Please can someone check my plan?

recklessmurmur

Hi all,

I have completed my SOA, reviewed the last 12 months spending & set a new budget going forward. DMP is the only next step for me.

I have paid up this month, and plan to cancel DDs before next payments come out.

I am planning on stopping payment to my Lloyds CC which now has £7800 on, at 34.9% APR. Costs me £300+ monthly. It originally had £11400, but a month ago I was able to transfer £3600 to a 0% Capital One card. I have just made my first payment on this. Is it worth leaving this one and continuing to pay, or should I really stop this one, too? 

All other 0% BT applications have been declined, so no option there.

I have read through so, so much from this forum. I am still scared about stopping payments. I understand the letters and calls I will get. But in my head I worry that once the accounts have defaulted, my payment plans will not be accepted and I will have bailiffs round, or my house repossessed. I know you all must get sick of answering the same things, but I lay in bed at night worried sick about defaults, CCJs and losing my house/possessions. 

All support/words of encouragement are HUGELY appreciated. 

sourcrates

Ok, yes, a lot of people worry about the same things as you, needlessly I might add, in by far the majority of cases, none of that will ever happen, and this is why.

Lenders who provide credit under the consumer credit act will normally simply assign bad debts to debt collectors, or they may sell them to a 3rd party, its a big business in the UK.

There is no such thing as not accepting your payment plan, your available disposable income is decided by your budget, so you pay according to what you can afford, no one will turn down your payment, (remember by this stage you will likely be dealing with debt collectors) and if they did, all that will happen is the debt will be sold, and you continue to pay the new guy.

Forget bailiffs, re-possession, its all pie in the sky, legal action won`t happen unless your very unlucky, and even then you still only pay what is affordable.

Honestly, one a DMP is set up, it just carries on as per normal, you won`t be aware of any changes etc, everything continues as it did before.

Most of the stuff people worry about ain’t never gonna happen anyway.

Take some time at the beginning to save up an emergency fund, and to try and get those accounts to default, nothing will happen in the first 6/9 months, the collection process will just do its thing, then once your sorted, start your DMP.

Do you intend to self manage, or go with one of the debt charities?

recklessmurmur

Thank you so much.

I think its because its so alien and just the unknown. It's scary. 

My plan is to get in touch with Stepchange and ask them to manage it initially. I might consider self managing once the balances are going in the right direction 

Would you say its best to default both CCs rather than just the one? My trail of thought was that I could keep the 0% interest offer valid if I paid it. I cam probably just about afford it but its not a long 0% term.  

sourcrates

Not a good idea, you either go the whole hog, or you don`t, there is no middle ground, especially if you go with Stepchange, who will expect you to include all your debts in the plan, you can`t show preference to one creditor over another.

That is not how debt management works.

Everyone thinks its "alien" and "scary" at first, you will soon get the hang of things, and there is plenty of support on this forum to guide you.

You will find its just another way of doing things, not scary at all.

enthusiasticsaver

I would say you either go for a DMP or you don't but you shouldn't really pick debts to default on.  Just default on all of them.  Your record will be shot anyway.  You won't get CCJs or lose your house as the credit cards are not secured on that and the card companies are unlikely to take court action on that small a debt especially if there is no chance of getting more money out of you. 

Rob5342

Those kinds of worries are common, but there are loads of people on DMPs and for the vast majority it all goes very smoothly with no problems at all.

Remember that debt purchasers buy debts at a fraction of their value with the intention of making a profit on them over a number of years. To you it's a significantly reduced payment but to them if you are paying then it's money for.old rope as they could be quadrupling their money in 4/5 years for virtually no effort. They are entitled to take legal action and could if they chose to, but as it would only end up with them getting the same payments from you there is little incentive. 

recklessmurmur

Thank you all. I am always imagining worst case scenario when it comes to this.  

RAS

That's normal. MSE's been supporting people with debt they can no longer manage for a couple of decades and providing you open any letters once a week and come back here if you actually get a letter before action, you will be fine.

In practice, if you are paying £x per month off a debt, why would the creditor take you to court to get £x-2? It isn't worth the candle.

The letters are computer generated and some sound scary, because by law they have to ask you to pay back the whole sum before they are allowed to issue the default, for example. They certainly don't expect you to do that. And from your point of view, that letter is a good thing as soon you'll get a default, interest and fees are frozen, and the first light at the end of the tunnel has just switched on.

recklessmurmur

Hi everyone, 
I just wanted to pop on with an update.
I chickened out last month and paid as normal. It’s validated why I am doing this as it left me incredibly short as normal. 
I have now cancelled my two direct debits & opened a fresh new bank account. I have moved the money for my usual payments to an emergency fund. I have organised everything to live within my new budget this month. 

I remain very, very worried about the contact I will receive once my payments are missed on the 1st. I know it’s not the end of the world, and I know there are thousands of others in the same situation. I read every post on this forum religiously so I know I am in good company.
Imagining life without emergency credit is petrifying. Realistically, I know I will have a small emergency pot, it’s just changing my mindset. I couldn’t borrow more before deciding to take this route anyway, I keep needing to remind myself of that. I will never borrow again, so why should I be so worried about my credit rating anymore.
Just playing the waiting game from the 1st April now. Xx

sourcrates

Don`t look on it as a waiting game, just carry on with your life as per normal, its just money, no one really cares about it, its just everyone has a  job to do, nothing is going to happen, I really can`t stress this enough.

I don`t use credit at all anymore, just my wages, works fine for me, if this is causing you this much stress its a good job you are doing this, as its seems to be way past time.

Just relax, and carry on as you normally do, it really isn`t worth worrying about, in 100 years who will know or care?

enthusiasticsaver

If you read a lot on this forum you know that the world is not going to stop if you no longer make credit card repayments.  The critical thing is to pay essential bills only, live within your income and no more credit.