DMP the right thing for me? Help!

BrighterDays15

Hi all,

So glad I found this forum.  

After hours and hours of reading, I believe DMP is the right choice for me.  Advice greatly appreciated.  It’s taking me a long time of fighting, paying huge monthly amount to debts (£2100) which is almost all now out of 0% terms (can’t get another 0% card as level of debt in my name) and interest absolutely crippling me.  I have never missed a payment.  Every penny of this debt is due to pandemic/cost of living crisis + trying to keep my business afloat/keep my staff in jobs etc. always hoping that next month things will go back to normal but never do.  I have restructured things and made massive savings now and have got it in a place where it can survive.  However, the amount per month I require to pay to debt is jeopardising it.  Hindsight is a wonderful thing and I have learned my lesson and then some.  I now need to sort this mess out and get my life back.  I have been so ill with the stress and worry for so long now.  

My situation:

62k debt in unsecured CCs + loans with lenders Virgin, MBNA, BofS, Halifax, Next (store card).

Mortgage is in my partners name.  I have a mortgage for a property i let but is in negative equity.  

No car or any other assets. 

Monthly payments are close to £2100. Very small chunk of this is still on some 0% terms which come to an end next month.  

My POA:

1. Contact my lenders - should I call them or email them?  Keezing said in hindsight keep everything in writing and email would be best as letters went missing etc.  Explain my situation.  Should I ask for breathing space to get everything in order?  Bank accounts etc and all transferred over etc. But let them know it’s unsustainable and I will be in touch re entering a DMP.  Should i ask them to freeze interest and charges?  I notice all of my lenders have a section on the app for support with your account.  But am I correct in saying if they offer me a payment plan at this stage that will result in an AP Marker on my file for far longer as opposed to stopping payments and letting the account default?  (I am aware of the 6 years from default date etc).  

2.  My next CC card payment is next week.  I have never missed a payment ever and the thought of cancelling DD and not paying terrifies me.  It feels so against everything I know.  Should I wait a response to my emails before stopping paying or cancel DD now and get sending the emails?  From my reading on here, the answer is stop paying, wait for defaults and start saving EF.  

3.  Do you think a DMP with my level of debt will be accepted by lenders?  

4. What is the likelihood of CCjs or court action from the lenders?  If I enter DMP and keep up payments then will that be enough?  I am also terrified of the thought of bailiffs/sheriff officers coming to my door.

5.  My plan is once I have informed my lenders that I am not able to pay and will be in touch re a DMP + to only contact me through written correspondence that I then ignore any threatening  phone calls. I will of course keep a close eye on mail and any LBAs and deal with promptly. 

6. Is £300 per month between all creditors unrealistic and likely to be revoked?  

7. I am based in Scotland and have looked into Trust Deeds + DASs - however a self managed DMP feels the better route for me.  I aim to offer F + F settlements in due course and really don’t feel comfortable with the rigidness of rules/inflexibility of TD + DAS.  I feel the DMP will largely give the same results but I will have full control and not appear on registers/not have to have formal yearly reviews etc.  Agree?  Or does anyone feel these other routes are more beneficial to me?  

8.  The only thing that has held me back all this time is that thought in the back of my head to preserve my credit rating, just hold off and you’ll get a 0% transfer offer through but even with best case scenario my monthly payments will only go down to around £1000 mark.  Please talk sense into me so I can let this go!!! 

9. If above all correct, are there any sites with good templates to send that first initial email?

The biggest thanks in advance!

sourcrates

The laws are different north of the border, and I`m not too clued up on Scottish law, my first thought is £300 per month on a 62k debt will take far, far too long to repay, your creditors may invoke legal action to secure one or more of the debts on your property, I'm not saying they will do that, but its a possibility.

However, if that is the only course of action left open to you then I would say go with it and see how it pans out, its all you can do, on the plus side, affordability is key these days, so affordable payments should not be rejected, and if they are, the debts only get sent to collectors who will accept whatever is offered, you seem well aware of the strategy and how it works, you don`t really need to tell them anything, its quite likely the creditors you have now, won`t be the ones you enter debt management with, just stop paying and see what comes out of the woodwork.

BrighterDays15

Thanks, Sourcrates.  Really appreciate the prompt response.  

What in your view would be the least monthly amount that has a better chance of being accepted?  

