About to begin a DMP with £53k of debt.

wildstyle2019

Hi everyone, 

I posted a thread a few months back discussing my financial difficulties and the solution was to hammer my credit cards before the interest periods started. Whilst I have tried to do that, our mortgage has now gone up an additional £300 a month and we have had to replace our car. The interest free periods are about to end in January on 3 of my cards and given that I can barely make the payments now I have been advised by Step Change that a DMP is the best course of action. I am not eligible for any 0% bank transfers.

Thankfully, I have been reading about DMP's on here and can see that its beneficial to make sure your cards have defaulted before starting the DMP. I am about ready to start so I just wanted to make sure I have understood correctly....

I have so far managed to save £500 as an emergency fund and will obviously continue to save when I cancel the direct debits to my creditors. 

So do I simply cancel the direct debits and wait? 

Am I right in understanding that this may take months before they default? 

The debt is solely mine, not my husbands so can I confirm that his credit wont be affected in all this? 

When I stop the payments do I just ignore them when they try to ring/ email/ send letters? 

I still haven't decided whether to go with Step change once they have defaulted or to do it myself. 

I think that's it really. It seems pretty straightforward really but completely unnatural to just stop paying! I have worked hard to maintain my good credit rating but I can't see anyway out. I just want to be debt free and not rely on credit anymore. 

Grumpelstiltskin

1  Do you have any joint accounts with your husband?

2  Yes cancel the direct debits

3 Yes ignore them unless you get a letter before action ( highly unlikely )

4  Block all their numbers, do not speak to them

5 Have you sent CCA requests to see if the debts are enforceable?

That will be a start on your journey.

fatbelly

If that's a joint mortgage I'm afraid he is linked to you

Rob5342

They can take 3-6 months+ to default. Some creditors take a frustratingly long time to default in the misguided belief that that they are helping you, but hold out and save the money in the mean time.

Waiting for the defaults can be a good chance to try out your budget - live on the budget and put what would have been the debt payments into savings.

I'd recommend managing it yourself when it comes to paying, it's really no effort (just setting up a standing order to each creditor and emailing them to say what you're paying) Stepchange have a very rigid approach of splitting the payments proportionally between the debts which causes more problems than it solves, especially if you want to make a full and final offer to just one of the debts.

While you are waiting you could make affordability complaints, I've had some very substantial interest refunds doing that.

A Grumpelstiltskin says, making CCA requests is something to look at at some point. Personally I'd wait until the debts have been with DCAs for a while before doing that as they will be more difficult for them to find them

wildstyle2019

Hi everyone, thanks for replying. 

Yes I have a joint account and mortgage with my husband. He is fully aware I planning to do this but I am concerned about how much it will affect his credit rating. 

My personal account and joint account are both with First Direct - we have no debts linked to these and we're not overdrawn. 

I am definitely considering managing it myself as I certainly can see the benefits. 

I haven't read enough about CCA requests yet but its definitely something I will consider. 

Grumpelstiltskin

Wildstyle I am a bit confused.

You say £53K debt yet on your previous thread it was much less.

Unsecured Debts[/b]

Description....................Debt......Monthly...APR

Virgin Credit Card ............4192......50........0

Virgin Credit Card ............4928......50........0

Virgin Credit Card ............7924......85........0

Santander......................5602......56........0

Tesco..........................6043......60........0[b]

Total unsecured debts..........28689.....301.......-  

Also you never made it clear how much your husband contributes to the total household bills and also how the debt occurred in the first place and why it is all in your name.

fatbelly

It' probably not going to affect him that much. You already have the joint mortgage and I presume he can cope without further borrowing or the latest credit card. The main thing is that he's aware of what you are doing.

wildstyle2019

Grumpelstiltskin said:

Wildstyle I am a bit confused.

You say £53K debt yet on your previous thread it was much less.

Unsecured Debts[/b]

Description....................Debt......Monthly...APR

Virgin Credit Card ............4192......50........0

Virgin Credit Card ............4928......50........0

Virgin Credit Card ............7924......85........0

Santander......................5602......56........0

Tesco..........................6043......60........0[b]

Total unsecured debts..........28689.....301.......-  

Also you never made it clear how much your husband contributes to the total household bills and also how the debt occurred in the first place and why it is all in your name.

Hi, 

Sorry for the confusion. 

The additional debt that makes it up to £53k is a loan I am paying back to my husband. That wouldn't come under the DMP but I had to factor it in when working out my debt, income & expenditure. 
My husband contributes to half of all household bills and groceries. Its my debt as I have lived from credit card to credit card and already had debt when I met my husband. 

sourcrates

What actually happens once you stop making your regular contractual repayments to your debts ?.

Well first late payment notices/messages will be triggered, if payment is still not made, notices of arrears will be next.

You will start getting missed/late payments fee`s added at £12 a time, plus added interest.

Once you get to three months behind, your account will likely be transferred to "collections" a creditors "in house" collections team, who will attempt to contact you to find out the reason for non payment.

Up to this point the entire process is all computer generated, the letters/calls/emails/texts will continue, this is called "collection activity" and is something every creditor will go through, this could last 6 months or more, dependant on the creditor.

Now usually by this time your account will have been defaulted for non payment, you will receive a "default notice" in the post, a very carefully worded, official looking document, which outlines the steps you need to take to remedy the breech to your accounts terms and conditions within 14 days, if you do not take the action required, a default may be placed on your credit file, it will then list a whole load of "further action" that may take place if you do not comply.

The choice of "Your account may be passed to a debt collector" is about 3rd option down, and in 99.9% of cases, that is the chosen option, the debt may be sold to a debt purchaser, that would be a "legal assignment", or passed to a collector to manage, an "equitable assignment".

Only a debts owner can take legal action against you.

Once defaulted, you are free to engage and make whatever payment arrangements you choose, of course you do not have to wait for defaults, a history of token payments will eventually result in default, but may also trigger "arrangement to pay markers" instead, which stay on your credit file 6 years after your debt is settled.

So you have to play the game to your best advantage, and that`s what it all boils down to in the end, its just a game between you and them, if brinkmanship is your thing, you will enjoy it, its a numbers game with them, who can procrastinate the most, who backs down first, it requires wit, sarcasm, bullishness, strategy, and most of all knowledge, good luck with it, enjoy the game.

wildstyle2019

That's super helpful. Becoming less daunting about managing it myself now although my husband is now very concerned about how much it's going to affect his credit file. I wish there was a way of getting more clarification about this. 

Grumpelstiltskin

There is no way of knowing at this point in time how much his file will be affected but surely with your amount of debt he won't be wanting to take more debt out in the future.

Are you sure now you know how to budget and you will as a family be able to live without credit.