DMP Newbie

nodebtdebt

Hi all,

I am at the very start of my Debt-free wannabe journey.
I have £ 47000 in debts (this includes a hire-purchase car)

Went onto the StepChange website and it suggested a DMP.
I have not defaulted on any of my payments, but I know that in the next month or so I won't be able to pay.
Currently I feel a bit overwhelmed by all the terminologies and feel completely frozen in what to do next.
If I haven't missed any payments yet but know I will struggle soon, what would be the best course of action?

sourcrates

When your in a hole, stop digging is the best advice.

Stop paying your non essential debts, work out a budget you can live on, then see what`s left over for debt repayments.

If you want to keep the car, that becomes a priority debt, you then just split your disposable income amongst your remaining creditors.

Best practice is to do this yourself, its very easy, and leaves you in control of how things work, you can wait until everything defaults but there are issues with this at present, but at the very least give yourself a six month hiatus from payments and save an emergency fund.

Then just start paying whoever writes to you basically, as debts get assigned to debt collectors or sold on in time.

That`s debt management in a nutshell, another thing is don`t bank where you have debts, so a new bank account is recommended if your always in your OD, then the OD just becomes another non essential debt to service.

nodebtdebt

Thank you for the advise. 

Me and my partner have a shared account with the bank where I have debts. 
If I were to open a new current account for myself and not use my personal current account with the bank I have debt with, then have my salary put into the new bank account with a different bank, could I still keep the shared account with my partner for our direct debits?
The debts are solely in my name, not my partner

2021rdsunshine

nodebtdebt said:

Thank you for the advise. 

Me and my partner have a shared account with the bank where I have debts. 
If I were to open a new current account for myself and not use my personal current account with the bank I have debt with, then have my salary put into the new bank account with a different bank, could I still keep the shared account with my partner for our direct debits?
The debts are solely in my name, not my partner

If you have debts in the shared account you better stop using that account altogether. To pay your direct debits you have to pay money in the account and the bank have the right to use that money for repayment of debt and your direct debits won’t be honoured.  Open a new bank account and transfer manually all your direct debits to the new account. 

nodebtdebt

2021rdsunshine said:

nodebtdebt said:

Thank you for the advise. 

Me and my partner have a shared account with the bank where I have debts. 
If I were to open a new current account for myself and not use my personal current account with the bank I have debt with, then have my salary put into the new bank account with a different bank, could I still keep the shared account with my partner for our direct debits?
The debts are solely in my name, not my partner

If you have debts in the shared account you better stop using that account altogether. To pay your direct debits you have to pay money in the account and the bank have the right to use that money for repayment of debt and your direct debits won’t be honoured.  Open a new bank account and transfer manually all your direct debits to the new account. 

I don't have debts on the shared account and the debts I do havebare solely in my name.
My understanding was that they can't use the money from the shared account.
I was going to open a basic account with another bank and then just put money in the shared account for the direct debit we have on that shared account

sourcrates

For any bank to use the right of set off, the account the funds are drawn from must be in the name of the debtor.

A joint account does not technically meet this criteria, so cannot normally be subject to that rule, however it depends on how that rule is interpreted by different banks, some may allow it, whilst other will not.

Its always best to err on the side of caution and don`t bank where you have debts.

EssexHebridean

It’s a pain, I know, but if the bank did interpret it that they can use the money in the shared account, and then your priority DDs bounced as a result, that would give you so many more problems that to be honest, a straight move away might be a good plan. Even if you could successfully claim the money back again from the bank, you still have the headache of missed payments on priority stuff. 

Sometimes “safety first” is a good approach on this stuff. 

Rob5342

Changing accounts isnt that much of a problem really. You can open a Monzo or Starling account in about 10 minutes on the app and then most direct debits can be changed online with the respective companies.