So stressed! DMP & Defaults

Sarahs2020

Hiya, 

I’ve spent all week chatting to PayPlan via Whatsapp, and finally come to my options. Their recommendation is IVA.., but also said I can do ‘self managed payment arrangement’ but they said they don’t advise this as some creditors say no. Then there’s bankruptcy. I definitely won’t be going bankrupt, and I don’t even think IVA is right for me. 

I owe around £10,000, which is a mixture of small credit cards, a loan and 2 store cards. I took these out when things were really tough and massively regret it. Due to being self employed and my income fluctuating so much,  I am constantly paying late, missing payments, some are with debt collectors etc, and I just can’t get my head round everything being paid at different times in the month. I’ve basically lost control. 

I’ve started reading stuff on here, as I as hoping to do a DMP with Payplan so I didn’t have to speak to creditors. Some are lovely, but some honestly make me panic. I’ve now read I could do this myself, but I don’t understand at what point I should try and negotiate a payment with creditors. Some are freezing interesting and letting me do reduced payments but only temporarily then it goes back to normal, and I am in a vicious circle. Does it matter who I pay any token payments to? The original creditor or the debt collector (and I find the debt collectors much easier to deal with for some reason!). Is there any advantage of waiting for a debt to be handed over to a debt collecting company as apposed to trying to keep the debt with the original creditor?

PayPlan are pushing for IVA, but with my work, I have really good months and extra money, and I honestly believe I can get this paid off. It’s just the amount of creditors I am dealing with which is causing me to lose sleep.  

Any advice welcome. 

sourcrates

Don`t do an IVA for a 10k debt.

IVA`s are for homeowners who owe more than 50k and can`t go bankrupt, that isn`t you.

Self managed DMP may work for you, you don`t ask approval from creditors about how much they will accept in payment, these are all unsecured, non priority debts that don`t get paid if the money won`t stretch that far, they know this, which is why they can be so vocal, ignore them, they can do nothing to you.

You wait ideally until everything defaults and debts are with collection agencies, you can then work out a budget and decide how much you want to pay to each debt, then arrange payment on each particular debt collectors website.

You tell them when they will be paid and how much, you are in control, not them.

Self management is easy peasy, there is no negotiation, and no need for stress, its simply business, you just pay what you can afford and that`s that, life goes on as normal.

Sarahs2020

sourcrates said:

Don`t do an IVA for a 10k debt.

IVA`s are for homeowners who owe more than 50k and can`t go bankrupt, that isn`t you.

Self managed DMP may work for you, you don`t ask approval from creditors about how much they will accept in payment, these are all unsecured, non priority debts that don`t get paid if the money won`t stretch that far, they know this, which is why they can be so vocal, ignore them, they can do nothing to you.

You wait ideally until everything defaults and debts are with collection agencies, you can then work out a budget and decide how much you want to pay to each debt, then arrange payment on each particular debt collectors website.

You tell them when they will be paid and how much, you are in control, not them.

Self management is easy peasy, there is no negotiation, and no need for stress, it’s simply business, you just pay what you can afford and that`s that, life goes on as normal.

Thank you, you’ve already made me feel less stressed. My gut was telling me an IVA is the wrong move but feeling like they are pushing me towards it as the best option. My income changes constantly, unfortunately, but when it’s good, I know I can get on top of things. When it’s not so good, I just can’t keep up. I just want to make really small payments so they are consistently getting something each month, then when I have spare income I can start trying to clear individual creditors. 

Whilst I want for them to be defaulted, do I just ignore them? Or tell them that’s what I am doing? Whenever I get a default notice I panic and scrabble around to pay what they are asking then back to square 1. 

Grumpelstiltskin

Do not contact any of your creditors, do not answer any phone calls or reply to any texts or  E Mails.

Open any letters you receive by snail mail, file them all you have to do anything about are letters before action.

When you get a default you decide if you any afford to pay them anything, you decide the amount, you set up a standing order for the payment, you are in control not them.

sourcrates

The absolute worst unsecured lenders can do is obtain a CCJ against you, and you repay the debt by instalments at an affordable rate, in the end that`s what all the rhetoric boils down to, most people won`t even bat an eyelid at that.

That kind of puts everything into perspective, debt collection is designed to frighten you into paying or else, well the "or else" is what`s described above, if you can live with that, then the fear has gone.

Yes, we advise you just let the collection process unfold, letters/calls etc, non payment will eventually lead to default, that`s when all interest stops, your credit file has a 6 year window until it clears again, and the debts go to collection agencies or will be sold, and are only too willing to agree to deals.

