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

RAS

Do you owe anything to the bank into which your salary is paid? Or to any other bank in the same group?

If so, you need a new basic bank account, and to talk to HR to organise the payment of your salary into the new account before you stop paying any of those accounts. Do not switch bank accounts as that will also transfer all the DDs paying your debts. Set up essential DDs manually. 

You also need to remove the house phone numbers from the relevant current debts before you stop paying them.

You could stop paying any other accounts tomorrow, and then send the letters the day after. Otherwise, I'd leave it a week or so after you remove the house phone number to stop paying.

CurlyTop11

RAS said:

Do you owe anything to the bank into which your salary is paid? Or to any other bank in the same group?

If so, you need a new basic bank account, and to talk to HR to organise the payment of your salary into the new account before you stop paying any of those accounts. Do not switch bank accounts as that will also transfer all the DDs paying your debts. Set up essential DDs manually. 

You also need to remove the house phone numbers from the relevant current debts before you stop paying them.

You could stop paying any other accounts tomorrow, and then send the letters the day after. Otherwise, I'd leave it a week or so after you remove the house phone number to stop paying.

I currently bank with First Direct which is where my salary is paid into. I have a small interest free overdraft with them, but could pay this off in a month. I don't think they own/are linked to any of Lendable, Zopa, Halifax, MBNA, RBS or Fluid, but could someone confirm please? I do have a Monzo also.

I have removed house phone numbers a couple of days ago from the ones that I think had it. My DD dates are 3rd - 8th. Do the companies get a notification when DD is cancelled or could I cancel tomorrow and they wouldn't know until payment was missed?

EssexHebridean

You sound to me like a pretty perfect example of someone who a DMP could really help. Your "lightbulb moment" has clearly struck, and formalising the arrangement to pay your debts will both feel very constructive which may help, but also - and perhaps more importantly - it will force you to completely step away from a lifestyle funded by credit - sometimes that enforced break can really help with building new habits. 

Are your parents aware of your situation? If not then I think you need to sit down with them and gently explain that you've been a bit daft, and got yourself in a tangle financially, but you're in the process of sorting it out. Explain to them that if anyone calls on the phone asking for you in connection with debts, they should say that a clear instruction has been give for contact to be in writing, and that the person is not to contact by phone again, then hang up the receiver. 

You don't mention your parents situation I don't think - bear in mind that often when parents find out that their "child" (regardless of age!) is in debt their temptation is to "try to fix it" - so to offer to take loans, dip into savings etc. No matter how tempting, please don't be tempted to take up on any offers of that sort. You need the process - to make the sacrifices, say no to the nights out, learn to manage a budget and fit your lifestyle to your available budget. It might be lengthy, but it will bring you out the other side stronger and more knowledgeable financially.

Rob5342

CurlyTop11 said:
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?

That approach sounds sensible to me. I would suggest working out a budget that includes debt repayments, emergency fund savings, planned expense savings, and full and final offer savings, and start living on that now with the planned debt repayments temporarily directed into one of the savings pots. That will give you a chance to see if it's realistic budget. Once they have defaulted the interest will be stopped so you can start paying the planned payments them, all of mine have been sold quite quickly after defaulting. Just write and tell them what you will be paying. Once they are sold there should be some prospect of full and final offers being accepted, obviously the companies involved want to maximise their investment so there will be some negotiation involved.

CurlyTop11

EssexHebridean said:

You sound to me like a pretty perfect example of someone who a DMP could really help. Your "lightbulb moment" has clearly struck, and formalising the arrangement to pay your debts will both feel very constructive which may help, but also - and perhaps more importantly - it will force you to completely step away from a lifestyle funded by credit - sometimes that enforced break can really help with building new habits. 

Are your parents aware of your situation? If not then I think you need to sit down with them and gently explain that you've been a bit daft, and got yourself in a tangle financially, but you're in the process of sorting it out. Explain to them that if anyone calls on the phone asking for you in connection with debts, they should say that a clear instruction has been give for contact to be in writing, and that the person is not to contact by phone again, then hang up the receiver. 

