Does this plan to default then enter into a DMP work?

lea

Hello

Thanks to the advice on my previous thread, and with a number of calls to Step Change, I've come up with this plan below for my almost £38k debt. I'd be grateful if anyone is able to confirm if this is a good way forward, as I still have some slight confusion about defaulting on payments and at what point I should begin my DMP.

-I am in the process of moving all my non debt direct debits and wages to a Monzo account I hold and up to now havent really used.

-I am closing all dormant joint  bank accounts I have with my ex

-I intend to cancel all my credit card and Next account direct debits from this week onwards, and start using the money I had been on these, to create some savings / a buffer.

-I had already done my online budget with Step Change - at what point do I contact them to start the DMP? They say that I should start it before defaulting, whereas I've read on here that the process of defaulting is actually required first? I've seen on here that it can take 6 months or more for an account to default, and that I shouldnt make payments before then as it might look like a payment arrangement - is this right? I really just sit tight and not pay anything to any of them?

-I have one balance transfer card that I recently have taken out and not even made one payment on yet (I did this before I realised a DMP might be an option) - should I make at least one payment on this to show willing before not paying?

-I own a property with my ex that I havent lived in for over 8 years and he remains in - anyone know how likely it might be that a charge is put against the property? The fixed term mortgage we currently have is due to end early 2026 and I have concerns that he will be made to remortgage at that point to help clear the debt - which he won't be able to afford to do (at this point I'm not even sure if he'd be able to borrow enough even to take my name off and transfer the current mortgage into his sole name).

-What happens if the DMP is refused? How likely is it that will happen? Will I be expected to go back to making the minimum repayments I had been before?

Anything else I need to consider at this stage? 

Thanks again for your help

.

Grumpelstiltskin

Right calm down and don't panic.

Who do you think are going to refuse a DMP?

No one is the answer to that.

The best thing to do is stop ALL unsecured debts including the one you have just taken out.

When you start getting defaults why not pay the debtors yourself?

No need to involve Stepchange then you can pay who you want what you want as long as you don't pay any of them more than their due percentage.

Does your Ex know what is happening? There is always a chance he will be contacted by one of the debtors.

You will get some defaults quickly, others could take months or in odd cases years before they default, so if you run your DMP yourself you could pay them as they default and keep saving as much as you can for emergencies and settlements further down the line.

fatbelly

The chance of these debts resulting in a charge against a property you do not live in is extremely small, and there are many stages between A and B

However you are linked financially to your ex by the joint mortgage and so he will need to know that his ability to obtain credit is going to be affected. When the fixed term ends, it's mostly his problem as you haven't been living there for 8 years. The mortgage will go on to the standard rate. He can try for another fix, or just live with it.

If the mortgage becomes unaffordable then the pair of you may want to think about selling it, which would be for the best

It's a shame that you can't make the first payment on the new credit card but you are where you are.

sourcrates

There is nothing to refuse in a DMP, debt management is just a fancy name for paying your consumer credit bills at an affordable rate, rather than at the minimum contractual payments specified by your creditors.

No creditor ever refuses money, if they are not happy with what you pay them, they simply either sell the debt to another company, and it becomes their problem to deal with, or they assign it to a collector to deal with and wash their hands of it all.

You just pay what your budget allows you to, debt purchasing companies pay pennies in the £ for these accounts, so can accept whatever you offer, likewise collectors operate a similar policy.

Defaulting accounts by non payment can take time, you should stop all payments initially, that emergency fund is paramount, you must save something it to it, but as to when you start making your reduced payments, that is entirely at your discretion, its better to wait till all are defaulted, but not essential.

If you want to remain in control and be proactive, run the thing yourself, it`s pretty simple, and there are tools out there to help you, otherwise let stepchange do it for you.

kimwp

You are right, waiting until the debts defaults before starting to pay them again through a dmp will result in a shorter time impact on your credit history record.

Doing the dmp on your own means you have a bit more freedom as to when you start. For example, you can delay a bit longer to save up a larger emergency fund or start paying a debt that has defaulted, before the other ones have defaulted.

lea

Grumpelstiltskin said:

Right calm down and don't panic.

Who do you think are going to refuse a DMP?

No one is the answer to that.

The best thing to do is stop ALL unsecured debts including the one you have just taken out.

When you start getting defaults why not pay the debtors yourself?

No need to involve Stepchange then you can pay who you want what you want as long as you don't pay any of them more than their due percentage.

Does your Ex know what is happening? There is always a chance he will be contacted by one of the debtors.

You will get some defaults quickly, others could take months or in odd cases years before they default, so if you run your DMP yourself you could pay them as they default and keep saving as much as you can for emergencies and settlements further down the line.

Thanks for this. How would I know what each creditor's due percentage is?

Ex is aware and I've asked him to look into how me doing this might affect him. Would they contact him if my new address (not related to him) is on all my creditors accounts?

