Advice before starting DMP

Sam2018

Im embarrassed to even be here so please be gentle 

After loosing my job during Covid, I’ve exhausted every credit avenue and now at breaking point, having spent the last year taking cash out from credit cards to pay the same credit card minimum monthly payments and all card companies now wanting me to increase payments further due to persistent debt. No more cards on offer and chances of a loan are pretty much zero and cards all maxed out. 

I simply can’t do this anymore. 

I spent 2 years applying for every job under the sun and not getting anywhere, not even a response, but have managed to get a job earlier this year but very low money, only a few hours a week and only coming out with £680 a month. Still applying for new jobs but getting nowhere. 

Card/catalogue debts are a staggering 35k (14 different companies). Repayments currently around £1400 a month 

Thankfully my partner is paying most of the mortgage and other bills but not my debts. I pay around a quarter of costs towards mortgage/utility bills but struggling with that aswell now. 

Questions - if anyone would be so nice to answer with their experience or knowledge 

• If I DMP can any of the creditors come after the house? Joint mortgage, comes off fixed rate in July so already dreading that. 

• 1 credit card is with Natwest. Our mortgage is also with them, along with my bank account. Can I DMP but leave NatWest credit card as being paid as it’s permanent low rate, but worried if I stop paying them, it will massively affect our mortgage rates with them, or they will just refuse to continue our mortgage. 

• Partner aware this will have negative impact on his credit file aswell as we are financially linked through mortgage (separate bank accounts and separate finances otherwise) but will it be exactly as damaging to him, as to me, even though he will carry on paying his own cards, car etc ? Or will the impact be slightly less for him?  He’s not that bothered as long as our house is safe although he will probably need car finance is 3-4 years ish. Would that even be possible for him?  We do not plan to move or remortgage, happy as long as Natwest continue to let us keep mortgage with them. 

• Do I need to declare partners income on incomes/expresses breakdowns, or just my own, as the debts are only in my name and have been accrued solely by me. 

And have I got this correct? 

Stop paying, cancel all the direct debits, make no contact. Ignore phone, emails etc. and save as much as I can each month for emergency pot until companies start defaulting? Then set up DMP (either with stepchance or payplan) and then once more sorted then can change to self DMP to be more in control. 

Then if/when I can get a second job or a better full time job, then can start paying more off to creditors. 

I feel sick to the stomach, haven’t slept properly for months and really can’t believe I am in this situation or that I’m seriously going to just stop paying everyone. Even typing that is making me cry!

I asked partner if we should just split up and I’ll sign the house over to him so I can just run away and hide. He said no and that it’s only money. Easy for him I guess as he’s never struggled and helps me out as much as he can but just can’t keep asking him too. He’s already working too much to keep the roof over our heads. 

What a mess 

kimwp

Hiya! I'm too sleepy to write detailed advice at the moment, but don't worry, it is all solvable!

RAS

Glad your partner has got his head screwed on the right way round. A few quick comments as I have to get out.

Starting with the house. Technically,  a creditor could eventually apply for a charging order which means their debt would be paid when the house was sold. If you read blueback's long thread on the Myth of Charging Orders, you'll understand that as the house is jointly owned it would be recorded as a restriction. As long as you discuss this with your solicitor before you hire them, then this is not a problem. But this is very unlikely anyway, particularly if you are paying something.

And when your fixed term ends, just pick the best option offered by Natwest. Even if you default on the credit card, it won't affect those options. If you want to keep paying that credit card, you really need to self manage as credit charities will pay pro rata and won't allow you to favour one over another. Regardless, you must stop using the card.

I'd get a new basic bank account elsewhere, preferably one with pots like Monzo, so that you can manage your annual spends more effectively; anything from clothes to Christmas and insurances.

It can be solved, so sleep.

fatbelly

I'll pick off a few questions

These are nonpriority unsecured debts. There is no danger to your house

With a self-managed DMP, you can do what you want. However if you give us a statement of affairs we'd like a joint one so we can see the whole picture

Car finance is not as difficult as other forms as it is secured to some extent on an asset

sourcrates

Sam2018 said:

I'm embarrassed to even be here so please be gentle 

After loosing my job during Covid, I’ve exhausted every credit avenue and now at breaking point, having spent the last year taking cash out from credit cards to pay the same credit card minimum monthly payments and all card companies now wanting me to increase payments further due to persistent debt. No more cards on offer and chances of a loan are pretty much zero and cards all maxed out. 

I simply can’t do this anymore. 

In the words of Mark Knopfler (Dire Straits) - "the bottles empty and there`s nothing left".

Yep, been there alright, had same feelings of embarrassment, guilt, shock even, that it had come to this.

All of the above applied to me as well, had borrowed to keep paying stupid credit cards, as in those days, I was unaware they were just non priority debts, and no one actually cared if they were repaid or not, once you got past the script reading call handlers, demanding money I just did not have.

I did my research and discovered there are many ways to pay back problem debt, all you had to do was get the right (free) advice for your circumstances, and the rest just falls into place naturally.

Unsecured means just that, your house is jointly held with your husband, there will be no issues there, and as others have commented, re-mortgaging with an existing lender does not require a credit check, in most cases.

