Advice on Defaulting and DMP

jmarquez

Hi everyone

I'm very new to all this so would like some advice on how best me and my husband can approach our debt situation. For background, this debt has been an accumulation of expenses since 2018 (from my husband moving from our home country to the UK, crazy expensive visa fees over the last years, parent's death and having to expatriate their remains) 

We are currently in a situation where all our unsecured debts (except the one my mum loaned us) are due to finish in 2026 if we keep up with payments. However, due to expenses outweighing our income we are always in a deficit each month and can't really afford to live normal if we pay off all our unsecured debts first. 

After reading a few threads here, I am thinking of opening a new bank account, waiting for our accounts to default, save up an emergency pot and then going for DMP through Stepchange. 

A few questions are: 

a. do you think this is advisable? If not, what approach would you suggest? 
b. where should we keep the emergency pot? Does this mess up the DMP and they just make you want to pay this into the debts instead? 
c. our car is really about to give up soon, and we would need a new  - should we part exchange our car now and buy a new one before DMP? We are not looking for anything  a lot more than the current part exchange value of our car
d. I am afraid of CCJs, how likely is it that legal action will be sought after us if we aim to default and ignore our creditors

Our SOA are below. I'm aware we can cut back of some things but this is how it is at the moment. 

Thank you very much for your time! Any input is appreciated.

[font=courier new][b]Statement of Affairs and Personal Balance Sheet[/b][b]

Household Information[/b]

Number of adults in household........... 2

Number of children in household......... 2

Number of cars owned.................... 1[b]

Monthly Income Details[/b]

Monthly income after tax................ 1893

Partners monthly income after tax....... 1500

Benefits................................ 170

Other income............................ 0[b]

Total monthly income.................... 3563[/b][b]

Monthly Expense Details[/b]

Mortgage................................ 0

Secured/HP loan repayments.............. 0

Rent.................................... 1306

Management charge (leasehold property).. 0

Council tax............................. 198

Electricity............................. 56.5

Gas..................................... 56.5

Oil..................................... 0

Water rates............................. 50

Telephone (land line)................... 0

Mobile phone............................ 66

TV Licence.............................. 0

Satellite/Cable TV...................... 12.98

Internet Services....................... 34.99

Groceries etc. ......................... 400

Clothing................................ 10

Petrol/diesel........................... 240

Road tax................................ 25

Car Insurance........................... 43

Car maintenance (including MOT)......... 21

Car parking............................. 0

Other travel............................ 0

Childcare/nursery....................... 0

Other child related expenses............ 15

Medical (prescriptions, dentist etc).... 26

Pet insurance/vet bills................. 0

Buildings insurance..................... 14.77

Contents insurance...................... 0

Life assurance ......................... 10.45

Other insurance......................... 18

Presents (birthday, christmas etc)...... 41

Haircuts................................ 26

Entertainment........................... 25

Holiday................................. 25

Emergency fund.......................... 25

Vaping.................................. 50

Personal care........................... 15

Family Support ......................... 80[b]

Total monthly expenses.................. 2891.19[/b]

[b]

Assets[/b]

Cash.................................... 0

House value (Gross)..................... 0

Shares and bonds........................ 0

Car(s).................................. 1000

Other assets............................ 0[b]

Total Assets............................ 1000[/b]

[b]

No Secured nor Hire Purchase Debts[/b]

[b]Unsecured Debts[/b]

Description....................Debt......Monthly...APR

Halifax........................8148......495.......22.44

Halifax........................1000......50........0

Castle Community...............1945.84...173.6.....31.85

Loan from parents..............17000.....300.......0

Drafty.........................900.......90........96.2

Paypal.........................1982.32...72.82.....21.9

Reevo..........................556.77....72.72.....42.6

Zopa...........................1275.3....141.7.....36.5

Zopa...........................1870.27...103.9.....33.4

Castle Community...............2365.82...173.6.....26.17[b]

Total unsecured debts..........37044.32..1673.34...-  [/b]

[b]

Monthly Budget Summary[/b]

Total monthly income.................... 3,563

Expenses (including HP & secured debts). 2,891.19

Available for debt repayments........... 671.81

Monthly UNsecured debt repayments....... 1,673.34[b]

Amount short for making debt repayments. -1,001.53[/b]

[b]Personal Balance Sheet Summary[/b]

Total assets (things you own)........... 1,000

Total HP & Secured debt................. -0

Total Unsecured debt.................... -37,044.32[b]

Net Assets.............................. -36,044.32[/b]

[i]Created using the SOA calculator at www.LemonFool.co.uk.

Reproduced on Moneysavingexpert with permission, using other browser.[/i][/font]

Scott_Weiland79

re the questions 

. do you think this is advisable? If not, what approach would you suggest? I would recommend speaking with Stepchange asap, the sooner you can get something in place the better. Some of the lenders you have mentioned are adverse creditors these guys your better to have a plan in place than default/and have them chasing you. I have being with Stepchange a few years now and I can only praise them for the way they have helped me with my journey. 



b. where should we keep the emergency pot? Does this mess up the DMP and they just make you want to pay this into the debts instead? 

re an emergency fund no its fine, when you speak with stepchange they will do you a budget and you can as part of that budget you pay into a savings account for things like xmas birthdays emergencies its only a small amount though from memory a max 20-30 pm etc. The only time it becomes an issue is if you have thousands sitting savings, stepchange will query it.

c. our car is really about to give up soon, and we would need a new  - should we part exchange our car now and buy a new one before DMP? We are not looking for anything  a lot more than the current part exchange value of our car

re the car if you are looking at taking on finance for a vehicle you do need to get advice from stepchange re this, i am not 100 percent but i dont think you cant do new finance applications or credit applications when you start whatever solution it is they recommend

d. I am afraid of CCJs, how likely is it that legal action will be sought after us if we aim to default and ignore our creditors

Re that it varies my advice the sooner you speak with Stepchange the better they will write to your creditors and offer plans of repayment. This in most cases will prevent the collection agency/legal stage in the bulk of cases.

