Self managed DMP

Dmptogo

Morning,long story cut short.

My son has 3 loans one was taken out to pay the other two off.Which he didn't do?

Have written to all off them and cancelled direct debits.This was 3 months ago.
I think he has standard letters from all of them stating arrears must be paid or action will be taken.

Have worked out a budget it with him which leaves about £100 a month to pay the creditors.Original payments where over £400 a month.

What is the best course of action moving forward.

Already moved his wages into another bank account due to overdraft in other account he has.

None of the loans are secured loans.

He has a car on HP which he is frightened of them taking it off him,needs it for his work.

Any help much appreciated

Regards.

Grumpelstiltskin

Have the debts defaulted yet?  Has he been saving an emergency fund since he has stopped paying?

When he does start paying again he pays what he wants, not what they are asking for and he need not give them any details of his income whatever they say.

sourcrates

As long as he maintains the car payments it can`t be taken by anyone, remember, these debts are of the unsecured, and non essential variety.

Very shortly these loans will be assigned to debt collectors, who will write to him, he can then pay what he can afford monthly on the DCA`s website without having to engage with anyone.

Dmptogo

Thank you,None of them have defaulted yet.No emergency fund as yet, due to having 3 weeks off sick with a shoulder injury wages for this month barely covers essentials.

Grumpelstilskin-Thank you Are you sure he doesn't have to give details of his income?

Socrates-Thank you

Grumpelstiltskin

If he is doing self managed he pays just what he wants and he doesn't have to justify his payment by giving any details, the creditor has 2 choices, accept what he pays or get nothing from him.

He wants to wait until the loans have defaulted and once he is back on his feet he should get an emergency fund together, for instance for unplanned car repairs etc.

gwynlas

When he is able to recommence payments ensure that these are affordable so that he can learn from his mistakes. He does not have to complete a SOA for any creditor but it might help him if he completes one for himself to see where his money is going and to help him budget appropriately. This is hopefully his lightbulb moment but it is incredibly easy to repeat mistakes of the past.

RAS

Your son really needs to take ownership of the process if he is to learn how to manage his finances long-term. He'll find it useful to complete a Statement of Affairs (SOA), see sourcrate's signature above of the link. 

So he can see where his money has gone previously work with 6 months statements from when he was not paying off the two loans. Were the loans acquired to pay off credit cards? He really needs to work out how he got into debt in the first place and why he didn't pay off the first loans with the third one. That means being honest with himself at least if he's been using substances, gambling, partying or just going off on expensive trips.

Then he needs to do an SOA which deals with the essential spends he needs to cover going forward.

The 3 weeks off work with a shoulder injury (contact sports? work injury?) and no pay highlights the need for an emergency fund. So next pay day everything not going on essential spends go into an emergency fund. No money towards the unsecured debts.

He also needs a fund to cover annual expenditure like insurance,  holiday, presents. Surprisingly those come round every year at the same time and he can set up a budgeting fund or funds to cover them. If he can't afford them within the allowance he's given himself they don't happen.
 
The car is a secured debt, so he has to keep paying that in the short-term. But he needs to read the contract as often they can be returned once 50% is paid off and it might be cheaper to given it back and get a little run around.

By the way, consolidation doesn't work for most people, they just heave a huge sigh of relief once the immediate problem has gone and start spending again. In their heads, they've "paid off the debt", rather than just shifted it to an easier but more costly payment plan.

He will get letters, which may reference legal action. Advise him to come here for help.

Dmptogo

Hi,
Thank you for the answers.
Moving forward just curious regarding the advice not to provide a S.O.A.The creditors are asking for this information either from him or a DMP company.He will be doing a Self managed DMP and at the moment trying to get an Emergency fund together.

Just some further questions to get clarification.

1)If he doesnt provide his SOA can they go straight to a CCJ and will that force him to provide the SOA to the courts.
2) One of his creditors(CREATION) have sent another letter giving him a further 7 days to provide a Financial statement.What is the best course of action?

3) Any other advice much appreciated

Grumpelstiltskin

Basically just ignore anything the creditors say only thing that does need dealing with IF it turns up is a letter before action which must be sent by snail mail.

Are you sure your son is 100% on board with this? He really needs to come on here himself rather than  letting you do everything for him

Dmptogo

Grumpelstiltskin said:

Basically just ignore anything the creditors say only thing that does need dealing with IF it turns up is a letter before action which must be sent by snail mail.

Are you sure your son is 100% on board with this? He really needs to come on here himself rather than  letting you do everything for him

He is on board works full time has 3 kids and helping out with a football team.I have more time..Or think I have 

fatbelly

Dmptogo said:

Hi,
Thank you for the answers.
Moving forward just curious regarding the advice not to provide a S.O.A.The creditors are asking for this information either from him or a DMP company.He will be doing a Self managed DMP and at the moment trying to get an Emergency fund together.

Just some further questions to get clarification.

1)If he doesnt provide his SOA can they go straight to a CCJ and will that force him to provide the SOA to the courts.
2) One of his creditors(CREATION) have sent another letter giving him a further 7 days to provide a Financial statement.What is the best course of action?

3) Any other advice much appreciated

Yes, it's good form to give them something. Our soa (https://www.lemonfool.co.uk/financecalculators/soa.php ) will be fine. Just make sure that the numbers justify the offer you are making, and doesn't give them any information that you want to keep secret

They won't go straight to court action as they have 6 years to start a claim. Just because you have a claim doesn't mean it goes to a ccj. Even if you have a ccj doesn't mean it will ever be enforced.

Creditor deadlines generally mean nothing. However if you ever got a formal preaction letter with reply form and 30-day limit then you do have to respond