You don't mention your parents situation I don't think - bear in mind that often when parents find out that their "child" (regardless of age!) is in debt their temptation is to "try to fix it" - so to offer to take loans, dip into savings etc. No matter how tempting, please don't be tempted to take up on any offers of that sort. You need the process - to make the sacrifices, say no to the nights out, learn to manage a budget and fit your lifestyle to your available budget. It might be lengthy, but it will bring you out the other side stronger and more knowledgeable financially.

Thanks for the tips @EssexHebridean - I will take onboard. To be honest I would never ask for help from others in terms of that type of help. I know that I have got myself into this situation, so I need to get myself out of it too. I would/will obviously lean on people for advice, but I understand that I need to go through the process to come out the other side better. I know it isn't going to be easy and it may get worse before it gets better with stress (chasing) but that's just a part of it. Putting rigid processes in place for future budgeting is now going to be a key part of my tasks!

Rob5342 said:

CurlyTop11 said:
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?

That approach sounds sensible to me. I would suggest working out a budget that includes debt repayments, emergency fund savings, planned expense savings, and full and final offer savings, and start living on that now with the planned debt repayments temporarily directed into one of the savings pots. That will give you a chance to see if it's realistic budget. Once they have defaulted the interest will be stopped so you can start paying the planned payments them, all of mine have been sold quite quickly after defaulting. Just write and tell them what you will be paying. Once they are sold there should be some prospect of full and final offers being accepted, obviously the companies involved want to maximise their investment so there will be some negotiation involved.

Thanks, will put a proper budget together. It's surprising when you actually write things down and try and forward plan for them, how much you actually should be saving. Hopefully the stress of the DMP/initial chasing will be less than the stress of worrying about every time I need to have the money for something.

Rob5342

CurlyTop11 said:

Hopefully the stress of the DMP/initial chasing will be less than the stress of worrying about every time I need to have the money for something.

For me the all the what if's I went through before starting my DMP were far worse than what actually happened. Once I'd had a few letters I was just thinking oh look, another one. Remeber that they have to give you plenty of opportunity to get back on track before they default you, so just let them get on with in. 

JCS1

Just checking if your exams are accountancy? Professional memberships often have rules on debt and insolvency so worth checking. From memory DMP are OK but formal insolvency can cause issues.

CurlyTop11

Rob5342 said:

CurlyTop11 said:

Hopefully the stress of the DMP/initial chasing will be less than the stress of worrying about every time I need to have the money for something.

For me the all the what if's I went through before starting my DMP were far worse than what actually happened. Once I'd had a few letters I was just thinking oh look, another one. Remeber that they have to give you plenty of opportunity to get back on track before they default you, so just let them get on with in. 

I have cancelled all direct debits now. I'm not sure if this will work for the ones that are next week, or whether it won't cancel in time, but I guess we will see. Very nerve-wracking to do it to be honest as now going into the unknown. Also as much debt as I have, I've never missed a payment. On the flip side, I do feel a little better that I will be able to put some money to the side now and towards MOT too. Thanks for all your input here as someone who is currently going through a DMP. Appreciate it.

JCS1 said:

Just checking if your exams are accountancy? Professional memberships often have rules on debt and insolvency so worth checking. From memory DMP are OK but formal insolvency can cause issues.

I know quite a lot of professional bodies are strict with insolvency etc. I have read up as much as I can (it seems a grey area) about a DMP, and like you say it seems that it will be okay. I think (and hope) that that will be the case.

Martico

Good luck @CurlyTop11, you seem to have your head screwed on and I'm sure you'll get through this. Keep us updated as things progress, won't you🤞👍

in_need_of_direction

Just echoing what JCS1 said.  Even if it doesn’t preclude you from professional body membership, some employers can take a dim view.  I did 15 years in professional services firm and it would have been strongly frowned upon.  Also, are you due a significant salary uplift in the next year?