Also, would they come after the flat I own even though its interest only mortgage and around 15K neg equity?  I am not on the mortgage of my family home with my partner.

Thanks again!  

sourcrates

As a general rule unsecured debts remain just that, but a creditor can take legal action, and obtain a charging order, its rare on consumer debts, but has been known, best to just get on with it and deal with that if it arises.

You make your offers according to your budget, if X is all you can afford, then X is what they get, payments are based on an individuals disposable income, there is no standard minimum, its all based on your available budget.

If you are paying them what you can afford, that should also ward off any potential legal action.

freshstart2023

This thread has terrified me…my accounts have nearly all defaulted and my plan is a self managed DMP. I naively didn’t really think that an inhibition order would be a possibility if offering to make affordable payments 😭

sourcrates

Banks have the ability to obtain a charging order on any consumer credit debt after a CCJ has been granted.

But just because they can do so, does not mean they will, It is a very rare occurrence, but has to be mentioned as a possibility just to cover all the bases.

Normally they will be satisfied with payments made according to your budget.

BrighterDays15

Thanks for this.  

Few quick q’s:

1.  If I’ve not to pay until the creditor defaults me, what happens if someone like Virgin (who seem to take a long time, up to a year or more to default) will my balance just continue to climb with interest and charges?  What if they never default, the balance will then get out of control and I’ll still be liable?  

2.  Will a DMP black list my home address in any way?  Will it affect my partners (very good) credit/financial reputation?

3.  Are there any template letters you’d recommend for my first initial letter to creditors?

Really appreciate your advice.

BrighterDays15

freshstart2023 said:

This thread has terrified me…my accounts have nearly all defaulted and my plan is a self managed DMP. I naively didn’t really think that an inhibition order would be a possibility if offering to make affordable payments 😭

I know freshstart2023 - still can’t believe i find myself in this situation.  It’s all the unknowns and the ifs and buts, especially when you’re someone who always tries to do the right thing/pay on time etc.  Well done for taking the leap.  I’m also going to self manage.  How long did the defaults take and how has it been?  Were the creditors empathetic? All the best on your journey - we are on the right path!  

freshstart2023

Hey, I’m the same, had never missed a payment in my life but was treading water and constantly moving debts, 0% offers dried up and interest/payments became unmanageable. 

To be fair it’s been ok so far. I’m actually really surprised at the lack of calls I’ve had. I blocked a few in the beginning and pretty much haven’t had any since in the last 4 months. Initially Virgin bombarded me with mail, I had two cards with them and on occasions received 12 separate letters from them on the same day 😳 …all other creditors just sent what you would expect, nothing excessive. 

Barclaycard defaulted me first, that was super fast. Tesco and MBNA both stopped charging interest months ago. Tesco have just defaulted me after 6 missed payments. MBNA haven’t defaulted me yet (again 6 missed payments). Virgin are still charging interest, again I have missed 6 payments with them. 

RAS

BrighterDays15 said:

Thanks for this.  

Few quick q’s:

1.  If I’ve not to pay until the creditor defaults me, what happens if someone like Virgin (who seem to take a long time, up to a year or more to default) will my balance just continue to climb with interest and charges?  What if they never default, the balance will then get out of control and I’ll still be liable?  

They will default. I can't remember if it was stu or Rob, but think one of them eventually explained to Virgin that they would pay if Virgin would please just register the default (18months in).

2.  Will a DMP black list my home address in any way?  Will it affect my partners (very good) credit/financial reputation?

Address are not blacklisted, individuals get damaged credit records. Do you share any consumer accounts with your partner?

3.  Are there any template letters you’d recommend for my first initial letter to creditors?

Really appreciate your advice.

Take it easy. Check your credit records and make sure you do the basic like keeping your electoral roll record up to date. And save everything you can afford after paying for your budgeted expense into your emergency fund.  

Superhoopza

I would probably forget the idea of a 0% deal within the first 12 months which is probably too long to wait? I have a similar level of debt, good income (so debt to income ratio isn't as high as others) and am only getting £600 Zopa 6 month 0% deals which are useless. You've also got cards with the providers most likely to offer deals, the medium range I call them, i.e. MBNA and Virgin. So that limits your options further. 

I did get a 3 month waiver with Barclays, there's no guarantee a provider will give you that but if you are going down the DMP route then this won't help anyway.