Unexpected impact of DMP and no car. Help!

JG12

So having had lots of savings, been good with credit for most of my adult life and buying my first house, my life and my finances started to spiral. Trying to make my first home livable with a balance transfer card and an inability to budget I couldn’t understand meant I racked up more credit card debt. I never thought it would happen to me. With the increase in interest rates, I couldn’t get out of it and was paying more and more without making a dent in the interest. After trying everything I could, I decided I had to face up to it and take steps that would be tough but would actually change something whether I liked it or not. 

I phoned step change and was directed to a debt management plan, i had avoided this as i was worried about the impact. After questioning if my credit score would be in bits and how serious a DMP would be i was told it would have an impact but would get better 

I agreed and was told it would take a few weeks to set up - this was in October. Still waiting, I called step change to ask what to do with November bills and was told i 'didn't have to pay' them as it was all being dealt with but could arrange a voluntary payment if i wanted. I filled in all the forms, emailed and posted notifications of budgets and step change info / my DMP to all my creditors right away and decided to wait for more info. The DMP didn't kick in till December 

Having had a good - excellent credit score my entire adult life and never having missed a payment, 3 of four credit files are now recorded as being in default and my credit score is through the floor- I wasn’t made aware that it would be this drastic or affected in so many facets. Thanks to the time it took to set up the DMP I’ve also been recorded as missing at least three payments on the fourth credit file. 

I’ve lost count of the amount of times I’ve tried to phone step change to be on hold for nearly an hour then told it’s the wrong number / department and having to start again or being tutted at or dismissed for asking questions. In querying why half the payments I’ve made have been recorded as missed, I’ve been passed between step change and my credit card company each blaming eachother when I notified every party involved and have been paying step change £400 a month for more nearly six months, having applied to step change 8 months ago. 

I persisted and Eventually, someone at step change said ‘oh yeah - we might not actually send the money to creditors within the billing date so that’s probably why you’ve missed payments - you  need to phone and get them to change the billing date. Not only had I been told that I didn’t have to manage these early payments in November or December but not once was I advised of issues with billing dates  this when agreeing to a DMP , asking about its impact or when i had previously contacted step change to enquire. 

Que hours of phone calls to request my billing date to be changed and if ‘missed payments’ could be updated to reflect the regular payments being made. My credit card company failed to update payment dates and my request to correct  payments recorded as ‘missed’  were dismissed as step changes-  fault  for not paying bills on time. More hours and a formal complaint later, I was told two of the three missed payments would be settled. Only one has. I’m now recorded as having at least two missed payments in the last 6-7 months and my credit score is even further through the floor than it  was after  the defaults. 

I’m also getting letters form said credit card company demanding £500 in these apparent accumulated missed payments. Step change say not to pay more but I’m worried this will make things even worse and right now that isn’t an option for me.

I hoped in time it would settle and to just take it on the chin, but more than six months in the situation is only getting worse. My credit score is non existent, I’m still getting letters about ‘missed payments’ when I had a DMP in place that I have payed religiously, along with all my other obligations  (credit card co doesn’t count the DMP as being active until January) 

The worse of it is, someone ran me off the road and wrote- off my car the week the DMP kicked in. I need a car for work. I can’t buy one out-right and I can’t find a cheap run around. I need  finance and I doubt I’ll ever be approved for any in this state with a DMP, three defaults, two missed payments and ‘very poor’ credit score. I know I need to agree any credit with step change but I’m scared to try in case it’s rejected and makes things even worse. Even better step change previously mentioned going to ‘poor credit car finance companies. Some rates are between 30-50%!!!

 I have to take responsibility but having gone from a clear credit file to one like this and facing very real problems a DMP didn’t consider, I wish I’de never did it. I had already been through all of the other debt and savings advice on money saving expert etc over a period of some time but increasing interest rates were a problem. 

