Debt questions around DMP

Discounted2024

Hi All, 

I've had a good read on the forums and feel more clued up on what I need to be doing, so thanks for the knowledge shared.
I do have a few questions though if some kind soul could help with.

1) I see most saying run your own DMP rather than someone else and understand why regarding defaults/building funds and settlements, however what's the consensus about writing to creditors explaining your situation, asking for interest to stop and agreeing a payment plan before it gets to that stage?

2) When going on the self managed DMP route, how does that work for an overdraft, would they not just keep charging the interest every month, how do you get those down the default route?

3)As above but for a loan, will it just be once a few months have passed it will just default?

In terms of starting a DMP, so far I've done the following:
-Opened a different bank for wages and bills to be paid from.
-Cancelled any direct debits in place
-Stopped paying others not on DD
-Start putting what I would pay the creditors in to the new bank.

It's early days and only a few payments have been missed so far, and I've had emails on those regarding late fees etc

Continuing on from here what should I be doing, just the same for the next few months until I start seeing default letters?

What's the process from then?
Is there anything else I need to be doing?

Kind regards 

pogg000

Have you sorted and checked your soa?

well done in your first steps

13thlegion

Discounted2024 said:

... however what's the consensus about writing to creditors explaining your situation, asking for interest to stop and agreeing a payment plan before it gets to that stage?

The consensus would be not to bother.

1. Doing so runs the risk of an arrangement to pay marker going on your account. These are not great as they will stay on your credit file for 6 years after you borrowing is paid off, compared to 6 years from the date of default. Made up example. If you owe £1000 and pay £10 a month back as a DMP. If it defaults this month any sign of the default vanishes from your record in May 2030. If you have an AP marker it's on your record until September 2038.
2. It's acting like the creditor is a human individual who treats you as an individual. They are faceless business driven by numbers and you are just one of many many numbers to them.
3. The company you will eventually pay will most likely not be the original creditor but a debt purchasing company that will buy your debt for a huge discount. Much later down the line you can negotiate a discount settlement figure.

Creditors are under pressure to not default as quickly but the sad situation is every other alternative is worse for the consumer (i.e. you).

Discounted2024

Thanks for your replies.

So with regards to the overdraft that will just keep getting interest each month until it hits its limit or defaults?

stu12345_2

from my wife's experience, the bank shut her reward account down,  very fast, stopped the  overdraft interest very fast but allowed her to open a basic bank account with them whilst she repays the overdraft via a dmp

fatbelly

It's easier if the overdraft is at or above its limit. If you can't engineer that then you may have to ask them to close the account

Discounted2024

Thanks for the replies, much appreciated.

First lot of all payments now missed.
So far just emails, the odd letter saying payment missed and a couple of calls that I've not answered.

I assume for now I just keep ignoring all until the default letters?
Will all come through as a letter?

Is there anything else I should be doing in the meantime?

Grumpelstiltskin

Anything else I should be doing?

Complete a SOA so you know where your money is going and save as much  as you can towards an emergency fund and possible settlements down the line.

RAS

Default letters have to arrive by mail. By law you have to be sent a warning letter that sounds scary, demanding you repay the lot. Often a reminder and then the formal default letter before the default is listed on your credit record, although there may be some delay.

So ignore the texts and emails, but open letters once a week and file.

Have you set up an emergency fund as you need that once the defaults kick in.

Discounted2024

Thanks.

I received a letter from HSBC saying.

DEFAULT SUM NOTICE

This is a default sum notice given in compliance with the Consumer Credit Act 1974

A "default sum" is any charge we make, excluding interest, as a result of a breach of the credit agreement by you. This would include fore example, charges for paying late or for exceeding the credit limit.

The total amount of all default sums is included in this notice is £12.00.


Scary as it reads i can just ignore these types for now?
What would the default letter be that i have to pay attention to?

Also just thinking next steps, CCA's only once each gets defaulted and passed on to someone else?

RAS

This letter relates to a "default sum", which in this case is £12 for late payment or exceeding your credit limit. I'm going to guess quite a few people might be confused into thinking the creditor are defaulting the account?

The warning letter sent before a default is issued gives you a month in which to pay back the entire sum owed to the creditor, so £xxxx.xx. Come back when you get one of those.