DMP … questions and help please

Jacksonc2114
Jacksonc2114 Posts: 40
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edited 23 January at 10:58PM in Debt-free wannabe
LONG POST ALERT … 🚨

So I’ve been trying to sort my life out for a while … debt is £34k … ( loans and CCards) im
literally just treading water each month … the stress is building the sleepless nights are building .. I need to decide what to do and what’s best ….  I’ve looked at options and a DMP was recommended by Stepchange … 

The online info has said about £500 a month … that’s based on my income after my share of the household bills  (*** i share my home with my husband - we pay 50/50 for mortgage, council tax, utilities and groceries  he pays the rest of the bills like insurances, the car , school dinners, pocket money, petrol etc … so im happy with £500 as a comfortable figure …  I don’t want to tell him the mess I’m in .. well not yet anyway .. I need to know what’s what and how things work before I can tell him as it will be a difficult period of time when I tell him  …but he won’t be happy if he has to pay toward my mess I’m sure . .. and he works in finance so no doubt will not be happy ) 

So £500 a month is affordable and I haven’t yet defaulted which I think I’ve read is best to do .. is this right. ? 

if I default I assume this means paying nothing to my debts and  saving up this £500 a month whilst waiting to default ? how long on average does a default takes ?  .. do I literally pay nothing until I get a default letter ? How do you know when you have defaulted ? I’ve missed a payment once or twice in the past by a few days and had a default letter and £12 charge ? Is this the same thing ?  

If I stop paying Can I use the “saved” money to pay some of the smaller debts off to reduce my creditors such as £200 on a catalog and £400 on another one ? Or would they see this as a preference ? Or should /could I  balance transfer smaller debts now to my credit card ( I have the space ) then wait a month or so to default ? To reduce the creditors ? Or could this reduce the potential of it being accepted ? I just hoped the less creditors the bigger the share they get the better acceptance 

The DMP I think is right option as we have a mortgage and don’t want to risk this in anyway due to kids in the home aswell and rent is more than the mortgage anyway .. and I’ve clearly messed up but don’t want to loose our house over it if it can be helped … ::  I want to pay back my debt the best I can and it’s says about 70 months to clear at £500 a month assuming it’s accepted and interest etc stops .. this I feel gives a light at the end of the tunnel … I’m paying well over £1k now and bitterly struggling and end up using credit to live and pay bills each month … 

can you pay extra money into a DMP if  I manage to save some? Or is it better to save it and pay it off in a lump toward the end ? My partner has some shares he can cash in 2 years and we put the money in together a few year back but had tomwaitn5 years to get them so half will be mine .. it’s only about £2or 3k but I’d pay that in too … 

what about mortgages .. any advice on renewals .. we have a mortgage with nationwide who we bank with and it’s fixed for another 3.5 yr is it easy to renew with tour existing lender when on a DMP ? We will only have 10 year left so happy to stay with them ?  — I’ll out a separate post on this up 

Sorry just want to try make sure im
doing the right thing … 


thank you to anyone who has taken time to read this and offer advice .. 
«1

Comments

  • Rob5342
    Rob5342 Posts: 1,337
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    Yes it's best to default first. When you default the interest stops and the default drops off your credit report 6 years after it was added. If you start the dmp straight away you are likely to get an arrangement to pay marker which stays on your credit report for 6 years after the debt is repaid. The debts are likely to default at some point on a DMP, but if you start a DMP without defaulting your credit report is likely to be damaged for much longer. The other thing is that once defaulted a debt is likely to be sold to a debt collector and they are more likely to accept a reduced settlement offer.

    To default you simply stop.paying and ignore the creditor until they default you. It seems bizarre but if you talk to them and ask for help you end up being treated worse than if you just ignore them (getting a payment arrangement instead of a default. The time to default depends on the lender, Barclaycard were great for me and did it.after three months, Virgin were very difficult and took almost two years. You'll get a default notice in the post giving you a chance to get up to date before they default, so you just ignore that and they default you.

