Time for DMP?

System

This discussion was created from comments split from: DMP mutual support thread part 13 !!.

Moxy10

Hello, I’ve been lurking and reading through for a little while now. I hope it’s ok to join this thread?  I’ve got to the point where I need to take action and do something about my debt, rather than continuously trying to consolidate/ balance xfr and rob Peter to pay Paul! I feel so crap that I’m in this position but I am!  I can honestly say that having read through the insightful and helpful posts, that maybe, just maybe there is hope. The knowledge you guys share is amazing - so thank you already. 

I’m new to this so please excuse me if I ask anything obvious! 

I have two CC debts 
£16k
£11k
I haven’t yet missed a payment but I’m heading in that direction I can’t reduce my outgoings anymore than I already have. 

So, I’m thinking a DMP. I’ve been in touch with StepChange but having read through the threads, I reckon I can self manage. Currently looking at Nedcab website to get started. Also, SC seem to want to set up a payment plan before defaulting.. the advice on here seems to be that will hurt my credit rating for a much longer time - have I got that right? 

So my first question is; where do I start? 

Cancel DD and send holding letters? Do I offer any payment with that? 

Second question; when I do my budget plan, how do I give myself the opportunity to start an emergency fund? My current outgoings are as basic as can be. 

Any advice is truly appreciated - thank in advance (and sorry for the long post!) 

sourcrates

Hi @Moxy10

I have moved your post to the general forum as it won`t get much attention in the DMP support thread.

As you only have two creditors, this couldn`t be easier, absolutely no need to overthink this, just do what you have been doing, except lower your payments to whatever you can afford, rather than what they ask for.

They will notice the difference in payment, its up to you whether you tell them your situation, or just allow the accounts to naturally default.

Saying nothing will see the default process move a lot quicker, all you need do is keep paying what is affordable.

Or you can with hold all payment until they default, but with only two accounts why wait.

Moxy10

sourcrates said:

Hi @Moxy10

I have moved your post to the general forum as it won`t get much attention in the DMP support thread.

As you only have two creditors, this couldn`t be easier, absolutely no need to overthink this, just do what you have been doing, except lower your payments to whatever you can afford, rather than what they ask for.

They will notice the difference in payment, its up to you whether you tell them your situation, or just allow the accounts to naturally default.

Saying nothing will see the default process move a lot quicker, all you need do is keep paying what is affordable.

Or you can with hold all payment until they default, but with only two accounts why wait.

Thank you @sourcrates

To confirm, if I pay something rather than withhold all payment, does that result in a payment marker on my credit file rather than getting an eventual default? 

RAS

Well done for recognising the realities.

You haven't told us about the parameters, and don't have to. If you are in a relatively secure job and renting, then you should be aiming for a couple of month's rent minimum as an emergency fund. If your are contracting, in insecure employment, have a mortgage that's due to increase, then a bit more.

Obviously if you can balance transfer to 0%, then there's possible relief,  but you may just be kicking the can down the road? If you've got a spare bedroom, then consider rent a room. 

But if you are struggling to pay essential costs and know your going to have pay a reduced amount, the sooner you start the better, as your credit record will recover sooner. Stop paying, save an emergency fund and then start paying again once the defaults are on your credit record and it's clear who now owns the debt.

No need to explain, your situation will largely be handled by their computerised systems. Go cold-turkey in the hope of getting defaults early. 

If your emergency fund isn't sufficient, then make small payments until you've got a buffer and increase later. You can halt or reduce as needed.

And when you look at your income and expenditure, do make allowance for annual and occasional costs. You can rely on the cooker breaking down the same month as a relative becomes ill or there's a funeral. So having a budgeting fund for replacement and VFR and an proper emergency fund for emergencies.

Moxy10

Thank you @RAS

That all makes sense. It feels quite scary (stopping payments, I mean) but I just can’t sustain these and going forward into next year my income will reduce quite significantly so I’ll have even less ability to meet repayments at the rate they are, plus will be coming to the end of a 0% transfer rate in Jan25 which will see the repayments hike in interest. 

I work in a fairly secure job, and have taken on a second job to bolster my income but this is only a short term option due to health issues. 

I pay mortgage and rent as am in shared ownership - don’t even get me started on the pitfalls of that! lol 

Thank you again for your advice, I’m sure I’ll be back with more questions if that’s ok? 

RAS

It may be worth looking for another 0% deal, but......

If you are in shared ownership you definitely need to build a good emergency fund. And folk here can always help you.

You will get calls, texts and emails. One option is to create a "burner" email and change the details on your accounts now. Any important information has to be posted, so open the mail once a week and file. There will be a scary letter warning you to pay back the entire debts; that's legally require and means the default should be registered soon. 

Moxy10

I was going to create a holding letter to each using nedcab site, specifying that I only want contact via mail.. not sure if they’ll take any notice but going by what others have said I thought it may be worth trying! 

I don’t really want another 0% transfer, don’t think it’d be an option anyway. 

So I wait for the defaults to come through (ignore the calls/texts, don’t action any letters in the meantime), squirrel away what I could have paid towards the debts to start my EF -then once defaults confirmed contact the creditors with I&E and a payment proposal? 

RAS

The holding letter can just delay the defaults, but asking for communication only by letter is fine. No need to explain anything else.

Once the defaults come through, assess your emergency fund. 

Creditors will often sell on accounts after the default is issued, or assign to a debt collector. They should send a letter telling you the payment options. So just set up a standing order and they accept what you send as a rule. 

Moxy10

Got it - thanks again @RAS