All you have to take notice of is any letters that specifically state legal action will be taken if you don`t agree a deal, that`s "will" be taken, not "may" be taken, they are know as LBA`s (letter before action) not likely you will get one, but something you should be aware of.

Oh, and don`t pay any more default notices, yes they will demand the full balance or the arrears to be paid, but that is a necessary prelude to defaulting, just let nature take its course and ignore it!!!

Rob5342

It's best to just ignore them as you want them to give up on you and default you.

It's very simple really. You work out how much you are going to pay each creditor and when, then when they have defaulted you just tell them what they will be getting. There is no need to speak to them, you can often tell them via their website or by email, or you can send them a letter if they decide to be awkward and don't provide any other way of writing. 

RAS

Given your fluctuating income, an IVA would be stressful as you need to make consistent payments each month.

You really do need to start a Statement of Affairs, ideally one that enables you to pay you absolutely essential costs each month. If your income doesn't cover that, it's essential that once you stop paying you debts, you put money into a budgeting fund. If you know that 4 months a year roughly you be in deficit, you need a fund that covers that eventuality.

Then you can pay the essentials and in good months buy or put aside for the costs that are more flexible like clothes, haircuts, dental care.  That's also when you stash money into an emergency fund. 

Sarahs2020

Grumpelstiltskin said:

Do not contact any of your creditors, do not answer any phone calls or reply to any texts or  E Mails.

Open any letters you receive by snail mail, file them all you have to do anything about are letters before action.

When you get a default you decide if you any afford to pay them anything, you decide the amount, you set up a standing order for the payment, you are in control not them.

Can I block their numbers? Some of them repeatedly call and I just stare at the phone till it stops and can’t even bring myself to listen to the voicemails. 

When a creditor finally defaults, can that action then not be undone? 

Sarahs2020

sourcrates said:

The absolute worst unsecured lenders can do is obtain a CCJ against you, and you repay the debt by instalments at an affordable rate, in the end that`s what all the rhetoric boils down to, most people won`t even bat an eyelid at that.

That kind of puts everything into perspective, debt collection is designed to frighten you into paying or else, well the "or else" is what`s described above, if you can live with that, then the fear has gone.

Yes, we advise you just let the collection process unfold, letters/calls etc, non payment will eventually lead to default, that`s when all interest stops, your credit file has a 6 year window until it clears again, and the debts go to collection agencies or will be sold, and are only too willing to agree to deals.

All you have to take notice of is any letters that specifically state legal action will be taken if you don`t agree a deal, that`s "will" be taken, not "may" be taken, they are know as LBA`s (letter before action) not likely you will get one, but something you should be aware of.

Oh, and don`t pay any more default notices, yes they will demand the full balance or the arrears to be paid, but that is a necessary prelude to defaulting, just let nature take its course and ignore it!!!

If I got a CCJ, does that mean going to court, or something I’d need to declare (like when you have to declare insolvency) ?

do debt collectors ever come round your house if you stop paying and ignore all contact?

Sarahs2020

Rob5342 said:

It's best to just ignore them as you want them to give up on you and default you.

It's very simple really. You work out how much you are going to pay each creditor and when, then when they have defaulted you just tell them what they will be getting. There is no need to speak to them, you can often tell them via their website or by email, or you can send them a letter if they decide to be awkward and don't provide any other way of writing. 

What’s the difference between paying a creditor my own amount before I am defaulted, as apposed to after I’ve had a default notice?

So I could effectively decide on all the amounts I want to pay my creditors and pay them all on the same day that I chose, and ignore their own ‘payment due dates’ ?

Grumpelstiltskin

Sarahs2020 said:

Rob5342 said:

It's best to just ignore them as you want them to give up on you and default you.

It's very simple really. You work out how much you are going to pay each creditor and when, then when they have defaulted you just tell them what they will be getting. There is no need to speak to them, you can often tell them via their website or by email, or you can send them a letter if they decide to be awkward and don't provide any other way of writing. 

What’s the difference between paying a creditor my own amount before I am defaulted, as apposed to after I’ve had a default notice?

So I could effectively decide on all the amounts I want to pay my creditors and pay them all on the same day that I chose, and ignore their own ‘payment due dates’ ?

If you start before a default you get Arrangement to Pay markers. They don't disappear until 6 years after your final payment, so you pay foy 5 years and the markers stay for a further 6 years 11 years in total.

If the debts default the marker disappears 6 years from that date even if the debt has not been repaid.

Look stop panicking about CCJs and debt collectors knocking at your door, a unlikely to happen and b not the end of the world. These are only unsecured debts nothing vital

The worse thing you can do is panic, nothing terrible will happen.