From my own experience some creditors will look at the ccj very quickly others wont I got issued a ccj in 2020 i was in hospital with covid at the time, I had done what we all have probably done ie had a letter/ignored it. I then got admitted with covid came out of hospital 2 weeks later to find a letter saying a ccj had being issued. If your gunna delay speaking with step change I would write/email each of your credits and just say look your in abit financial difficulty/ask them to put a hold on the accounts for 30days just while you get some debt advice.

jmarquez

Scott_Weiland79 said:

re the questions 

. do you think this is advisable? If not, what approach would you suggest? I would recommend speaking with Stepchange asap, the sooner you can get something in place the better. Some of the lenders you have mentioned are adverse creditors these guys your better to have a plan in place than default/and have them chasing you. I have being with Stepchange a few years now and I can only praise them for the way they have helped me with my journey. 



b. where should we keep the emergency pot? Does this mess up the DMP and they just make you want to pay this into the debts instead? 

re an emergency fund no its fine, when you speak with stepchange they will do you a budget and you can as part of that budget you pay into a savings account for things like xmas birthdays emergencies its only a small amount though from memory a max 20-30 pm etc. The only time it becomes an issue is if you have thousands sitting savings, stepchange will query it.

c. our car is really about to give up soon, and we would need a new  - should we part exchange our car now and buy a new one before DMP? We are not looking for anything  a lot more than the current part exchange value of our car

re the car if you are looking at taking on finance for a vehicle you do need to get advice from stepchange re this, i am not 100 percent but i dont think you cant do new finance applications or credit applications when you start whatever solution it is they recommend

d. I am afraid of CCJs, how likely is it that legal action will be sought after us if we aim to default and ignore our creditors

Re that it varies my advice the sooner you speak with Stepchange the better they will write to your creditors and offer plans of repayment. This in most cases will prevent the collection agency/legal stage in the bulk of cases.

From my own experience some creditors will look at the ccj very quickly others wont I got issued a ccj in 2020 i was in hospital with covid at the time, I had done what we all have probably done ie had a letter/ignored it. I then got admitted with covid came out of hospital 2 weeks later to find a letter saying a ccj had being issued. If your gunna delay speaking with step change I would write/email each of your credits and just say look your in abit financial difficulty/ask them to put a hold on the accounts for 30days just while you get some debt advice.

Hi! Thanks so much for your reply. I really appreciate it. You mentioned that the creditors I mentioned are adverse creditors. Please can you explain to me what this means? 

Scott_Weiland79

jmarquez said:

Scott_Weiland79 said:

re the questions 

. do you think this is advisable? If not, what approach would you suggest? I would recommend speaking with Stepchange asap, the sooner you can get something in place the better. Some of the lenders you have mentioned are adverse creditors these guys your better to have a plan in place than default/and have them chasing you. I have being with Stepchange a few years now and I can only praise them for the way they have helped me with my journey. 



b. where should we keep the emergency pot? Does this mess up the DMP and they just make you want to pay this into the debts instead? 

re an emergency fund no its fine, when you speak with stepchange they will do you a budget and you can as part of that budget you pay into a savings account for things like xmas birthdays emergencies its only a small amount though from memory a max 20-30 pm etc. The only time it becomes an issue is if you have thousands sitting savings, stepchange will query it.

c. our car is really about to give up soon, and we would need a new  - should we part exchange our car now and buy a new one before DMP? We are not looking for anything  a lot more than the current part exchange value of our car

re the car if you are looking at taking on finance for a vehicle you do need to get advice from stepchange re this, i am not 100 percent but i dont think you cant do new finance applications or credit applications when you start whatever solution it is they recommend

d. I am afraid of CCJs, how likely is it that legal action will be sought after us if we aim to default and ignore our creditors

Re that it varies my advice the sooner you speak with Stepchange the better they will write to your creditors and offer plans of repayment. This in most cases will prevent the collection agency/legal stage in the bulk of cases.

From my own experience some creditors will look at the ccj very quickly others wont I got issued a ccj in 2020 i was in hospital with covid at the time, I had done what we all have probably done ie had a letter/ignored it. I then got admitted with covid came out of hospital 2 weeks later to find a letter saying a ccj had being issued. If your gunna delay speaking with step change I would write/email each of your credits and just say look your in abit financial difficulty/ask them to put a hold on the accounts for 30days just while you get some debt advice.

Hi! Thanks so much for your reply. I really appreciate it. You mentioned that the creditors I mentioned are adverse creditors. Please can you explain to me what this means? 

Yeah sure its basically lenders that lend to people when there credit history is ‘bad’ or ‘very poor’.  Lenders offering loans to those of us with adverse credit will likely charge higher interest rates. If you look at the aprs of some of your debts they are quite high

ie these guys

Reevo..........................556.77....72.72.....42.6

Zopa...........................1275.3....141.7.....36.5

Zopa...........................1870.27...103.9.....33.4

Have you spoken with stepchange? I know its stressful but honestly if your starting to get letters and your worried re ccjs defaults etc and if your stressed re your debts speak with them asap.

The first thing they will do with you is a budget and work out what you can afford, once thats agreed they write to your creditors and that can stop things escalting.

Dont make the mistake I did, I have a ccj because I buried my head in the sand and I never would again.