End of my DMP ! Debt free tips tricks and advice from someone who’s done it !

ChampagneSupernova36

It’s official, as of 08.36 this morning my debt management plan is complete. My stepchange dashboard is zero across the board & it is all gone !

I have some final thoughts and some tips and tricks I’ve learnt along the way. I want to preface this by saying I am not a financial expert , I would just like to share my experience & things that I would do differently looking back.   

 First of all , I wish I had found this forum sooner. I was well into my DMP when I came here. My DMP was with stepchange who really are brilliant, I wouldn’t be out of debt without them. I would say though , to read this forum before you start: 

https://forums.moneysavingexpert.com/discussion/6496941/in-debt-and-wannabe-debt-free-first-steps#latest

And this :

https://debtcamel.co.uk/dmp-credit-rating/

As brilliant as step change were , I was on a DMP immediately with them , when in hindsight I should have waited for everything to default before I began. The threatening letters from creditors frightened me and I thought if I ignored the problem anymore, something terrible might happen.  (It won’t)

Take a deep breath and take your time whilst you establish the best repayment plan for you. A couple of my accounts did default just by virtue of being on a DMP. They were then sold on to other companies.

I have managed to get a full and final settlement on my largest debt because it was sold on to a debt purchasing company, had my loan not defaulted, the original creditor was unlikely to accept such an offer. Had I let everything default , I could have got even better reductions.

I used some templates to help me draft my F&F letter : 

https://nationaldebtline.org/sample-letters/full-and-final-settlement-offer/

https://www.stepchange.org/Portals/0/documents/sample-letters/stepchange-settlement-letter.docx

My starting offer was 30% of the full amount , I worked this out by using national debt lines formula found here:  

https://nationaldebtline.org/fact-sheet-library/full-and-final-settlement-offers-ew/

Lump sum available x each debt

÷ the total amount you owe to your creditors

= offer to the creditor. 

I had £600 available on a £2196 balance, this formula actually calculates about £560 but I offered £600 which was accepted. It is definitely worth negotiating with these companies, from reading forums on here , I learnt that they buy debt for peanut amounts. So my £2000 odd balance is probably worth about £200, so a 30% offer is a nice profit for them. 

These two links also helped me a lot:

https://debtcamel.co.uk/sold-to-dca/

https://forums.moneysavingexpert.com/discussion/6522686/dmp-and-lump-sum-payment-advice#latest

I think it’s also important to note that I contacted the debt company directly, JCIA in my case, to make my offer. Reading about the company , they really do haggle to buy debts at the lowest price possible, so there is a lot of room for negotiation with F&F. Source: https://moneyadvisor.co.uk/jcia-debt/

Another note on the defaulting process , the accounts that did not default still added interest onto their balance (there is no obligation to freeze any interest).

 I was replaying a Zable (formally level owned by lendable) credit card, when checking my final balances, I realised I owed about £100 more than I thought. With capital one also , my balance was £30 or so more than I had expected, this was all because of interest and could have been avoided letting accounts default. It’s not a massive amount of money but it makes the point, double check your balances as the plan comes to an end.

There is more about this interest here: https://nationaldebtline.org/fact-sheet-library/debt-management-plans-ew/

I was also successful in an unaffordable lending claim with one of my creditors vanquis, my other lenders are investigating, with 2 at the financial ombudsman currently. I was able to get the remaining balance cleared through this but do note that it is a very slow and long process & not to rely of this method to get a quick few quid. It takes months and months to resolve but it certainly something to look into if you think it could apply to you. I had 7 creditors at one point and really struggled to juggle it all, and still was accepted for credit. There is more in these links to see if you could apply: 

https://www.financial-ombudsman.org.uk/businesses/complaints-deal/consumer-credit/unaffordable-lending

https://debtcamel.co.uk/refunds-catalogue-credit-card/

For vanquis , I used charter house claims. I WOULD NOT recommend a third party do this for you as they take a big cut. It’s really easy to contact your creditors directly, I did so for other creditors using this template: https://www.citizensadvice.org.uk/template-letters/letter-to-complain-about-a-loan/edit/?button= and they have 8 weeks to respond  (like I say, it’s very slow). Once with the financial ombudsman , it can take even longer, not a quick fix. 

From experience, I also wouldn’t recommend a consolidation loan. With my financial situation at the time , I could only get a high APR loan but this was still inviting as it would clear my credit card balances and have a smaller monthly repayment amount. 

However , I quickly built up the balances on all of my cards again and was in three times as much debt as before! My loan from 118118 money had almost £4000 in interest alone , it made my finances so much worse and not better. Again, defaulting can stop any more spending but unless you can trust yourself it’s best to just avoid. You have to be disciplined to make it work… weigh up and pros and cons. This MSE article is definitely worth a read: https://www.moneysavingexpert.com/loans/debt-consolidation-loans/

Finally , I have posted before that this is actually my second DMP.  I never dealt with the root cause of my spending, unhappiness & depression. I know a lot of people can relate and I know that there’s incredible practical advice on this website and beyond about our debt but it was dealing with my mental health  that really helped me combat my debt. I had to learn to be open and honest about everything I was going through , I had to learn to talk about my problems and not bottle everything up inside. I have utilised Samaritans and the shout texting service , just for a chat when necessary. Talking therapies really helped me as well, I have linked all 3 below. It is a safe space so reach out if necessary.

https://www.samaritans.org

https://giveusashout.org

https://www.nhs.uk/service-search/mental-health/find-an-NHS-talking-therapies-service/

Now, I also like to journal. I think if you don’t particularly like talking out loud , just writing things down really gets stuff off my chest. 

https://pinkpapermail.co.uk/products/let-it-go-journal-around-30-pages-a4-double-sided-hole-punched

All in all , a debt management plan was the best course of action for me. It is , however, a slow process and it feels like a mountain to climb when you first begin. 