Is there an option to start with Step Change then say 6 months in, take over the plan myself? TBH I'm feeling pretty daunted by it all. I've never missed a payment in my whole life and it feels quite overwhelming and counterintuitive to stop paying (I do understand this is the right process - just feels like going against the grain!)

lea

sourcrates said:

There is nothing to refuse in a DMP, debt management is just a fancy name for paying your consumer credit bills at an affordable rate, rather than at the minimum contractual payments specified by your creditors.

No creditor ever refuses money, if they are not happy with what you pay them, they simply either sell the debt to another company, and it becomes their problem to deal with, or they assign it to a collector to deal with and wash their hands of it all.

You just pay what your budget allows you to, debt purchasing companies pay pennies in the £ for these accounts, so can accept whatever you offer, likewise collectors operate a similar policy.

Defaulting accounts by non payment can take time, you should stop all payments initially, that emergency fund is paramount, you must save something it to it, but as to when you start making your reduced payments, that is entirely at your discretion, its better to wait till all are defaulted, but not essential.

If you want to remain in control and be proactive, run the thing yourself, it`s pretty simple, and there are tools out there to help you, otherwise let stepchange do it for you.

Thank you.

Does going through StepChange hold more 'sway' with creditors? Ie are they more likely to accept the amounts StepChange propose, than if I were to go it alone?

lea

fatbelly said:

The chance of these debts resulting in a charge against a property you do not live in is extremely small, and there are many stages between A and B

However you are linked financially to your ex by the joint mortgage and so he will need to know that his ability to obtain credit is going to be affected. When the fixed term ends, it's mostly his problem as you haven't been living there for 8 years. The mortgage will go on to the standard rate. He can try for another fix, or just live with it.

If the mortgage becomes unaffordable then the pair of you may want to think about selling it, which would be for the best

It's a shame that you can't make the first payment on the new credit card but you are where you are.

Thank you.

Would there be any merit in making one payment to the new credit card to 'show willing' before defaulting?!

Would ex be affected by my DMP say in 2 years if he tries to remortgage and take over the mortgage on his own? (Ie I come off the property)?

Grumpelstiltskin

lea said:

sourcrates said:

There is nothing to refuse in a DMP, debt management is just a fancy name for paying your consumer credit bills at an affordable rate, rather than at the minimum contractual payments specified by your creditors.

No creditor ever refuses money, if they are not happy with what you pay them, they simply either sell the debt to another company, and it becomes their problem to deal with, or they assign it to a collector to deal with and wash their hands of it all.

You just pay what your budget allows you to, debt purchasing companies pay pennies in the £ for these accounts, so can accept whatever you offer, likewise collectors operate a similar policy.

Defaulting accounts by non payment can take time, you should stop all payments initially, that emergency fund is paramount, you must save something it to it, but as to when you start making your reduced payments, that is entirely at your discretion, its better to wait till all are defaulted, but not essential.

If you want to remain in control and be proactive, run the thing yourself, it`s pretty simple, and there are tools out there to help you, otherwise let stepchange do it for you.

Thank you.

Does going through StepChange hold more 'sway' with creditors? Ie are they more likely to accept the amounts StepChange propose, than if I were to go it alone?

The creditors will accept what ever you pay them, you are in charge not them, so forget Stepchange having more sway.

You have to completely change your mindset, remember you are just a number to these companies, they are not interested in you as a person.

You asked earlier how you know the percentage to pay them.

Example total debt £5000
A £3000
B £!000
C£1000

You would pay A 3 fifths, and B & C 1 fifth each of the total amount you can afford to pay.

fatbelly

I think there's a calculator and all the tools/standard letters on

https://nedcab.cabmoney.org.uk/dmp.asp

No point making contractual payments if you've decided they are unaffordable and you need a DMP

Yes both your credit histories will be linked by a joint financial product, i.e. Mortgage. I see no reason why any of your creditors would write to him. And no-one will be forcing him to remortgage. At the end of the fixed term the mortgage goes on to the standard variable rate.

I assume you don't pay anything to that mortgage?

If he wants advice tell him to come on here and start a thread

lea

fatbelly said:

I think there's a calculator and all the tools/standard letters on

https://nedcab.cabmoney.org.uk/dmp.asp

No point making contractual payments if you've decided they are unaffordable and you need a DMP

Yes both your credit histories will be linked by a joint financial product, i.e. Mortgage. I see no reason why any of your creditors would write to him. And no-one will be forcing him to remortgage. At the end of the fixed term the mortgage goes on to the standard variable rate.

I assume you don't pay anything to that mortgage?

If he wants advice tell him to come on here and start a thread

Thanks for all your advice, its much appreciated.

I don't pay anything to that mortgage. He can't afford to buy me out and doesnt want to sell, so we are where we are atm with that. The fixed mortgage rate is 1% currently so happy to let him see that out for the next 2 years and see where we are then - he may be in a position to buy me out at that stage and at which point I would use any settlement to repay my debts.