Moving direct debts to a different account for them to default

newbegin23

Hi all

I am really new to this I’ve managed to rack up some significant debt (loans) and now feel I’m in trouble.

i’ve read lots of threads on here and I feel relieved I’m not alone even though I felt so isolated. I was looking into getting a DMP, but then see threads saying that you should let your accounts default first, while that is very nerve racking I have some questions. I’m hoping some of you guys can help me out with.

The main thing I’d like to know is, could I transfer all my loan direct debits to another bank account that I don’t use and then just not pay them and wait for them to default? 

Or is it best to leave them in their current account that they’re in and move my salary and priority debts into the other bank account? Or

When my salary hits my account, could I just move my salary out of the account so the debts can’t be paid?

I’m trying to think of the less stressful way for me to deal with this considering my mental health is not as great that the moment.

appreciate anyone’s help and look forward to your replies.

Mark_d

Deliberately avoiding paying your debts sounds like a recipe for disaster.  Do you wants CCJs and bailiffs coming around?

newbegin23

Mark_d said:

Deliberately avoiding paying your debts sounds like a recipe for disaster.  Do you wants CCJs and bailiffs coming around?

Absolutely not, this is where I’m stuck I can’t afford the payments but I just don’t know what to  do for the best 

Grumpelstiltskin

OK You need to open a new basic ( no overdraft ) bank account with a bank group you don't owe any money to.

Then transfer manually ( don't use the switch service ) your income and vital direct debits( mortgage/rent council tax utilities etc) cancel all direct debts for debt and just leave your current account, don't use it again.

Whilst you are waiting for defaults save as much money as you can for your emergency fund.  You need this to cover things like washer breaking down, car failing MOT as you won't have access to credit.

sourcrates

Ignore the above remark about bailiffs and CCJ`s, these events can easily be avoided.

There`s no need to move any payments around, if your goal is to get defaults prior to debt management then you simply stop paying your non priority credit debts.

What ever payment method you use, you remove their ability to take payment.

You only need swap bank accounts if you owe your bank money, if that`s the case a new bank account is a pre-requisite to starting a DMP.

Once all defaults are in, you can make whatever arrangements you see fit with creditors/collectors.

newbegin23

sourcrates said:

Ignore the above remark about bailiffs and CCJ`s, these events can easily be avoided.

There`s no need to move any payments around, if your goal is to get defaults prior to debt management then you simply stop paying your non priority credit debts.

What ever payment method you use, you remove their ability to take payment.

You only need swap bank accounts if you owe your bank money, if that`s the case a new bank account is a pre-requisite to starting a DMP.

Once all defaults are in, you can make whatever arrangements you see fit with creditors/collectors.

Phew thank you. I didn’t start worry reading that comment  

I don’t owe the current bank any money it’s only used to have my salary paid in and my direct debts come out..

i was actually thinking of jumping straight into dmp and doing that agree to pay thing. Might just take the money that’s waiting to pay my debts and then put it in an emergency fund and then wait to default

Grumpelstiltskin

If you jump in now before the debts have defaulted you get Arrangement to Pay markers. This stay on your credit file for 6 years after the final payment, so if the debt takes 5 years to clear it will be 11 years before your credit record clears.

Once the debt has defaulted the default clears after 6 years even if the debt hasn't been fully paid,  this explains why you are advised to let the debts default first.

sourcrates

If the effect on your credit file doesn't really bother you that much, then you can of course go into an arrangement with your creditors if you want to.

However, you can`t just switch from making contractual repayments to arranged payments, without first informing your lenders of your financial difficulties, so the process is the same, stop making payments, write and tell them your circumstances, tell them what you can pay, and when, and always ask them to stop charging you interest.

Once you hear back from them, and come to an agreement, then you can start paying as soon as you like, just keep in mind an emergency fund will be needed at some point, so if you can budget that in as well, so much the better.

Rob5342

The other thing is that once debts have defaulted they are more likely to be sold to debt purchasers who will be open to settlement offers so you can settle them for a lot less than you might pay otherwise. If you don't wait for defaults you can easily pay teice as much to clear everything and have a credit record that is harmed for twice as long. 

Defaulting really isnt that scary at all. The first default letter you get can seem a bit alarming but you soon realise that everyone sends a letter saying pretty much the same thing. Talk of debt collectors can sound very alarming too but again its nothing to worry about. The letters are normally quite friendly to start with, we are here to help you etc. As. long as you are making payments to someone once defaulted then nearly all of the timw it all goes smoothly

exponential

Mark_d said:

Deliberately avoiding paying your debts sounds like a recipe for disaster.  Do you wants CCJs and bailiffs coming around?

This is NOT helpful at all. Why would you post this to someone who's clearly worrying and needs helpful guidance??

newbegin23

Thanks for all the advice, I’m just trying to take the first steps which is making me feel uneasy I’ve never missed a payment and keep thinking I’m gonna get in so much trouble,  but I really have come to a point that I have no choice but to miss payments to get back on the right track, expect a lot of questions from me as I embark on this journey and I’m bringing you all with me.