DMP for £60k worth of debt...ready to tackle this!

bravo4_5

Hi Everyone – long time lurker about to embark on my self-managed DMP journey.

The main point of my post is to explain how I’m going to go about this, for you guys to tell me if there’s something I can do better or in a different way and questions that I have. Are their any tips you may have to help this all go smoother?

I have already got in touch with payplan but they were very pushy in me going for an IVA. They said this is do-able with a DMP but I didn’t like that fact that I couldn’t control the re-payment split and that the debts could potentially receive AP markers as opposed to defaults (correct me if im wrong).

Below is my SOA and my proposed payment split proposed by the nedcab site. The SOA is my personal contribution towards payments that are shared such as Mortgage, Gas, Electric etc. and my partners income has been set to £0 as she will not be contributing towards the DMP.

SOA:

Income	Amount(£)
Monthly income after tax	2700
Partners monthly income	0
Benefits	0
Other income	0
Total monthly income	2700

 

Expenses	Amount(£)
Mortgage	1000
Secured/HP loan payments	0
Rent	0
Management charge (leasehold property)	0
Council tax	65
Electricity	33
Gas	45
Oil	0
Water Rates	18
Telephone (land line)	0
Mobile phone	55
TV Licence	13
Satellite/Cable TV	0
Internet services	16
Groceries etc.	200
Clothing	30
Petrol/diesel	350
Road tax	18
Car Insurance	66
Car maintenance (including MOT)	41
Car Parking	0
Other travel	0
Childcare/nursery	0
Other child related expenses	0
Medical (prescriptions, dentists, opticians etc.)	0
Pet Insurance/Vet bills	0
Buildings Insurance	10
Contents Insurance	0
Life Assurance	0
Other Insurance	0
Presents (birthday, christmas etc.)	50
Haircuts	40
Entertainment	50
Holiday	0
Emergency Fund	0
Total monthly expenses	2100

 

Secured & HP Debt Description	Debt(£)	Monthly(£)	APR(%)
Mortgage	252000	(1000)	5.7
Secured & HP Debt totals	252000	-	-

 

Unsecured Debt Description	Debt(£)	Monthly(£)	APR(%)
Santander CC	5000	150	26.9
Capital One CC	1000	30	24.9
Barclays CC	8300	320	0
Updraft Loan	9300	280	24.9
Novuna Finance Loan	25000	550	24.9
Kroo Bank Loan	9000	200	7.9
Tesco CC	1400	30	23.9
Unsecured Debt totals	59000	1560	-

Split of re-payments:

Santander CC	5000	50.93
Capital One CC	1000	10.19
Barclays CC	8300	84.55
Tesco CC	1400	14.26
Kroo Bank Loan	9000	91.68
Novuna Finance Loan	25000	254.66
Updraft Loan	9300	94.73
Totals	59,000.00	601.00

 

Firstly I am going to let every debt default as per the advice on the forum, the money I am no longer re-paying towards debts I am going to save away in an emergency fund.

I will then get in touch with each creditor as they default using the template letters to explain my situation and explain I can afford X amount…In an ideal world the creditor will agree to this, I have seen this is not always the case OR it gets sold to a DCA, I have always thought of these as daunting but have seen from this forum it’s a favourable outcome.

My questions:

1. Different debts will default at different times – Do I action each one as they default? For example: Santander defaults first but the others haven’t, would I then get in contact with Santander explain I am going into a DMP and I can offer X amount (as per the payment split) per month towards my debt. In the meantime I would pay Santander their agreed amount from the £600 going towards the DMP and the rest of that £600 I would continue to save into an emergency fund… and so on as each defaults? Is this the correct way to set myself up going forward?

2. Do I have to give my SOA to creditors, if I do is it worth explaining the split of payments?

3. How do I keep track of how I have paid towards each debt? Would I still view the online accounts/apps as normal?

4. Is receiving a default on a debt a guarantee that interest/fees will be frozen? Or can creditors still charge interest after defaulting?