    You need.a change of mindset with a DMP, forget what the creditors think, work out a sustainable budget for yourself, and the creditors get what comes out of that.. It's completely up to you how you.run it. The most important thing is getting an emergency fund built up so have the money to cover things, after that you can decide how you.wsnt to use the money towards the debts. I'd pay a reduced amount to the creditors and put the difference aside for making settlement offers. It will be slow to start with but once you get going you can increase the payments when you get oayrises, and when you get one settlement offer accepted you can save the money from that debt towards the next offer.

    I'd do it yourself rather than involve Stepchange as it's much more flexible and you.can do everything I'm a way that suits you instead of having to.follow.theor.approach. If you follow their approach your credit report will be harmed for longer and it will cost you more overall.

    You've taken a big step now you've started to tackle it. I found the stree and worry disappeared literally overnight when I started mine. 
  • fatbelly
    fatbelly Posts: 20,198
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    edited 24 January at 4:32AM
    Don't assume that because he works in finance he will understand this. Debt advice is a bit of a speciality and some actions appear odd but there's logic behind them.

    He will need to know because with a joint mortgage the two credit files are financially associated. And as you have already worked out, your next mortgage deal will likely come from your existing lender.

    Your emergency fund also becomes a fighting fund and in many cases you will be able to clear a debt with a full& final offer somewhere down the road. The windfall may be useful at that point. Make it work for you. It should clear debt 2-4 times its value

    It's fine to pick off some smaller debts if that's what you want to do. Preferences only matter if you are going for insolvency, and you're not.

    Ask again if you think we haven't answered your question.
  • Jacksonc2114
    Jacksonc2114 Posts: 40
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    Rob5342 said:
    Yes it's best to default first. When you default the interest stops and the default drops off your credit report 6 years after it was added. If you start the dmp straight away you are likely to get an arrangement to pay marker which stays on your credit report for 6 years after the debt is repaid. The debts are likely to default at some point on a DMP, but if you start a DMP without defaulting your credit report is likely to be damaged for much longer. The other thing is that once defaulted a debt is likely to be sold to a debt collector and they are more likely to accept a reduced settlement offer.

    To default you simply stop.paying and ignore the creditor until they default you. It seems bizarre but if you talk to them and ask for help you end up being treated worse than if you just ignore them (getting a payment arrangement instead of a default. The time to default depends on the lender, Barclaycard were great for me and did it.after three months, Virgin were very difficult and took almost two years. You'll get a default notice in the post giving you a chance to get up to date before they default, so you just ignore that and they default you.

    You need.a change of mindset with a DMP, forget what the creditors think, work out a sustainable budget for yourself, and the creditors get what comes out of that.. It's completely up to you how you.run it. The most important thing is getting an emergency fund built up so have the money to cover things, after that you can decide how you.wsnt to use the money towards the debts. I'd pay a reduced amount to the creditors and put the difference aside for making settlement offers. It will be slow to start with but once you get going you can increase the payments when you get oayrises, and when you get one settlement offer accepted you can save the money from that debt towards the next offer.

    I'd do it yourself rather than involve Stepchange as it's much more flexible and you.can do everything I'm a way that suits you instead of having to.follow.theor.approach. If you follow their approach your credit report will be harmed for longer and it will cost you more overall.

    You've taken a big step now you've started to tackle it. I found the stree and worry disappeared literally overnight when I started mine. 
    How do you do it alone . Is there guides anywhere? It freaks me out the thought of defaulting and just waiting … I always fear the thought of bailiffs turning up … would it be best to get the smaller debt into my cards so im dealing with less  people … 

    I’ve 3 credit cards 
    2 loans
    thrn  4 or 5 small accounts 

    ive been bal transferring this back n  forth n trying to reduce monthly outgoings by putting it together rather than loads if little ones   but the cards alone  are £750  

    do you have to default everything? 




  • Jacksonc2114
    Jacksonc2114 Posts: 40
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    fatbelly said:
    Don't assume that because he works in finance he will understand this. Debt advice is a bit of a speciality and some actions appear odd but there's logic behind them.

    He will need to know because with a joint mortgage the two credit files are financially associated. And as you have already worked out, your next mortgage deal will likely come from your existing lender.

