Defaults or DMP or both?

LeedsOnTheUp

RAS said:

By law, creditors can't take legal action until a debt is defaulted, so your fear is not supported by the law.

Bingo. This is exactly what I need to curtail the worries. Sure I will wobble when all the post  starts coming but I will keep this in mind. Thank you very much.

fatbelly

I see you are getting good advice here.

There is a large part of the debt advice 'industry' that over-exaggerates the likelihood of nonpriority consumer debts getting tangled up in court action. Hence the introduction of Breathing Space which for 99% of people is a solution looking for a problem.

Obviously the IVA pushers work on stoking up fear of the unknown, but this attitude also permeates stepchange, payplan and (for no good reason) CAB.

The posters here are not trying to sell you anything, or to use you to hit target numbers or anything like that.

Rob5342

LeedsOnTheUp said:

RAS said:

By law, creditors can't take legal action until a debt is defaulted, so your fear is not supported by the law.

Bingo. This is exactly what I need to curtail the worries. Sure I will wobble when all the post  starts coming but I will keep this in mind. Thank you very much.

They'll mention all sorts of things that may happen, but they can't take any legal action until they have defaulted you. Even then legal action would probably be a long way down the line, they tend to get sold or assigned to collectors who work through a set of letters of decreasing friendliness before they seriously consider legal action. They can still apply interest and late fees before you default, but that balances out in the long term as you will be able to make a settlement offer to a collector and your credit report will be cleaner sooner.

daffodil5

Rob5342 said:

I'd suggest that you start living on your DMP budget straight away and put the money you would be paying towards the debts into a savings account. That gives you a chance to check that the budget is sustainable while also getting an emergency fund in place. 

I'm thinking of doing this now, and saving the money I would be paying into the DMP, plus if I can put away any more I will.

Payplan are calling me back on Monday and said to me this week when I suggested waiting for a while that the sooner I get the repayments set up and get them to deal with the creditors the better.
They also said that I should cancel the DDs once they've got the ball rolling but I've done that already as I just haven't got the money company them, so will be expecting the creditors to be in contact pretty soon. Not sure how to deal with that side of it. 

I am just worried about getting endless phone calls and assuming I answer (difficult at work and I don't want my partner to worry so haven't yet told him what I'm doing until I'm all set up with a solution) and what do I say to them if I did answer the phone? How did others manage this ? I'm fine with letters and emails as these can be ignored and filed, but I really don't want to engage with these people on the phone.

RAS

You can write to the creditors specifying you preferred means of communication. They'll need to write to you to deal with the legal stuff, but otherwise you can choose which method you want. 

Rob5342

Payplan and Stepchange are funded by the creditors..Their approach is to repay the whole amount without any consideration to how it affects your credit report in the long term. If you default first you can have a clean credit report much sooner and also reduce the amount it costs you overall.

With the telephone calls I just did a combination of not answering, blocking the number and hanging up. 

daffodil5

RAS said:

You can write to the creditors specifying you preferred means of communication. They'll need to write to you to deal with the legal stuff, but otherwise you can choose which method you want. 

So I need to send a letter explaining that I can't pay and that I'm exploring my options for dealing with my debt? Is there a template that I could use for this?

I am even more confused having read through many threads, some seem to suggest that cancelling direct debits and refusing to engage with creditors to await defaults and saving in the interim before actually starting a DMP, and others are telling people to pay token amounts.

I've also seen worrying threads where people are receiving letters before action after ignoring creditors.

If I understand it correctly, if I choose to wait a few months to enter into a DMP with Payplan (will Payplan wait to start it for that long?) after cancelling my direct debits with all creditors, I need to:

Not make any payments at all

Write to all creditors outlining the fact that I cannot pay and am seeking advice via PayPlan on the best way to deal with my debts (they only give you 30 days so how can it continue for several months)

Include in my letter that I would like to only be contacted in writing i.e emails or letters 

Sorry for all these questions but am I also right in thinking that if I enter into a DMP now with Payplan, that the interest will continue to be added, won't be frozen, the debt will not default and my credit file affected for a lot longer? So any payments I make will not reduce the debt because of interest?

For context all my debts are credit cards, loans and finance and there have not been any missed payments up to now. I have savings but some more would be good, as both my business and full time job are seasonal, so want enough to carry me through the winter months in early 2025.

Which makes it a bit scary.

I want to get this right, if I don't pay anything for a few months I will be living on my DMP budget and putting away the money I would have paid PayPlan plus anything else I can manage to save. 

Originally I wanted to just get started on my DMP with PayPlan straight away but the advice seems to be otherwise, I assume PayPlan just want to get it all set up quickly and won't understand why I want to wait for defaults and save money? 

But my worry is that I'll end up with a ccj or similar, how do I know if a creditor has defaulted, do they write to you?