5. What do I do if a creditor does not want accept the proposed DMP re-payments, I’ve heard of some creditors making peoples lives hell by not accepting the re-payments and issuing a CCJ?

6. CCJ question: God forbid it gets to receiving a CCJ letter in the post, but how does this work? Will I get issued a threat of CCJ first? If I can come to an agreement with the creditor at this point then a CCJ is not registered? I’m finding it hard to understand at what point of “talks” of a CCJ does this become prevalent on my credit file? As you can guess this is my biggest worry!!

7. The novuna finance loan I took out at the end of March as a panic to try consolidate a few finances such as my car loan and other credit cards, which are now not shown in my SOA as the balance is £0 from consolidation. I haven’t even made my first payment towards this and I am now going to plan on defaulting without having made a single payment…how will the creditor take this? Its seems like I’m taking the P***. This creditor is my biggest worry about not accepting DMP as an answer purely because of 0 payments on record. Just for this month I can use £550 of the £600 I have leftover to make a 1st payment and then miss payments after that? What do you guys think?

8. Out of all my creditors listed, what experience has everyone had with them? Any good and any bad experiences just so I know what to be prepared for?

Lastly just to explain how I'm currently feeling: The thought of having manageable repayments already relieves so much stress BUT it's the whole missing payments and creditors calling, sending letters and constantly chasing with their legal "threats" causes me so much worry and the possibility of a CCJ being issued and my home being at risk. Will I get debt collectors and bailiffs turning up at my door or is this unheard of?

I just want to get to a stage where all creditors are happy with what i'm re-paying and I just repay these for what I feel (metaphorically) like will be for the rest of my life.

Thank you all for your time and consideration to reading this far and I look forward to your input!

sourcrates

Hi,

Welcome to the boards.

Answers -

(1) Yes, seems a good plan, defaults are harder to get with some creditors than others, treat each one on an individual basis.
(2) No, but it can help your position, doesn't have to be your genuine SOA, just one that agrees with your figures.

(3) No, its unlikely the creditors you enter debt management with will be the same ones you default on, debts are sold in a lot of cases, ask for periodic statements from whoever you end up paying.

(4) All interest and charges stop on default, some debt collectors will try it on occasionally, but unless your original agreement allowed 3rd parties to add interest (most do not) its not something they can do.

(5) They may sell the debt on, or they may take legal action, which essentially just means you still pay what you can afford, so no real benefit to them, as courts insist on affordable monthly payments.

(6) Yes, letter before action (LBA) must be sent first, a document with a 30 day return window to come to an amicable arrangement before legal action is taken (civil procedure rules) comply, and it will not proceed to a claim.

(7) Hmmm, large debt, recently taken credit as well, may get legal if they think what your offering is insufficient, play this one by ear, hopefully standard collection process will follow.

(8) High street banks accept DMP`s no question, more specialist lenders may be more tricky, again, its going to be a case of "suck it and see" hopefully there should be no issues.

Standard collection process will be deployed, calls/letters, are par for the course, affordability is key in these uncertain times, most collectors operate from call centres, not many still knock on doors, although there are one or two who do, forget bailiffs, they don`t often act on consumer credit debts.

Legal action should not be feared, all a CCJ does is confirm you owe the debt, and as long as you make the affordable payments ordered by the court, no further action will be taken.

High street lenders won`t go down that route, unsure how Kroo/Novuna and Updraft will react, deal with it if it happens is the only advice I can give you.

Hope this helps.

fatbelly

So you have £600 per month available to service 60k.

I guess they didn't like the sound of an 8-year plan. But many IVAs last that long in practice despite being advertised as 5 years, and you still have the potential remortgage or secured loan in year 5

I'd stick with your plan. Sourcrates answers your questions

Sly72

suprised that Novuna Finance Loan agreed to that loan.

enthusiasticsaver

Is it worth exploring whether that Novuna loan is unaffordable lending? 