    Your emergency fund also becomes a fighting fund and in many cases you will be able to clear a debt with a full& final offer somewhere down the road. The windfall may be useful at that point. Make it work for you. It should clear debt 2-4 times its value

    It's fine to pick off some smaller debts if that's what you want to do. Preferences only matter if you are going for insolvency, and you're not.

    Ask again if you think we haven't answered your question.
    Wil he find out from his credit report how bad it is ? I was hoping to try do this and speak to him once sorted and it’s up and running and I’ve understand it all 

    Our mortgage is with our bank and I understand this could impact us renewing it.. from credit sense he gets his car in finance (lease) and has a loan that he wants to top up next year when it’s finished to do home improvements again that’s it … he has recently started a new job where his pay will increase next year so I hope to use some of the extra income to top up my payments. 

    I’m feeling this is better than doing nothing … 

    I’ve looked at homeowners loans if £35k and I could tell him do it this way and pay £500 ish over 10 years but there seems to be advice not to 
  • Rob5342
    Rob5342 Posts: 1,337
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    edited 24 January at 7:56AM
    Doing it yourself is simple, you just work out a budget of what you'll be paying, write to the creditors to tell them and set up standing orders for that amount. If you need help you can use this website to create a budget and generate letters.

    https://nedcab.cabmoney.org.uk/dmp.asp

    It's up to you how you handle it, you could use Stepchange to get started and then switch to doing it yourself when your get more comfortable with the process and want to be a bit more flexible.

    DMPs are informal arrangements l
    You don't have to default, but the chances are the debts will default anyway at some point in the dmp,v do by defaultimg earlier you can speed things up and minimise how long your credit report is harmed for.

    You don't need to worry about bailiffs. They are the very last resort, as long as you start making payments.omce defaulted it shouldn't come anywhere near that. Debt Camel has some information here:

    https://debtcamel.co.uk/debt-stop-bailiffs/
  • Floss
    Floss Posts: 8,110
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    I’ve looked at homeowners loans if £35k and I could tell him do it this way and pay £500 ish over 10 years but there seems to be advice not to 
    This ^^^ PLEASE  don't do this. You do not want to turn unsecured debt into a debt secured on your home.
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  • sparks_2023
    sparks_2023 Posts: 157
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    Rob5342 said:
    Yes it's best to default first. When you default the interest stops and the default drops off your credit report 6 years after it was added. If you start the dmp straight away you are likely to get an arrangement to pay marker which stays on your credit report for 6 years after the debt is repaid. The debts are likely to default at some point on a DMP, but if you start a DMP without defaulting your credit report is likely to be damaged for much longer. The other thing is that once defaulted a debt is likely to be sold to a debt collector and they are more likely to accept a reduced settlement offer.

    To default you simply stop.paying and ignore the creditor until they default you. It seems bizarre but if you talk to them and ask for help you end up being treated worse than if you just ignore them (getting a payment arrangement instead of a default. The time to default depends on the lender, Barclaycard were great for me and did it.after three months, Virgin were very difficult and took almost two years. You'll get a default notice in the post giving you a chance to get up to date before they default, so you just ignore that and they default you.

    You need.a change of mindset with a DMP, forget what the creditors think, work out a sustainable budget for yourself, and the creditors get what comes out of that.. It's completely up to you how you.run it. The most important thing is getting an emergency fund built up so have the money to cover things, after that you can decide how you.wsnt to use the money towards the debts. I'd pay a reduced amount to the creditors and put the difference aside for making settlement offers. It will be slow to start with but once you get going you can increase the payments when you get oayrises, and when you get one settlement offer accepted you can save the money from that debt towards the next offer.

    I'd do it yourself rather than involve Stepchange as it's much more flexible and you.can do everything I'm a way that suits you instead of having to.follow.theor.approach. If you follow their approach your credit report will be harmed for longer and it will cost you more overall.

    You've taken a big step now you've started to tackle it. I found the stree and worry disappeared literally overnight when I started mine. 
    How do you do it alone . Is there guides anywhere? It freaks me out the thought of defaulting and just waiting … I always fear the thought of bailiffs turning up … would it be best to get the smaller debt into my cards so im dealing with less  people … 

    I’ve 3 credit cards 
    2 loans
    thrn  4 or 5 small accounts 

    ive been bal transferring this back n  forth n trying to reduce monthly outgoings by putting it together rather than loads if little ones   but the cards alone  are £750  

    do you have to default everything? 