Being in a DMP has taught me some valuable lessons, though, firstly how to stick to a budget. I have not been able to get credit , so once my money is gone it’s gone. 

It has taught me to be more careful and to be patient, when I was shopping on credit card and loans it was that instant gratification I was accustomed to… it was gone , I couldn’t shop to make myself feel better and had to learn to appreciate everything I already have. I have enough and I am enough. I now get my gratitude elsewhere, from my friends and family and my job. A DMP is not an overnight solution , it takes time to clear your debts but seeing the progress is the motivation.

It has also taught me to be kinder to myself , pat yourself on the back when you see this progress and don’t dwell on the past because you can’t change it. Finally, I know that I am responsible for my self , this is the consequences of my own actions. No one is going to swoop in and save me & I certainly wouldn’t have learnt so much if they did. 

It’s a tough but necessary lesson but a worthwhile one.

Thanks for reading if you’re still here, all of this may be obvious to some but I was totally ill informed (embarrassingly so). If anyone sees some misinformation or something that is incorrect or out of date , please correct me. I’m open to learn even more !

Hope everyone has a lovely weekend, 

Sincerely (a debt free!!!!!) E

Ps MODS this is a duplicate post from my DFD but I wanted to share with the DFW thread x

pogg000

Congratulations 

sourcrates

Well done, nice to read about something positive for once.

DMP`s can take a long time to complete, which is why we suggest getting your accounts defaulted first, and saving up those payments, get that emergency fund nice and healthy, so that further down the line, settlement offers are a real possibility, it can cut years off your plan.

Congrats to you.

Martico

Many congratulations, and great to see you share what you've learned along the way - I can imagine a few people that come onto this forum will be encouraged to read this thread

Rob5342

Well done for completing it, reading this kind of thing can really help people that have just started one. 

It's a very good point about defaulting first as that can make a massive improvement to the health of you credit report and reduce the overall cost considerably. My involvement with Stepchange sits very awkwardly with me. On one hand they gave me some appalling advice to start a DMP straightaway without defaulting. It means my credit report will be harmed for 18 months longer then it needed to have been, and that I didn't initially have an emergency fund to fall back on. On the other hand I had been in debt for over a decade and contacting them is what funding triggered me into addressing them. 

I had a huge success with an unaffordable lending complaint over a Nationwide credit card. I got a £16,000 interest refund which cleared the £11,000 balance and left me with £5000. Nobody should ever count on the happening though, it took two years of fighting every step of the way and I had four others I never got anywhere with. 

Don't forget CCA requests as well, I can just ignore a £7000 debt I have as the creditor can't produce the CCA. That's something else Stepchange don't tell you.

ChampagneSupernova36

Rob5342 said:

It's a very good point about defaulting first as that can make a massive improvement to the health of you credit report and reduce the overall cost considerably. My involvement with Stepchange sits very awkwardly with me. On one hand they gave me some appalling advice to start a DMP straightaway without defaulting. It means my credit report will be harmed for 18 months longer then it needed to have been, and that I didn't initially have an emergency fund to fall back on. 

Don't forget CCA requests as well, I can just ignore a £7000 debt I have as the creditor can't produce the CCA. That's something else Stepchange don't tell you.

I definitely agree with this sentiment, I am grateful that stepchange exist in the sense that they also triggered me to get my debts in order but there are things they do not advise. I’m in the same boat with defaults also , I would  have a year or so less had I just waited. I’d have also been more comfortable with an emergency fund under my belt. Stepchange immediately put you on a DMP, and they are efficient with the arrangement but I would wait and build up an emergency fund and ensure all accounts are defaulted. It’s just something to be aware of if you decide to use them. I was happy overall but definitely take advice from other sources too.

what a turn up for the books with the unaffordable lending , it is a long drawn out process though so I hope I get that point across! 

Thank you for mentioning CCA requests , this was not something I had to combat because my debts were relatively recent but could certainly apply to anyone with older debts !

  

RAS

@ChampagneSupernova36

Lovely post. Your kindness shines through. 

Hoping life is as kind to you going forward.

ChampagneSupernova36

sourcrates said:

Well done, nice to read about something positive for once.

DMP`s can take a long time to complete, which is why we suggest getting your accounts defaulted first, and saving up those payments, get that emergency fund nice and healthy, so that further down the line, settlement offers are a real possibility, it can cut years off your plan.

Congrats to you.

This is absolutely the best advice I’d give anymore about to embark on this. Thanks for sharing all of your knowledge on this forum, it’s been invaluable for me and I’m very grateful!

ChampagneSupernova36

RAS said:

@ChampagneSupernova36

Lovely post. Your kindness shines through. 

Hoping life is as kind to you going forward.

thank you  I remember what it’s like to be absolutely despairing and unkind to myself… so I hope to show that , with work and patience, things can get better xxxx

razor1981

When going through it with SC, do they:-

1) Work with the creditors to freeze interest ASAP?
2) Give a full timeline plan of paying all off?

Do you get any debts written off/reduced through them?
Do creditors or DCA's still offer the opportunity to pay of reduced settlements?

TIA

debtspiraldisaster

I think I’m going to have to read your post a few times to get my head round it. I can’t make my monthly minimum payments on my debts and am falling behind. I looked at my spreadsheet for May and no way I can meet the minimums so I put my details into StepChange who immediately offered a debt management plan. I’m on the cusp of going for it because I’m just so scared of bailiffs turning up on the doorstep (yes I watch too much tv!) and CCJs & I’ll need a mortgage at some point in the future. My debts are all credit cards and personal loans. I don’t know what to do and I’m stupidly scared of getting into trouble and having people knock on the door (yes I’m 47 and still scared!)