A DMP and Budgeting

Conan1Sett

I have several debts at the moment. I have 4 defaulted accounts that were passed over to debt collection agencies. Three credit cards and one overdraft. I have another credit card that hasn't defaulted. I have a JSA advance. I have also two unsecured personal loans. The loans are doing the damage. Both are in arrears and cut into my monthly income by £300 between them. I cannot afford it.

My priority bills are not in arrears but I'm between positions. When I start a new job I will be changing my due dates for all my bills.

My Experian report says my total borrowing is 15k. I don't know how equity works but I'm fairly sure that the amount I've paid towards my mortgage so far would not cover the 15k borrowing.

I'm going to phone StepChange on Monday and request that they setup a DMP. I'm wanting to default on the loans. I don't know how likely it is they would pursue legal action or further action of any kind or would they be content with a monthly repayment. If the monthly repayment is so low I don't see how they would sit still for it.

I am wondering if there's a budget planner guide that displays certain outgoings that are mandatory and would have a minimum amount that would be allowed.

Altogether I'm worried that I will end up in the benefit system begging my relatives to help me furnish a council flat. 

RAS

OK slow down. Stop and breathe.

Into which account is your UC being paid? Do you owe anything to that provider or any in the same banking group? 

If so, you need a new basic bank account with a "safe" bank. This doesn't require a credit check.

Get the UC paid into your safe account, transfer DDs for essentials like rent, CT, utilities to the new account, then cancel all the other DDs. You need to prioritise accommodation, food, utilities. Forget about the loans.

The debt charities will encourage you to start the DMP immediately. You'll only be able to afford token payments and arrangements to pay damage your credit record much longer than defaults.

So wait until the debts default and save anything you can into an emergency fund. If you get back into work, still prioritise the essentials and make sure you can cover a month's essentials. The creditors who have issued defaults will have to accept a token payment until your finances are stable.

Conan1Sett

My bank account is with Virgin Money and I do not owe them any money. 

I am waiting for a DBS check before starting a new job which could take up to 14 days I've heard. It's only a basic check I presume but it's the waiting around as more and more bills become due. I would really feel better when the accounts are all being managed by step change so I can just make one convenient payment plan every month. 

I've tried my best for years and I've struggled every day with health issues such as low mood, depression, anxiety, anger as well as binge-drinking. The drinking is the only thing that takes the edge off. However, it's not a solution to all this.

Once I have the DMP I want to get one on one counselling.

A few years ago I took on a second job because I love alone in order to pay some arrears and I was quite literally goosed all the time. All of this began from a horrible domestic abuse situation that I survived in which I was subject to constant ridicule and blame for my parents stresses and issues. Even though they're retired and are financially stable I was constantly told that they were the victims.

fatbelly

So you haven't got a start date for the new job yet. If you start in January when will you get your first payment? End of Jan? And will that just be a part-month with the first full payment at the end of Feb?

Forget stepchange for now. You need to be planning how to get through the next 10/11 weeks.

The nonpriority debts can go without paying. Nothing will happen and you don't need to give any explanation. You don't ask for permission to default. You just stop paying

The mortgage is different. It is still going to have to go without payment if you need the financial resources that you have, for heat and food. But they do need to know why, and when payments will restart

sourcrates

Ok, relax, take it down a notch or two, debt management is a well recognised, informal way to repay debts that are otherwise unaffordable to you.

Creditors are happy with an affordable payment derived from your disposable income, whatever that may be, everyone is different, and we all have different budgeting needs, but the main focus is affordability, if you don`t have sufficient income to generate a reasonable payment offer, then the creditors would not expect you to pay anything.

FCA guidelines were updated during COVID, and now affordability is the key factor in play here, you have no need to worry about any of this, creditor attitudes have had to change to match the times we live in, if you are not working, then no one will expect you to pay anything, but you should write and tell your lenders about your situation, that way they can put a hold on collection activity.

When you regain employment, you can re-assess your situation.

Brie

Good that you have made a decision to get things sorted.  At a guess I agree that a DMP is not the answer at this point.  If you are on benefits it wouldn't be and it's not something to rush in to in any case.

Stick to paying your priority bills - anything that keeps you indoors, fed and watered. So rent/mortgage, council tax, utilities.  Do you have a vehicle that has monthly payments?  If you will need that for work keep paying that as well.  If you depend on public transport ensure that you've got the ££ for that for getting to the job centre and your new job when you start.  

Credit cards and loans can wait.  If you miss a couple of months and are able to catch up eventually then it will just be a blip on your credit history that will soon fade into the past.  If it takes longer the banks etc won't come rushing to your door demanding money and threatenting court - that, if it happens at all, will take a long time.  

Start looking about for your food banks, Olio, community fridges - they are stocked full of nice stuff for Christmas right now so no reason to think you'll be eating sawdust for the next few months. 

Let friends and family know that things are tight this year so you won't be buying fabulous gifts - go down the voucher route of offering baby sitting, dog walking or 2 hours of garden tidying or whatever.  Nice presents don't need to cost anything.

Best of luck with the new job when it starts!!