    Please don't worry about defaulting. It is an easy process of simply not paying the debt.

    Bailiffs will not turn up until after any CCJ is issued - and that is not likely until much later if at all.

    It is best to have all the accounts default at once as they each have their own 6 year countdowns for disappearing from your credit report.

    You actually do not have to default everything. Up to you. Also I'd personally get the "small debts" onto 1 card to reduce the number of defaults you are dealing with.


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  • Jacksonc2114
    Jacksonc2114 Posts: 40
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    Rob5342 said:
    Yes it's best to default first. When you default the interest stops and the default drops off your credit report 6 years after it was added. If you start the dmp straight away you are likely to get an arrangement to pay marker which stays on your credit report for 6 years after the debt is repaid. The debts are likely to default at some point on a DMP, but if you start a DMP without defaulting your credit report is likely to be damaged for much longer. The other thing is that once defaulted a debt is likely to be sold to a debt collector and they are more likely to accept a reduced settlement offer.

    To default you simply stop.paying and ignore the creditor until they default you. It seems bizarre but if you talk to them and ask for help you end up being treated worse than if you just ignore them (getting a payment arrangement instead of a default. The time to default depends on the lender, Barclaycard were great for me and did it.after three months, Virgin were very difficult and took almost two years. You'll get a default notice in the post giving you a chance to get up to date before they default, so you just ignore that and they default you.

    You need.a change of mindset with a DMP, forget what the creditors think, work out a sustainable budget for yourself, and the creditors get what comes out of that.. It's completely up to you how you.run it. The most important thing is getting an emergency fund built up so have the money to cover things, after that you can decide how you.wsnt to use the money towards the debts. I'd pay a reduced amount to the creditors and put the difference aside for making settlement offers. It will be slow to start with but once you get going you can increase the payments when you get oayrises, and when you get one settlement offer accepted you can save the money from that debt towards the next offer.

    I'd do it yourself rather than involve Stepchange as it's much more flexible and you.can do everything I'm a way that suits you instead of having to.follow.theor.approach. If you follow their approach your credit report will be harmed for longer and it will cost you more overall.

    You've taken a big step now you've started to tackle it. I found the stree and worry disappeared literally overnight when I started mine. 
    How do you do it alone . Is there guides anywhere? It freaks me out the thought of defaulting and just waiting … I always fear the thought of bailiffs turning up … would it be best to get the smaller debt into my cards so im dealing with less  people … 

    I’ve 3 credit cards 
    2 loans
    thrn  4 or 5 small accounts 

    ive been bal transferring this back n  forth n trying to reduce monthly outgoings by putting it together rather than loads if little ones   but the cards alone  are £750  

    do you have to default everything? 




    Please don't worry about defaulting. It is an easy process of simply not paying the debt.

    Bailiffs will not turn up until after any CCJ is issued - and that is not likely until much later if at all.

    It is best to have all the accounts default at once as they each have their own 6 year countdowns for disappearing from your credit report.

    You actually do not have to default everything. Up to you. Also I'd personally get the "small debts" onto 1 card to reduce the number of defaults you are dealing with.


    Thanks yes that’s my thinking of on dealing with 3 credit card companies and 2 loans that’s better than others .. I think I’ll start by consolidating all debt to my credit cards this month then stop paying next month and start the letters and process .. god it’s scary 
  • fatbelly
    fatbelly Posts: 20,198
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    edited 24 January at 11:47AM
    So what's the advantage of consolidating the debt on to credit cards?

    I thought you were going to pay the smaller ones with cash from your emergency fund that you are saving while you wait for defaults

    Hopefully none of the debts that remain are connected to the bank who provides your bank account. If so, you need a new account
  • Rob5342
    Rob5342 Posts: 1,337
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    I'd keep them as they are personally, smaller ones will be easier to knock off with full or partial settlements when you have free money.
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