Here I go... Start towards my Debt Free Life with a Self Managed DMP.

BlueLionKing

Hello- MoneySaving/DebtFree Wannabe here!!  

Have been lurking and reading through the DFW threads for the past few weeks- a BIG thank you to all that post with your own experiences and knowledge- makes this situation of mine feel a little less lonely and scary.

This coming month will be my first month I will not be able to make all of my minimum payments; having only got this far by using one credit source to pay another (until now).

Before finding these threads, I’d been for the last few weeks researching my available options online; including using StepChange and NDL websites, and had been considering a DMP via them, or even Bankruptcy.

I thankfully then looked to these trusted MSE Forums again (whom I’ve used previously about a decade ago and successfully reclaimed bank charges) and have been reading and digesting all the information; and I am going to do the self-managed DMP route (as I want to repay what I owe; I just can’t meet the combined monthly repayments anymore).

 

My Plan for my Self-Managed DMP (after all my reading on here- thank you all) :

-I’ve written a debt summary, and calculated my total current debt which I’m very ashamed to say currently stands at just under 60K (combination of denying there’s been a problem and spending beyond my means, consolidation loan to pay off consolidation loan, 0% offers ending etc) with a total of 15 creditors (1 x Overdraft, 2 x Loans and 12 x credit cards). (This total is also x1.5 times my yearly salary before tax).

As I said, up to now I’ve not missed any payments on anything; so, all my priority debts are thankfully OK.

OVERDRAFT:

Natwest – £4805 (Overdraft limit now £4900)

 

LOANS (Unsecured):

Natwest Loan- £10,955 (Original Loan amount £12,000)

Admiral Loan- £11,765 (Original Loan amount £25,000)

 

CREDIT CARDS:

Aqua- £5,300

Capital One (Card 1)- £1500

Capital One (Card 2)- £400

Zopa- £400

Vanquis - £855

Virgin- £1,240

Natwest- £3,450

Paypal- £3,245

Fluid- £1,970

MBNA- £6,700

HSBC- £4,000

Asda- £3,300

 

-I’ve set up a new basic bank account (no credit facilities!) and set up for my wages to now be paid into this new account. (It’s a Starling Account so been able to set up ‘saving spaces’ to budget such as for one off expenses (I.e birthdays, Christmas, car insurance, car maintenance, home appliance failure etc).

-I cancelled all my Direct Debits into the old account; and re-set up the priority ones (i.e rent, fuel, water, etc) to come out of the new bank account.

-I plan now to stop all payments to the x15 creditors and await for them to default; at which time I can then begin making payments again to pay off the debts (as from what I’ve read on here, once debt defaulted the interest/charges will then stop, and my payments will be going towards paying off what I actually borrowed as opposed the interest charges).

-In the meantime, I am going to use money I’m now not using for these minimum monthly payments to save for an Emergency Fund and for any potential future Full and Final Settlement offers.

-I’ll ignore all communication from creditors for now (may write to them and ask for all communication in writing. Can I ask by email only?), in pursuit of getting defaulted by them asap, before then commencing payments to them via a Standing Order.

 

My only question I have which I’m a little confused about is in relation to my arranged Overdraft (Overdraft was originally agreed at £5000 but I reduced it myself in the past 2 months to start bringing it down to £4900.

As of today it stands at £4805; but when next month’s interest is added I will go over my arranged overdraft).

So my question is, do I wait like the loans and credit cards, not pay anything and let it go to default the same way; OR do overdrafts not work the same and should I make either a small payment to cover the interest and bring balance down a little each month or use all my available funds to pay the overdraft off before I begin on building an Emergency Fund/Future Settlement Funds?

 

Once again, thank you to all for your help. Here begins my journey to being Debt Free. I feel energised and ready to tackle this. ….

Blue 

Grumpelstiltskin

As long as you are happy that  your income is going into your new account then just ignore your overdraft, it will just become another unsecured debt.

Don't pay anything to reduce it.

BlueLionKing

Many Thanks Grumpel. I'll just wait now then for them all to Default.

Blue

Aimingforthegoodlife

@BlueLionKing best of luck on this journey, well done for sitting down and working out what you owe, that's the biggest step! Will check in frequently!

Jaytee

Hi
I am in a near identical situation to you except one of my credit card debts has now defaulted and it sent me into a tailspin. I was convinced I would be in an episode of can't pay, we'll take it away!
I will watch your thread with interest. I am a natural worrier and always want to do 'the right thing' so it is an uncomfortable position for me but I am grateful for everyone who has shared their experience and knowledge. It feels less lonely.
Good luck!

collinsona

Following your journey with interest! Good luck xx

BlueLionKing

Aimingforthegoodlife said:

@BlueLionKing best of luck on this journey, well done for sitting down and working out what you owe, that's the biggest step! Will check in frequently!

Many Thanks, much appreciated 🙏🏼  

BlueLionKing

Jaytee said:

Hi
I am in a near identical situation to you except one of my credit card debts has now defaulted and it sent me into a tailspin. I was convinced I would be in an episode of can't pay, we'll take it away!
I will watch your thread with interest. I am a natural worrier and always want to do 'the right thing' so it is an uncomfortable position for me but I am grateful for everyone who has shared their experience and knowledge. It feels less lonely.
Good luck!

Best of luck to you too Jaytree!
  

 I can, as I assume most of us can, emphasise with the feeling of debt loneliness as it’s a subject we sadly don’t talk about enough with friends and family; but I’m very glad your feeling a little less alone, as am I 😊

BlueLionKing

collinsona said:

Following your journey with interest! Good luck xx

Many Thanks Collinsona; we’ve got this! 👍🏻

2021rdsunshine

Hi Blue! Well done in starting this journey to become debt free. Your plan looks quite organised to me and is basically how I started in November 2023. 

Bear in mind that creditors might take quite a few months to default and in the meantime they will call and write to you saying they want to “help you “. I also chose to ignore all of it and wait for defaults. I have less creditors than you so I didn’t bother to even write to them asking for all communication to be by letter, I just ignored the phone calls and blocked some of the numbers. I hardly get any calls now. 3 of my 4 creditors have recently defaulted and I’m paying what I decided to pay by standing order. So yes it seems daunting at first but honestly it does get much easier. I would suggest that you create 

a  file for all your different creditors so you know what’s happening with each individual account. If you have any questions post it on the general debt free wannabe on this forum and people will come along to advise. 

Wish you very good luck , you doing everything right and you will get there for sure xx

BlueLionKing

Thanks for tip 👍🏻 I’ve purchased a file organiser to file letters away for each creditor; but I’ll create a quick table now in Word for a quick visual glance of where we’re at i.e dca, default date, sold date etc 

Many Thanks @2021rdsunshine 😊