DMP Help

Rob5342

I found Stepchange very good at doing what they proposed, but they have a very fixed system of always splitting payments equally between creditors. Thats partially because they are funded by the creditors so they have a bit of a balancing act in the advice they give, having a take an approach that helps people but also keeps their funding coming in. The reason I went self managed is I wanted to have more flexibility in my repayments - stopping paying one debt that I'd found was unenforceable, stopping paying another so it would default and paying more to a small one to clear it. Stepchange wouldn't have supported that sort of approach. I did find it helpful having them take care of the repayments at first, but when I went self managed I found it easier doing it all myself instead of having to think about what they thought.

I have mixed feelings on Stepchange now. One one hand my credit report has probably been harmed for two years longer than it needed to have been as I followed their advice to start paying straight away. On the other hand if it hadn't have been for them I might not have even started tackling my debts. Knowing what I know now I'd advise anyone to go self managed over using Stepchange.

As to how long defaults take, the proverbial piece of string comes to mind. Barclaycard defaulted me after a few months and backdated the default to when my DMP started. Virgin on the other hand didn't default until I'd been on a dmp for a year and then hadn't paid anything for 16 months

You don't have to deal with creditors that much really as you.call.all.yue shots. You just stop paying until it defaults, and some time after that set up a payment to whoever owns the debt and tell them how much they'll be getting.

Greengrass23

Again, thanks for your advice!

How likely would if be for creditors to take further action, like a ccj? Or would this only be the case if I ignored them after defaulting?

sourcrates

Although legal action can be taken at any time after a debt defaults, this is not common practice in this country, which is why we have a debt collection industry.

There are various types of collection agencies, and various stages to debt collection, you can quiet happily sit and do nothing for a good length of time after default, accounts can be passed around multiple collection agencies, who work through a range of standard letters/calls/emails/texts etc, sometimes this can be for years.

It`s really only when your debt is sold, that you need to start taking notice of letters, companies such as Lowell/PRA Group/Cabot/Arrow Global to name but a few, are debt purchasing companies, they buy debts in bulk, for a few quid in the £, and then attempt to get you to cough up the full face value.

If you receive a letter notifying you of the sale of your debt, then you need to take notice.

They will go through a very similar collection process to a normal debt collector, but ignoring companies such as this can lead to legal action being taken, so if in fact you intend to engage with them, this is the point you do so.

As they buy debts cheap, discounts can be plentiful, dependant on the company, and how long they hold your account for.

fatbelly

Although court action on debts is unlikely, the one time when we do see a few claims is when a debt buyer has bought a debt, the debtor identified, but no payments made and the debt is getting near six years since the default.

Because they have to precede a claim with a standard 30-day preaction letter, that is the point where we suggest that people engage. That doesn't necessarily mean 'pay' but it does mean to reply to the letter.

Woodsey10

Hi @Greengrass23 just wanted to say well done for taking steps to face up to your debt. It’s easier to ignore it rather than tackling it head on. It’s also a big change to embark on when you’re used to never missing a payment.

I’m currently in the early stages of a self managed DMP (👍🏻thanks and credit to the advice and knowledge of the many forum members here, especially the veterans👍🏻), 1 account getting close to default so far. It was the same realisation as your situation, that the monthly payments combined were adding up to an unsustainable amount going forward. As I am being paid weekly, and the direct debits were spread out over the month, it made it easier to dismiss the overall amount. 

Just some bits of advice/thoughts accumulated since starting the DMP journey. Some of these may assist yourself or any other visitors to the forum. 

* Upon fully realising my debt situation I believed my only route out would be a consolidation loan. Until coming on here I was unaware of the different options available. 

* The SOA (statement of affairs) was extremely worthwhile doing and investing some time into. Doing this has been the foundation to better understanding my money situation and also retraining myself to favour saving for things rather than continuing on the modern age way of using credit to get things instantly.
 
It highlighted the fact I was not saving for an emergency fund (regardless of DMP), that I was not budgeting for other expenses eg. car maintenance, days out, clothing etc. It also made it easier for me and the other forum members to see areas for improvement such as mobile phone contracts, food shops, insurance costs. 

* Facing your debts and deciding on a path takes some real effort at the start. I can only comment on the DMP route. After that initial effort at the start you then embark on a fairly long wait for accounts to be defaulted and sold on. The wait times vary for everyone. I have used this time to focus on reducing bills where I could and setting up different budgeting pots. Using Monzo bank has helped with this, other bank accounts do exist, I don’t work for Monzo👍🏻. I feel in a much better place mentally since getting my finances into a more organised setup. It’s as good a buzz as writing your thoughts down on paper/notes page, in a list, and ticking them off as you complete them. 

* A DMP is one route to debt free and is a good one, I’m not knocking it. It’s 100% right for me and my situation.  What I feel it won’t automatically do, and it’s easily overlooked, is ensure you don’t end up back in the same situation years down the line. I think it’s really important to say, that alongside running your DMP especially whilst waiting for defaults, you put some time into yourself to reflect on how you got into this situation and see where you can learn, improve yourself to be more resilient to it in future. It’s easy to say, I know. I was at the lowest points of my life when I slipped into a toxic debt world. Unfortunately I’ve seen posts on here where people have got debt free with DMP’s and other methods but are back where they started with thousands in debt again. The DMP has just become a sticking plaster. 

* Realise and then remember that there is no loyalty bonus for keeping up with payments to your lenders. It is a hard thing to stop payments if you’ve been a good customer up until now, I certainly found that mentality switch difficult. It’s much more important to make sure your priority bills are paid first eg mortgage/rent. 

* Your lender/s are not sat focusing on your name on a computer screen somewhere. You are one of many names on a large system that has letters automatically generated.

* Don’t sit in doubt, it’s not worth the stress and worry. You’re not an expert at all subjects.  Ask questions. This forum is a great place to start with plus CAB, step change etc out there too.