DMP and Defaults

Hi guys, I've never posted before but have constantly been reading and searching through over the last week.

About 2 weeks ago it really hit me what a mess I had gotten into financially, I started googling and came across Stepchange and various routes to take (I was completely oblivious to the fact there were even options and I just thought I had to carry on struggling - very naive of me after reading here ha)

I hastily filled out Stepchange ready to start a DMP as I thought this was my best and only option. After doing more research and reading I then came across all of the support and information on here.

So I just wanted to double check that I was making the right choice/putting the right things into place after reading so many useful things on here.

• I have emailed stepchange to advise them I do not wish to commit to the DMP at this time so that is now cancelled.

• Over the last few days I have set up a new basic bank account (I have a loan and overdraft with my current bank)

• I have manually set up and switched all my priority DD and informed payroll for my wages with my new bank details.

• I have completed a budgeting tracker - income vs outgoings and included everything in there from school uniforms to school trips to haircuts etc.

• I am going to stop making payments for my debts and wait for the accounts to default before entering into a DMP with them.

And the biggest thing I have taken from this is ensuring I create a good emergency fund which I will definitely be building and adding to whilst not making payments to my debts which was the main thing that made me realise the importance of not rushing into a DMP and not needing the use of credit again in the future.

My biggest worry is obviously around missing payments and all the phonecalls/threatening letters that come along. But I was also worried that am I essentially making my debt worse with all the late fees/interest that is going to be added to my accounts?!

If there's anything else you feel I need to be putting into place/prioritising then please let me know.

I feel so different about my approach this time round and feel I'm definitely in the right space to get debt free and manage my finances better. 

Thanks 😊 
«1

Comments

  • sourcrates
    sourcrates Posts: 28,549
    First Anniversary Name Dropper First Post Photogenic
    Ambassador
    So far so good, you are doing all the right things.

    The "collection process" as it is referred too, is nothing to worry about, yes you will get calls/letters etc, but you can safely ignore such contact, no enforcement action will be taken at this early juncture.

    Whilst it is true interest and charges may continue to accrue until your accounts default, there are things you can do about that, you can complain and ask for them to be refunded, but usually most DMP`ers find that once their accounts get sold on, later in the process, settlement offers can be on the cards, which enables you to pay less than is owed to settle the account permanently.

    So what you get charged at the beginning, usually gets written off at the end.
    I’m a Forum Ambassador and I support the Forum Team on the Debt free wannabe, Credit file and ratings, and Bankruptcy and living with it boards. If you need any help on these boards, do let me know. Please note that Ambassadors are not moderators. Any posts you spot in breach of the Forum Rules should be reported via the report button, or by emailing [email protected]. All views are my own and not the official line of MoneySavingExpert.For free non-judgemental debt advice, contact either Stepchange, National Debtline, or CitizensAdviceBureaux.Link to SOA Calculator- https://www.stoozing.com/soa.php The "provit letter" is here-https://forums.moneysavingexpert.com/discussion/2607247/letter-when-you-know-nothing-about-about-the-debt-aka-prove-it-letter
  • Rob5342
    Rob5342 Posts: 1,363
    First Post First Anniversary Name Dropper
    Forumite
    edited 6 December 2023 at 7:45PM
    Well done on getting started sorting it out, it sounds like you are doing all the rights things (especially letting accounts default as following Stepchanges approach can be a lot more damaging for your credit report in the long term. I was in a similar position and struggled for years doing anything I could to meet the minimum payments - payday loans, drawing cash out of cards to pay into my bank account to pay the same card off. I got into a real mess but when I started a DMP things changed literally overnight, the immediate stress was gone and I could start learning living on a sustainable budget and actually start paying things off.

    The letters and calls can seem a worry at first but they aren't too bad at all really. Once they've called you once you can block the number so they don't call again, and the letters all pretty much say the same thing and they can't do anything until they default you anyway.
  • Thank you so much!

