Entering a DMP. What next?

BlueManc10

So I finally bit the bullet and decided to settle my debt. Total is around 23k across credit cards and catalogues etc. the interest charges were killing me every month and I was robbing Peter to pay Paul and it was all getting too much. 

Filled in all relevant budget and debt on stepchage and they reckon I can afford to pay £369 a month. Which seems much better than the near £1000 I was paying. 

So my question is. Now I’ve submitted all the documents etc. what do I do next? Just wait? Do I stop paying my payments as I’ve seen advised here or do I continue until all set up? Anything else I need to be aware of? Also will the £369 they say I can afford be the amount or could they ask for more (or less) once they review my situation. 

fatbelly

When in a hole stop digging.

Cancel the direct debits now, get your banking sorted so you are not banking where you have debts and save some sort of emergency fund until you are ready to start your dmp.

BlueManc10

Thanks for the reply. I have changed my current account with overdraft however my joint account is with the same company. Will this be ok? They cannot take any funds from a joint account? I was going to leave my overdraft out of the plan as it’s only £300 but stepchange advised if I did this it could he seen by my other creditors as favouritism and so I should include. But I don’t really want to move my joint account as all my bills come out and would be a big job. 

NeverendingDMP

Not sure about if funds can be taken from a joint account so I'll let someone else answer that. For the overdraft don't include it if you don't want. Step change always encourages you to treat everyone equally. Nothing to say you can't take that off your list though or pay it off in the first month and a bit that you aren't paying anyone else whilst you are waiting to officially start your dmp. Overdrafts tend to have high interest though so you need to do something cost effective with it- And you need to be careful if you pay it off you don't then use that again to make more debt once your dmp starts.

BlueManc10

NeverendingDMP said:

Not sure about if funds can be taken from a joint account so I'll let someone else answer that. For the overdraft don't include it if you don't want. Step change always encourages you to treat everyone equally. Nothing to say you can't take that off your list though or pay it off in the first month and a bit that you aren't paying anyone else whilst you are waiting to officially start your dmp. Overdrafts tend to have high interest though so you need to do something cost effective with it- And you need to be careful if you pay it off you don't then use that again to make more debt once your dmp starts.

How long does it usually take to start making payments towards the DMP? My overdraft was on the paperwork I submitted but I could easily remove my overdraft when I get paid at the end of this month. That way when stepchange contact my bank there will be no debt to settle with them? Is that something I can do? 

Rob5342

It's up to you how you handle it. The most important thing is that you have a good emergency fund inmplace when you start your dmp. If you can clear the overdraft and still have a good emergency fund then fine, but don't get into the situation where you have used all your money to clear the overdraft and don't have an emergency fund in place.

Ideally you would stop payments and the creditors would default the accounts before you started the DMP, but some creditors are being very difficult about defaulting at the moment.

fatbelly

BlueManc10 said:

Thanks for the reply. I have changed my current account with overdraft however my joint account is with the same company. Will this be ok? They cannot take any funds from a joint account? I was going to leave my overdraft out of the plan as it’s only £300 but stepchange advised if I did this it could he seen by my other creditors as favouritism and so I should include. But I don’t really want to move my joint account as all my bills come out and would be a big job. 

The rules are deliberately vague. There is nothing to stop setaside from a joint account as far as i can see

If you self manage you can do what you want but sc are funded by creditors so have their hands more tied

There's no problem moving accounts, it is what the switching service is all about

NeverendingDMP

BlueManc10 said:

NeverendingDMP said:

Not sure about if funds can be taken from a joint account so I'll let someone else answer that. For the overdraft don't include it if you don't want. Step change always encourages you to treat everyone equally. Nothing to say you can't take that off your list though or pay it off in the first month and a bit that you aren't paying anyone else whilst you are waiting to officially start your dmp. Overdrafts tend to have high interest though so you need to do something cost effective with it- And you need to be careful if you pay it off you don't then use that again to make more debt once your dmp starts.

How long does it usually take to start making payments towards the DMP? My overdraft was on the paperwork I submitted but I could easily remove my overdraft when I get paid at the end of this month. That way when stepchange contact my bank there will be no debt to settle with them? Is that something I can do? 

If you liaise with step change and follow there process it can be set up fairly quickly. If you prefer to have a think...miss a few payments whilst finalising your budget and either go self managed or just go a bit slower in returning all the paperwork you could use the 369 you have spare to build an emergency fund. If you want you can pay off the overdraft if that makes it more straightforward for you budgeting wise. In 4 months you could have 1k fund set aside for emergencies. That puts you in a better position than I was at the beginning of mine. I found the forums afterwards😆

BlueManc10

Oh so it’s not simply a case of stepchange receiving my docs last Thursday and then them calling me to set up my first payment at the end of the month? Can I have a couple of months to save an emergency fund and then begin in say April? Meanwhile the creditors could default my accounts? As I’ve read this is ideally what I want to happen sooner rather than later? Should I make any token payments in this time? Or just pay nothing and save an emergency fund?

fatbelly

I definitely think token payments just slow the process down for no reason.

But stepchange will be reluctant to delay much. You'll have to see how much you can make them drag their heels. If necessary go self managed

BlueManc10

They’ve said I could apply for breathing space in the meantime? Is this worthwhile? Sounds quite scary but I guess the whole thing is