Please don’t pass judgement if you aren’t familiar but I’ve also been diagnosed with adhd at the behest of others, having no clue it was behind some of my problems. I’ve fought for treatment, I’m taking hellish medication and doing everything in my power to improve my circumstances as I understand it’s my responsibility. I’m learning every technique I can and have been doing much better with money. I’ve tried to engage with my creditors and step change as much as I can and am paying £400 a month in repayments but It’s only getting worse and I don’t know what else I can do. 

I need a car for work and without one I’m in dire straights. My boss is being patient but it’s required and travel isn’t very feasible without one. My mortgage is also due for renewal and  I’m extremely worried about loosing my home or facing interest rates so high I can’t afford my home or transport. 

I tried talking to step change about it and the credit card company but getting nowhere. If I wait a month or two, I’m wondering if  the missed payments might drop Off my credit report but if my credit card company takes further action I assume it will only reduce my score further when I have tried so hard to improve it. I don’t know if I can manage another two months without a car.

I know much of the above is part of the course but the reality of my situation remains the same -  Is there anything I can do to improve my situation at the moment to help access car finance? I.e 

Improve my credit score 

Be approved for car finance

Improve my chance of better car and mortgage finance rates 

Any other suggestions? 

JG12

Also a car finance payment is within my budget - it wouldn’t reduce my payments to creditors, if anything I’m making changes to be able to pay them more 

fatbelly

You went into debt management too quickly without realising how it worked. From where you are now:

1. Read this thread

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

2. Stop paying stepchange and use your surplus to save a fund, in the first instance to sort out your car

3. Post on the motoring board about what car to buy within your budget

4. Post on the debt free wannabe board about your debts. It will take 3-6 months of below contractual payments to get the defaults registered, which is what you want, so stop fighting the process.

5. Stop cheking your score. It's meaningless.

MEM62

You do not have a credit score, other than the ones that CRA's produce for entertainment purposes.  Your credit standing however, was always going to be impacted by you DMP.  That is a given and there is no point in trying to protect it.  As advised, you want to stop payments to all creditors until they have defaulted you.  Use this time to save an emergency fund a sort a car that you can pay for with cash.  You need to understand that you are in a DMP because you debts have become unmanageable.  Further borrowing therefore, is just not on the cards. 

JG12 said:

I need a car for work and without one I’m in dire straights. My boss is being patient but it’s required and travel isn’t very feasible without one. 

If a car is that critical for your job function then maybe your employer should provide one for business use.  
   
 

JG12

i dont think dont being able to get to work is an option and i dont have cash for a car. if i didnt have to take credit i wouldnt be looking at it. 

sourcrates

Stop paying your non essential credit debts, you can`t afford to service them right now, ignore the credit card company, and your non existent credit score, save up as much as you can, as quick as you can to buy a cheap car for work.

When things have stabilised, and your debts have been sold on, then you can deal with them.

You jumped into debt management totally unprepared for what you were getting into, defaults are par for the course, which of course means no further credit will be available to you, this is not a bad thing on the whole.

We always advise you to save an emergency fund prior to entering debt management, so when an emergency crops up, it can be dealt with, it may benefit you to read up on some of the debt management stories from other posters, we have a dedicated thread in the stickies section.

Grumpy_chap

JG12 said:

The worse of it is, someone ran me off the road and wrote- off my car the week the DMP kicked in. I need a car for work. I can’t buy one out-right and I can’t find a cheap run around. 

I need a car for work and without one I’m in dire straights. My boss is being patient but it’s required and travel isn’t very feasible without one. 

What is the insurance position with regard to the car that was written off?  Are you expecting to receive sufficient funds to allow a replacement car to be purchased?

When you say you "need a car for work", do you mean that the role requires you to be mobile to fulfill the role, or do you mean that you need a car to get to and from work?
If the role requires you to be mobile, it would seem to be your employer's responsibility to facilitate suitable transport.
If the car is required to get to / from the place of work, this is private use and you may need to consider alternative transport options.  Is public transport available?  How far is the commute - could you walk / cycle?