Looking at a DMP

Fresh44

As the title says. And excuse the long thread so here goes. Currently in around 86k of debt. 

Santander cc £10500 (2 missed payments) 
santander od £2058 (4 missed payments) 
Halifax cc £8500 (2 missed payments) 
lloyds cc £9849 (2 missed payments) 
Mbna cc £7142 (2 missed payments? 
Monzo loan £560
monzo od £1950
updraft loan £5800 (2 missed payments) 
updraft loan £7800 (1 missed payment)
plend loan £7000 (2 missed payments) 
virgin cc £7568 (3 missed payments) 
virgin cc £4067 ( 1 missed payment) 
virgin loan £12700 (3 missed payments) 
HMRC £1180 upto date £180 pm

It’s not pretty i know. Got into a lot of debt during Covid and that’s why I find myself in the position I am in today. (In January I was in a bike accident and torn my ligaments in my left leg. I rested for four weeks and got back into work. Relying on pain relief to get me through the original injury, I actually became addicted to the pain relief, crazy it may seem and having never took a drug in my life previously I couldn’t believe it, it sent my mental health through the roof but after a 2 month trip to Ireland to see a relative I managed to sort myself out and get myself back into work next week. 

I contacted StepChange and they drew up a dmp plan for 6 years to pay the debt. (£1280 pcm)  Which sounds great to me.i can afford that as i was Paying 2.5k. I did apply for breathing space which runs out end of November so Im braced for thousands of letters, calls etc
 read some other people’s posts it seems the best way is to wait for defaults to come then contact StepChange? Or start the ball rolling now? How long will it take to get the defaults? 

I do have a house worth £265k owing £162k on the mortgage. All payments upto date. I’m worried about charging orders etc. could anyone advise me or help me make the decision on my next move? Obviously I have been down, but I’ve realised what I need to do to become debt free. 

Having read some of the stuff on here I think it’s great some of the help people get so well done on that. 

Grumpelstiltskin

OK You are in the right place now.

Read through this thread .
.In Debt and Wannabe Debt Free? first Steps to take are here, please read, then ask questions. — MoneySavingExpert Forum

Complete a honest SOA and format for MSE and paste on here.

The biggest mistake you can make is panicking and rushing into a DMP too soon.

Have you stopped paying all of the debts?

Have they defaulted?

Have you saved an emergency fund, as you will need that when something breaks down and you haven't got access to credit?

If you can answer those questions we can give you the best advice.

Fresh44

Hi 

thanks for reaching out, I have stopped paying the debts, and none have defaulted. I havnt saved any emergency fund as I’m starting back to work next week but will start when I get my first wage. 

Grumpelstiltskin

OK You will need  to open a basic ( no overdraft ) bank account with a bank that isn't connected with any of your debts, you appear to have debts with a number of banking groups so be careful.

Get your wages paid into it and transfer manually all vital direct debits, don't use a switch service.

fatbelly

Good advice from Grump, and it sounds like stepchange have also pointed you in the right direction

HMRC are priority creditors so if you have a £180 arrangement with them you have to build the dmp around that.

Charging orders can only happen following a ccj following a court claim. Nothing to worry about anyway but unlikely to happen unless you're intending not to pay anyone.

The other strategy that I might have expected Stepchange to push a bit is an IVA but this isn't going to have clear advantages over a 8- year dmp. If it was a 16-year one, I think they would have suggested it as an alternative

Fresh44

I have opened an account with starling bank and wages will be going in there from next week. I don’t know if I would have the time to self manage a dmp. Would I be best waiting for all to default? Would token payments help my situation? Thanks 

Grumpelstiltskin

Token payments will just prolong the agony, don't do them.

Yes don't pay anything until the debts have defaulted, this won't happen at the same time, the first few months will be a little bit messy but once you are up and running you just make standing orders to pay, a)  what you can afford and b) what the correct proportion of what you can afford.

You do realize defaults will disappear after 6 years ( assuming England or Wales) even if they have not been cleared. but if you start to repay before a default you get Arrangement to Pay markers that don't clear until 6 years after the final payment.

You will get phone calls and texts, block the numbers and ignore, also E Mails ignore them.
You must open any letters you get by snail mail as some could be important.

It isn't s hard as you think to run a DMP and remember you will be in control not your creditors.

Fresh44

Again Thanks for the help, I am aware after reading on here about the defaults etc. regarding anything coming in the post. I will be working away from home in blocks of 4-6 weeks, is there anyway I could request all correspondence to be by email? I’m afraid I may miss things in the post. 

Grumpelstiltskin

The worse you can get by snail mail is a letter before action, that has to be sent by snail mail, so no you can't get that by E Mail.
It is unlikely you will get one but you have to be aware it could happen.

Don't worry about that at the moment it would be way down the line if it happened at all.

Fresh44

One last question, my mortgage is with Halifax and I will be defaulting on an 8k credit card debt with them. What happens there when it’s time to get a product transfer? 

sourcrates

Fresh44 said:

One last question, my mortgage is with Halifax and I will be defaulting on an 8k credit card debt with them. What happens there when it’s time to get a product transfer? 

Secured and unsecured debts are very separate things, non payment of the unsecured will not effect the mortgage.

Re-mortgage with the same lender usually does not require a credit check, so you should have no issues there.