New to forum but not to debt. DMP HELP PLZ

Jasebroke4abit

Hi Everyone.  I have been reading all of these forums for the last week or so and it’s really helping me to get started on this journey. 

Thanks for all the useful information and making me not feel so alone through this tough time in my life. 

I have 52k of debt with 6 credit cards and 1 loan with my current bank. 

I own a house worth 300k with 200k mortgage and secured loan of 40k all in my name. (These I can manage easily). 

I have a Mrs and our 2 kids living with us. 

My 0% period for my cards are coming to the end and I’m terrified as I can’t move the money anymore. 

I’ve been speaking to stepchange and will be going ahead with a DMP for £266 a month for 16 years. I know that’s a long time but I’ll save and clear it all with settlements hopefully within 5 years. 

I’ve not started my DMP yet as I’m confused about defaulting, not defaulting, payment markers etc.

So my questions are: 

step change don’t seem keen on me defaulting before starting my plan. Why? 

I have 7 creditors, what if most default and some don’t? When do I start my plan? 

And how long after ignoring a default will I start getting into deeper trouble? 

I worried if I wait for all to default I’ll end up with balliffs at my door. I have a nice car and some valuable things in my house such as TVs etc which we obviously need. 

I’m also worried if the debt gets sold before I start my DMP will the new debt collector accept my DMP? 

When is best to cancel my direct debits? 

And do I need to phone each creditor to let them know I’m dealing with stepchange or will that put an agreement to pay marker on my account? 

I’ve never missed a payment in my life so this is terrifying and don’t feel right. 

Sorry for all the questions! 

It’s taken me a couple of weeks to build up the courage to write on here. 

Thanks in advance for any advice 

fatbelly

I'll try to answer

Stepchange are funded by creditors so they cannot be seen to be telling you to pay nothing for a bit

You should cancel d/ds and make sure you are banking where you have no debt

You will get letters and if they sell the debt on, that's fine. You won't get court action, so no bailiffs

EssexHebridean

When is best to cancel the direct debits? Now. The sooner they are cancelled, the sooner the road to defaults begins, the sooner you can start saving the money that isn’t going out on the unsecured debts, to build first an emergency fund, and then a “fighting fund” for future full and final settlements. 

You may already know this but the reason for getting defaults first is because it means your credit file will “recover” faster. If you just enter into the DMP, then you will likely get “arrangement to pay” markers - and those stay on your file for 6 years after the debt is cleared. So let’s assume you take 5 years from now to clear a debt with an AP marker - that means it will be 2035 before the debt drops off your file.  If instead you allow the debt to default , regardless of how long it takes you to clear it, it will drop off your credit file in 2030. The other advantage to defaults is that the interest stops - clearly an advantage.

No need to contact creditors at all - and indeed it’s possibly best not to to avoid risk of getting talked into for example “just making £1 a month payments” which could earn you those dreaded AP markers. You don’t have to speak to anyone on the phone, and you can even block phone numbers if you prefer. If you wish you can write to them and tell them you are only prepared to be contacted by the post. That’s entirely your choice to make.

gwynlas

As above the faster you stop direct debits the quicker you default. Stepchange is okay given the amount of debt you have and are fair with affordability. However they do not like you paying off one creditor before another as this goes against their ethos of beig equitable to all so you could either keep some smaller debts out of the dmp or save seperately in order to make settlement offers at some time in the future. You might still receive letters offerring you settlement along the way.

Jasebroke4abit

Thank you for your responses! 

I plan to save and clear them all in one go as hopefully by then I will have more understanding to self manage. But for now I’ll let step change take charge to take the stress away from it all. 

I understand about the defaults and markers but I’m still confused regarding how many out of the 7 creditors do I let default? I understand all of them, but what if I takes a year plus? And how long have I got from the first default to wait for the rest to default before getting into serious trouble? 

fatbelly

You won't get into serious trouble.

This is not criminal (do tell us if you have court fines or anything ending in the word tax though)

In most cases they will eventually sell the debt to a third party who would only get twitchy if it looks like their investment is going statute barred (meaning no payments for 6 years in England)

First step is to move your banking away from where you have debts