    I've seen a lot of people saying defaults are taking a longer period of time for companies to apply, after a set amount of time is it best to get in touch and request a default or just continue to ride it out and make the most of continuing to adjust to a budget and building up emergency funds?
  • Rob5342
    Rob5342 Posts: 1,363
    First Post First Anniversary Name Dropper
    Forumite
    Yes they seem to be taking longer to default accounts now, supposedly ly to help people but if you are on a DMP it makes things far more difficult for you if they don't default.

    I can't t see any harm in telling them you are waiting for a default of they haven't defaulted your account.
  • sourcrates
    sourcrates Posts: 28,549
    First Anniversary Name Dropper First Post Photogenic
    Ambassador
    edited 6 December 2023 at 10:18PM
    You can`t just request they default your account without good reason, they can only consider doing so once between 3 and 6 monthly payments have been missed, remember these companies want to retain your business, defaulting and losing that customer is a last resort for them.
    I’m a Forum Ambassador and I support the Forum Team on the Debt free wannabe, Credit file and ratings, and Bankruptcy and living with it boards. If you need any help on these boards, do let me know. Please note that Ambassadors are not moderators. Any posts you spot in breach of the Forum Rules should be reported via the report button, or by emailing [email protected]. All views are my own and not the official line of MoneySavingExpert.For free non-judgemental debt advice, contact either Stepchange, National Debtline, or CitizensAdviceBureaux.Link to SOA Calculator- https://www.stoozing.com/soa.php The "provit letter" is here-https://forums.moneysavingexpert.com/discussion/2607247/letter-when-you-know-nothing-about-about-the-debt-aka-prove-it-letter
  • stu12345_2
    stu12345_2 Posts: 800
    First Post Name Dropper First Anniversary Combo Breaker
    Forumite
    edited 6 December 2023 at 10:57PM
    I got a default status after falling into arrears with a Tesco credit card.it  took 6 months.
    I also got a letter today from Tesco credit card saying they have defaulted my account.. 2 years later.
    that doesn't make sense

    but Barclaycard were super fast ,12 weeks and they had defaulted me and sold my debt on.
    pay your debt at your rate.not what the creditor demands.cos they have no power.they aren't the police.
  • Rob5342
    Rob5342 Posts: 1,363
    First Post First Anniversary Name Dropper
    Forumite
    Barclaycard were great with me too, they defaulted my account after three months and backdated the default date to the date that Stepchange had told them I was entering a DMP so my credit report was harmed for the minimal time. They also sent.me a covering letter with the official default notice that was quite friendly in tones.

    Virgin on the other hand were complete *******s, 12 months on a DMP and 18 months of not paying and they have only just defaulted me.
  • gwynlas
    gwynlas Posts: 1,622
    First Post First Anniversary Name Dropper
    Forumite
    You are doing great so far in getting things set up for self managed plan. You could probably speed up defaults by writing to creditors and offering token payments.Keep control by not completing theit SOAs. If you can keep up loan and overdraft payments it is probably best to do so. 
  • RAS
    RAS Posts: 32,468
    Name Dropper First Anniversary First Post
    Forumite
    @Jones_222

    If you make token payments towards debts that are not already defaulted, you get arrangement to pay marker. Those stay on your credit file for 6 years after the debt is paid off.

    Defaults are removed 6 years after they are issued, regardless of whether the debt is paid off or not. 

    Guess which wrecks your credit record longer?
    The person who has not made a mistake, has made nothing
  • Rob5342
    Rob5342 Posts: 1,363
    First Post First Anniversary Name Dropper
    Forumite
    You want them to give up on you and default, don't do anything that will make them try and help you as that will delay the default.
Meet your Ambassadors

Categories

  • All Categories
  • 341.8K Banking & Borrowing
  • 249.7K Reduce Debt & Boost Income
  • 449.2K Spending & Discounts
  • 234K Work, Benefits & Business
  • 606.2K Mortgages, Homes & Bills
  • 172.5K Life & Family
  • 246.8K Travel & Transport
  • 1.5M Hobbies & Leisure
  • 15.8K Discuss & Feedback
  • 15.1K Coronavirus Support Boards