sure your mates know you can't afford expensive jollies, multiple rounds and meals out. At your age, there will probably be more weddings, so you may have to pick which you can attend. 

You then need to start saving towards moving out.

Thanks. I know the above re budgeting now. Yes, I do buy presents ,which again wasn't budgeted. To be honest, I knew it in the past too, just never actioned it and that has been one of the factors in leading to this situation I am now in. Just embarrassing really.

I agree re making more of a contribution, which if I was to set up a DMP, I would build something in for this. I just haven't been able to do so at the moment.

I have already turned down a weekend away with friends next year which has now been booked, so at least I have actually managed to do that for once I guess (even though there's no way I could have afforded it).

With regards to writing to the creditors about written communication only, is this something that you would do prior to cancelling payments? Or is it something that you can only do once you have defaulted or they are chasing you?

If I do go DMP, then I will be trying to save every penny possible. However I manage to get through this situation, I never want to touch credit again! Unless one day I can manage to get a mortgage.

Martico

Ah, so if you've already tried that route and shed a hundred in that time then, yes, a DMP does look like your option. I'll leave that to others to comment, as they have direct experience. Good luck!

in_need_of_direction

can i ask the nature of your work exams?

Rob5342

CurlyTop11 said:

Does anybody know if they threatened that and then you contacted them to say I'm starting a DMP, would this suffice? Or does this then mess up trying to get a default because you are meant to completely ignore them?

There's not really a meant to, it depends how you want to handle it. If you speak to them to begin with and explain you are on a DMP then it will be quite amicable, but you will probably end up with an arragement to pay which stays on your credit record for 6 years after you have finished paying the debt. If you ignore them then they'll get quite ratty with you but will default you and probably sell your debt on. The default will stay on for 6 years from that point and you'll be able to make a full and final offer to whoever owns your debt then.

You need to pick one or the other, I don't see much point in telling them anything if you want them to get fed up and default you. They can't take any legal action until they default you, so you can happily ignore any fuss they make. 

CurlyTop11 said:

I know that either route I take won't be easy/will take a long time to sort itself out. I am just trying to weigh up which is the lesser of two evils stress wise. In an ideal world, I would try and get through to next year when the Lendable loan is finished, but the stress of not having any backup (my fault entriely I know) if anything did go wrong is huge at the moment. Like if I decided against a DMP and then in a couple of months time had a shocking MOT that I couldn't afford, would I regret not doing one more than if I did do one?

 It's a tricky one. Are you going to be able to save up say £600 for when the MOT is due?

CurlyTop11

in_need_of_direction said:

can i ask the nature of your work exams?

They are evening study, so mainly weekend extra study/revision. One more exam and then a case study/report. I'd rather not say what they are, but they are professional exams with a professional body.

Rob5342 said:

CurlyTop11 said:

Does anybody know if they threatened that and then you contacted them to say I'm starting a DMP, would this suffice? Or does this then mess up trying to get a default because you are meant to completely ignore them?

There's not really a meant to, it depends how you want to handle it. If you speak to them to begin with and explain you are on a DMP then it will be quite amicable, but you will probably end up with an arragement to pay which stays on your credit record for 6 years after you have finished paying the debt. If you ignore them then they'll get quite ratty with you but will default you and probably sell your debt on. The default will stay on for 6 years from that point and you'll be able to make a full and final offer to whoever owns your debt then.

You need to pick one or the other, I don't see much point in telling them anything if you want them to get fed up and default you. They can't take any legal action until they default you, so you can happily ignore any fuss they make. 

CurlyTop11 said:

I know that either route I take won't be easy/will take a long time to sort itself out. I am just trying to weigh up which is the lesser of two evils stress wise. In an ideal world, I would try and get through to next year when the Lendable loan is finished, but the stress of not having any backup (my fault entriely I know) if anything did go wrong is huge at the moment. Like if I decided against a DMP and then in a couple of months time had a shocking MOT that I couldn't afford, would I regret not doing one more than if I did do one?

 It's a tricky one. Are you going to be able to save up say £600 for when the MOT is due?

Understood. So you are effectively ignoring them to get them to create a default and wanting them not to actually send somebody to your door (I know not actual bailiffs)? Does it default again once they sell the debt? Or is the initial default the only one for each separate debt? I understand they can be separate times, so your last default is effectively when your 6 years of being off your report would start.

I couldn't save it as it stands without missing any payments. I would just be hoping that I got lucky with the MOT and it wasn't a huge one.

Rob5342

They default when they have given up on you, so you want to act in a way that encourages them to do that. It is very counterintuitive but ignoring them works out better for you in the long run

A debt can only default once. A six year period applies to defaults, payment arrangements and debts becoming statute barred in different ways, so don't confuse them. www.debtcamel.co.uk has a lot of useful articles thst explain this kind of thing.

CurlyTop11

@Rob5342 understood. I wasn't sure if it defaulted with company A and then defaulted once it had gone to debt collectors, but I guess your agreement is with the initial lenders and the debt collectors don't have an agreement and that is what they try and force you to pay with other means?

I think I am leaning towards doing a DMP to be honest. As previously mentioned, I think if I had a big cost come up that I couldn't afford, then I would regret not doing it (I understand my credit rating will be hammered for 6 years). I could save the £1,300 per month current minimum payments though, so even in 3 months I should have £3,900 saved up in a side pot.

If I were to go ahead and do a self managed DMP, from your experience, would this be the correct way to do so:

1) Cancel all direct debits.
2) Save every penny I can from cancelled payments and anything extra.
3) Ignore all correspondence and wait for the companies to default me.
4) Don't interact with them and don't make any payments to them, as defaults won't arise if I do.
5) The debts in theory will then be sold. At this point, do I start to make minimal payments to the DCA? Should I write to the DCA saying I can pay £x and then start making those payments?
6) Keep saving as much as possible and hope that over time, these debts will be sold again and there may be the opportunity to agree full and final offers?

Really appreciate all your help with this.

CurlyTop11

Also, on the above, at what point would I write to them and request written/email correspondence only? After they chase? Does this class as corresponding with them and slow down a default?