Decide on your plan of action, self managed DMP would be best I`m guessing, stop making payment to non essential debts, take some time to get that settlement fund going, whether you tell your creditors your plans or not is up to you, defaults tend to come quicker if you ignore them, keep in mind debts get sold or assigned to collectors, the creditors you have now, may not be the same ones you will end up with later, there is no loyalty in money lending.

Lastly, stop panicking, once this plan gets swung into action things will run as smoothly as if you were making normal repayments, so  r e l a x.

Sam2018

kimwp said:

Hiya! I'm too sleepy to write detailed advice at the moment, but don't worry, it is all solvable!

Thank you - I am literally reading everything I can to try and help me reduce the panic state I’ve been living in for such a long time. 

Sam2018

RAS said:

Glad your partner has got his head screwed on the right way round. A few quick comments as I have to get out.

Starting with the house. Technically,  a creditor could eventually apply for a charging order which means their debt would be paid when the house was sold. If you read blueback's long thread on the Myth of Charging Orders, you'll understand that as the house is jointly owned it would be recorded as a restriction. As long as you discuss this with your solicitor before you hire them, then this is not a problem. But this is very unlikely anyway, particularly if you are paying something.

And when your fixed term ends, just pick the best option offered by Natwest. Even if you default on the credit card, it won't affect those options. If you want to keep paying that credit card, you really need to self manage as credit charities will pay pro rata and won't allow you to favour one over another. Regardless, you must stop using the card.

I'd get a new basic bank account elsewhere, preferably one with pots like Monzo, so that you can manage your annual spends more effectively; anything from clothes to Christmas and insurances.

It can be solved, so sleep.

Thanks - Ive had a skim through the charging order thread but will keep reading. 

Really unsure what to do with Natwest but I’ll maybe make the January payment and give myself the extra month to figure it out. 

I’ll look at Monzo aswell. Thank you !

it’s going to be very strange having money “in pots” and saving as I’ve literally relied on credit to pay everything for such a long time now. 

I did manage to fall asleep eventually. The last few weeks have been extremely difficult. 

Sam2018

sourcrates said:

Sam2018 said:

I'm embarrassed to even be here so please be gentle 

After loosing my job during Covid, I’ve exhausted every credit avenue and now at breaking point, having spent the last year taking cash out from credit cards to pay the same credit card minimum monthly payments and all card companies now wanting me to increase payments further due to persistent debt. No more cards on offer and chances of a loan are pretty much zero and cards all maxed out. 

I simply can’t do this anymore. 

In the words of Mark Knopfler (Dire Straits) - "the bottles empty and there`s nothing left".

Yep, been there alright, had same feelings of embarrassment, guilt, shock even, that it had come to this.

All of the above applied to me as well, had borrowed to keep paying stupid credit cards, as in those days, I was unaware they were just non priority debts, and no one actually cared if they were repaid or not, once you got past the script reading call handlers, demanding money I just did not have.

I did my research and discovered there are many ways to pay back problem debt, all you had to do was get the right (free) advice for your circumstances, and the rest just falls into place naturally.

Unsecured means just that, your house is jointly held with your husband, there will be no issues there, and as others have commented, re-mortgaging with an existing lender does not require a credit check, in most cases.

Decide on your plan of action, self managed DMP would be best I`m guessing, stop making payment to non essential debts, take some time to get that settlement fund going, whether you tell your creditors your plans or not is up to you, defaults tend to come quicker if you ignore them, keep in mind debts get sold or assigned to collectors, the creditors you have now, may not be the same ones you will end up with later, there is no loyalty in money lending.

Lastly, stop panicking, once this plan gets swung into action things will run as smoothly as if you were making normal repayments, so  r e l a x.

Thank you so much - it’s bizarrely weird to know I’m not the only one who’s got themselves in this state and in such a mess. Very embarrassing, confusing and stressful. 

As long as we don’t loose our house, nothing else is that important really. We worked and fought so hard to buy our own house, to loose it would completely destroy me. 

Not going to lie, I’m not looking forward to harassing phone calls. I can easily ignore emails and letters.  I did wonder if I changed me phone number on all my accounts now to a different number and then leave that phone turned off for a while - or would the creditors still keep my old number and try ringing it ? 

Sam2018

fatbelly said:

I'll pick off a few questions

These are nonpriority unsecured debts. There is no danger to your house

With a self-managed DMP, you can do what you want. However if you give us a statement of affairs we'd like a joint one so we can see the whole picture

Car finance is not as difficult as other forms as it is secured to some extent on an asset

Thank you! I need to spend some time getting statement of affairs done but happy to post once I’ve done it. As I know I’ll need it anyway for DMP - just not sure if I. Red to give creditors just my own income or include my partners income aswell?

Grumpelstiltskin

There is no need to panic, you will find when you stop paying ( I hope you have canceled the payments ) nothing terrible will happen. It can sometimes take quite a few weeks before your creditors even notice.

You want to get a different current account as soon as you can and save up as much as you can until you are ready to start your self managed DMP.

OK you might get letters from your creditors listing out what they could do, just because they could do things doesn't mean they will. The letters are worded to try and frighten you into paying them, don't panic if you get any of these letters come back on here for reassurance.

Sam2018

And thank you all - just not being judged or ridiculed has made me feel a little better