Sourcrates answers your questions but yes that recently taken out consolidation loan is a concern. The rest of your plan sounds good. 

bravo4_5

sourcrates said:

Hi,

Welcome to the boards.

Answers -

(1) Yes, seems a good plan, defaults are harder to get with some creditors than others, treat each one on an individual basis.
(2) No, but it can help your position, doesn't have to be your genuine SOA, just one that agrees with your figures.

(3) No, its unlikely the creditors you enter debt management with will be the same ones you default on, debts are sold in a lot of cases, ask for periodic statements from whoever you end up paying.

(4) All interest and charges stop on default, some debt collectors will try it on occasionally, but unless your original agreement allowed 3rd parties to add interest (most do not) its not something they can do.

(5) They may sell the debt on, or they may take legal action, which essentially just means you still pay what you can afford, so no real benefit to them, as courts insist on affordable monthly payments.

(6) Yes, letter before action (LBA) must be sent first, a document with a 30 day return window to come to an amicable arrangement before legal action is taken (civil procedure rules) comply, and it will not proceed to a claim.

(7) Hmmm, large debt, recently taken credit as well, may get legal if they think what your offering is insufficient, play this one by ear, hopefully standard collection process will follow.

(8) High street banks accept DMP`s no question, more specialist lenders may be more tricky, again, its going to be a case of "suck it and see" hopefully there should be no issues.

Standard collection process will be deployed, calls/letters, are par for the course, affordability is key in these uncertain times, most collectors operate from call centres, not many still knock on doors, although there are one or two who do, forget bailiffs, they don`t often act on consumer credit debts.

Legal action should not be feared, all a CCJ does is confirm you owe the debt, and as long as you make the affordable payments ordered by the court, no further action will be taken.

High street lenders won`t go down that route, unsure how Kroo/Novuna and Updraft will react, deal with it if it happens is the only advice I can give you.

Hope this helps.

Hi, thanks for the reply - With the novuna loan is it worth trying to bump up the payments a little more while reducing payments on the rest to make my offer of re-payments look more favourable?

I'm guessing its not worth paying the first instalment to Novuna then and in turn sacrificing the first month of my emergency fund? 

bravo4_5

enthusiasticsaver said:

Is it worth exploring whether that Novuna loan is unaffordable lending? 

Sourcrates answers your questions but yes that recently taken out consolidation loan is a concern. The rest of your plan sounds good. 

What would I actually get out of going down the unaffordable lending route? Isn't this usually done to get a refund on interest paid, in this case so far its 0.

How would I even word a letter for unaffordable lending and if I was to do this would this be on the basis of fighting my case for if they weren't playing ball with not accepting my reduced payments or threatening with court action?

bravo4_5

This may sound like a stupid question but if one of the creditors gets as far as court action (which i'm hoping this doesnt go to as I want to comply and communicate as much as possible) do you physically have to go to court in a courtroom and also pay for legal representation too?

bravo4_5

fatbelly said:

So you have £600 per month available to service 60k.

I guess they didn't like the sound of an 8-year plan. But many IVAs last that long in practice despite being advertised as 5 years, and you still have the potential remortgage or secured loan in year 5

I'd stick with your plan. Sourcrates answers your questions

On the bright side - I am on the verge of getting a new role which is a promotion and therefore be taking home an extra £200 and has a working from home aspect which means fuel costs would be reduced drastically. But it could be another 3-4 months by the time I am fully in this and WFH.

sourcrates

bravo4_5 said:

This may sound like a stupid question but if one of the creditors gets as far as court action (which i'm hoping this doesnt go to as I want to comply and communicate as much as possible) do you physically have to go to court in a courtroom and also pay for legal representation too?

No, not normally, its all done online and by post, you submit your own defence, you don't need legal help.

These things are done in bulk, you only have to attend if the case is particularly complex, or the judge orders it.

stu12345_2

if he gets a ccj, is it just the total owed he pays back or will court fees plus the creditors solicitors fees be added and at what point and how in the letter before action ( if he prevents a ccj) can a full and final offer be made in the 30 day reply box tick