Thanks for reading all this! And for any replies. 
It's a lot of info (some conflicting) to process and take in 🤦

LeedsOnTheUp

daffodil5 said:

RAS said:

You can write to the creditors specifying you preferred means of communication. They'll need to write to you to deal with the legal stuff, but otherwise you can choose which method you want. 

So I need to send a letter explaining that I can't pay and that I'm exploring my options for dealing with my debt? Is there a template that I could use for this?

I am even more confused having read through many threads, some seem to suggest that cancelling direct debits and refusing to engage with creditors to await defaults and saving in the interim before actually starting a DMP, and others are telling people to pay token amounts.

I've also seen worrying threads where people are receiving letters before action after ignoring creditors.

If I understand it correctly, if I choose to wait a few months to enter into a DMP with Payplan (will Payplan wait to start it for that long?) after cancelling my direct debits with all creditors, I need to:

Not make any payments at all

Write to all creditors outlining the fact that I cannot pay and am seeking advice via PayPlan on the best way to deal with my debts (they only give you 30 days so how can it continue for several months)

Include in my letter that I would like to only be contacted in writing i.e emails or letters 

Sorry for all these questions but am I also right in thinking that if I enter into a DMP now with Payplan, that the interest will continue to be added, won't be frozen, the debt will not default and my credit file affected for a lot longer? So any payments I make will not reduce the debt because of interest?

For context all my debts are credit cards, loans and finance and there have not been any missed payments up to now. I have savings but some more would be good, as both my business and full time job are seasonal, so want enough to carry me through the winter months in early 2025.

Which makes it a bit scary.

I want to get this right, if I don't pay anything for a few months I will be living on my DMP budget and putting away the money I would have paid PayPlan plus anything else I can manage to save. 

Originally I wanted to just get started on my DMP with PayPlan straight away but the advice seems to be otherwise, I assume PayPlan just want to get it all set up quickly and won't understand why I want to wait for defaults and save money? 

But my worry is that I'll end up with a ccj or similar, how do I know if a creditor has defaulted, do they write to you?

Thanks for reading all this! And for any replies. 
It's a lot of info (some conflicting) to process and take in 🤦

 The advice I have been given is to just cancel all debt payments and completely ignore contact until they default me. Creditors cannot take legal action to recover money until an account is default (mentioned in response to me earlier in this thread, which I then confirmed by searching it after). Simply ignoring them and just checking your credit file (experian, mse and credit karma can be used for that) until you default is the way to go, and then either self manage or go to stepchange/payplan.

I am pretty sure this information is accurate after all the information seeking I've been doing the last few days but if any of it is wrong somebody feel free to correct me.

sourcrates

daffodil5 said:

Rob5342 said:

I'd suggest that you start living on your DMP budget straight away and put the money you would be paying towards the debts into a savings account. That gives you a chance to check that the budget is sustainable while also getting an emergency fund in place. 

I'm thinking of doing this now, and saving the money I would be paying into the DMP, plus if I can put away any more I will.

Payplan are calling me back on Monday and said to me this week when I suggested waiting for a while that the sooner I get the repayments set up and get them to deal with the creditors the better.
They also said that I should cancel the DDs once they've got the ball rolling but I've done that already as I just haven't got the money company them, so will be expecting the creditors to be in contact pretty soon. Not sure how to deal with that side of it. 

I am just worried about getting endless phone calls and assuming I answer (difficult at work and I don't want my partner to worry so haven't yet told him what I'm doing until I'm all set up with a solution) and what do I say to them if I did answer the phone? How did others manage this ? I'm fine with letters and emails as these can be ignored and filed, but I really don't want to engage with these people on the phone.

Stop, and take a breath, debt management is all about regaining control of your debt situation, remember you are in control of this, not them, always keep that thought foremost in your mindset.

After you stop making payments, its essential you save an emergency fund, that is your first priority, second, do you have a safe bank account?
One that is not connected to any of your creditors?

If not, get one, and quickly, a basic account, with no borrowing facility, and with a lender with whom you have no debts, that`s your second priority.

Everything else you can ignore, for now.

The GDPR (General Data Protection Regulations) allow you to now choose how a company contacts you, use that to your advantage, insist your creditors contact you in writing only.

If you get any calls, ignore them and hang up, it will be computer dialled anyway, these matters should only be discussed in writing from now on.

You want your debts to default, and who owns the debt is not really your problem, so talking to lenders just slows things down, you want them to default and preferably sell the debt on, ideally you will set up payment arrangements with whoever buys your debts 6/9 months down the line.

That is an ideal scenario.

Keep an eye on the post for any letters that might be pre-action letters (very unlikely, and will state clearly what they are) as they are the only thing you would need to address, other than that, let them do their thing.

sourcrates

I`m a tad confused as I`ve just realised this is not your thread @daffodil15.

What`s happened to @LucySpudnik ?