£53,000 in unsecured debt, feeling very scared.

MissCarmen

Just exploring all options here… 

The other path, which is what I was thinking before I found this forum, would be:

Pay the arrears to avoid the defaults & protect credit file. 

Juggle & scrabble until the sale of the rental property goes through.

Then use that money to pay down some of the debt, thereby making it more affordable. 

At the same time keep working to bring my income back up and earn more again through my biz and other ways. 

The benefit would be not trashing credit file.

The risk is that something goes wrong, and I can’t afford priority debts and essential living expenses.

and end up delaying but eventually doing DMP and getting defaults anyway.

As per Fatbelly’s advice above, I’m trying to slow down and explore all options rather than panicking & rushing into action. 

What do you all think? 

Working_Mum

I think the way to frame it in your mind is that you have a six year plan (from when the last default is registered). During those six years you should seek to secure your income and grow your savings whilst chipping away at the debts via your DMP.

If you need to take a break from paying your non-essential debts then you should be able to do so. You'll just need to liaise with PayPlan.

During the 6 years you may be a bit limited with regards to where you get your mortgage from but renewing with your existing lender or working with a broker who specialises in cases with defaults are open to you. After 6 years the defaults will drop off your file so you'll be able to apply for a new mortgage etc etc. 

Once you've either saved up or have monies in from your house sales then you'll be able to offer F&F payments to the debt collection agencies (who will have bought your debt from the original lenders by then). They buy the debt for pennies in the £ so you can play a very smart game to pay the debt off at reduced rates. There is this thread if you want to get a feel for your choices over the next few years - it is super useful:-

https://forums.moneysavingexpert.com/discussion/5897083/dmp-mutual-support-thread-part-13#latest

Well done on making some changes to your life - they're significant and you'll reap the benefits for years to come  - I feel sure you'll get into the swing of things and you're stress levels will reduce significantly.

Good luck.

MissCarmen

Does it matter that my mortgage is with NatWest, who I also have a credit card with? 

They are the ones who’ve sent a default notice for credit card straight away (they said because I started the DMP, it triggered the default). 

Mortgage is up to date. 

Will I still be able to remortgage with them when fix ends in Dec 2025? 

Hoenir

MissCarmen said:

Does it matter that my mortgage is with NatWest, who I also have a credit card with? 

Certainly does you no favours in terms of future mortgage product offers. Relationships are ultimately two way. Shaft somebody in business and they are equally as likely to play hardball. Actions have consequnces. 

Working_Mum

Hoenir said:

MissCarmen said:

Does it matter that my mortgage is with NatWest, who I also have a credit card with? 

Certainly does you no favours in terms of future mortgage product offers. Relationships are ultimately two way. Shaft somebody in business and they are equally as likely to play hardball. Actions have consequnces. 

This comment ^^^^ doesn't feel supportive or helpful.

My understanding is that the mortgage arm and the credit card arm are separate entities and they don't really talk to each other. To switch to an existing lenders new mortgage rate etc shouldn't need a credit check or any searches to be done so they tend to just transfer over to the new deal at the time.

Don't worry about it yet MissCarmen - focus on today and covering your essential bills and the way forward will become clear.

sourcrates

Panicking about non essential unsecured debts is actually quite normal, as people wrongly assume there will be terrible consequences if they don`t pay, obviously apart from your credit file suffering, the reality is anything but that.

The unsecured lenders tend to make the most noise as they are well aware non essential debts don`t get paid if the money dries up, best advice is don`t struggle if you don`t have too, nothing moves that quick in the world of debt collection, once your money comes through, and your debts are all defaulted and sold on, you should be able to settle all you owe with a bit of clever negotiation and forward thinking.

Re-mortgaging with the same lender does not normally entail any new credit checks, so as long as mortgage payments are kept on track, you should be more than fine.

Debt management is a well trodden path for homeowners who have little or no other choice when dealing with bad debts, just keep a calm head, and take your time with things, there`s no rush.

MissCarmen

Thank you Sourcrates. 
That's reassuring. 

I've actually had 2 default notices already, from Halifax and Tesco bank, which seems really quick compared to what I read from others. 

I only just went onto my DMP. Payplan have been contacting my creditors, maybe 3 weeks ago, and I made the first reduced DMP payment 2 weeks ago. 

This week both those default notices came. 

Is it anything to be concerned about, that they came so quickly? I actually spoke to Halifax, before I read this forum, and the girl I spoke to said the default is automatically triggered by the DMP. I just haven't read of others getting them so quickly. 

sourcrates

Its a mixed bag where defaults are concerned, some default sooner than others.

Are you certain you have received "default notices", and not "notice of default sums in arrears"?

They are very different things, the former will demand full payment of the arrears within 14 days or your account will be closed and a default registered on your credit file.

The latter is just a notice that you are behind with your payments and have been charged a £12 default fee.

Read what it says very carefully, as I suspect its the latter you have been sent.

MissCarmen

Hi Sourcrates, 

They are definitely default notices demanding full payment of the arrears within 14 days or your account will be closed and a default registered on your credit file.

sourcrates

MissCarmen said:

Hi Sourcrates, 

They are definitely default notices demanding full payment of the arrears within 14 days or your account will be closed and a default registered on your credit file.

Well aren't they quick off the mark then, that`s good, some people confuse one for the other sometimes.