Questions about dmp vs defaulting

dobbysock

It’s a HP car we have about 2 years left and a balloon payment which we will not be doing (so returning the car). 

I agree about birthdays, it varies month to month.  it’s just that I have included the cost of Xmas over the year and also “days out” for birthdays. This is something we can definitely and will cut back on. 

Yes it’s looking like we will have to go on a dmp. Now just wondering if we should let the accounts default first or just go ahead with the dmp through step change/national debt line. 

EssexHebridean

Absolutely right to include the cost of Christmas in your “presents” pot - but that cost needs reducing, it sounds as though you have already realised this. For a family whose finances are healthy, spending £2400 a year on presents and Christmas might well be fine, but for a family with debt, this just isn’t sustainable. The other question is whether this money is actually being set aside? How much money do you have saved right now ahead of this Christmas for example - and how are you budgeting to use that? What steps can you put in place now to manage expectations and reduce that spend, enabling you to transfer whatever excess there may be to your Emergency fund? 

If you are going with the DMP then letting the debts default first is the usual advice on here - because you stop paying anything towards unsecured debts immediately, that gives time to build a robust emergency fund and perhaps also a fighting fund pot to be able to use for full and final settlements further through the process.