Possible DMP or Default and Wait?

Cheeseontoast21

Well tonight was the night I faced reality…..and the reality is I owe £62k across 6 credit cards and 2 loans.

The monthly payments are killing me, and the interest on the cards means that I’m barely paying anything off every month.

I was pretty sure a DMP with StepChange was my only option, but having read lots of useful stuff on here tonight I’m now pretty sure that leaving my accounts to default and saving the money as a buffer is my best option, but I have one burning question. If all 6 of my cards are almost maxxed out (there’s maybe a couple of hundred pounds left on each) after my first or second missed payment the interest charges will take me over the credit limits. Does this just make a bad situation worse?? 

Wish I’d looked in to this ages ago, I’m so embarrassed that I let it spiral this far.

Thanks in advance for any help you can offer.

Rob5342

You need a long term strategy, if thst strategy is a DMP then its best to stop paying and let them default before starting the DMP. In the short term it would make things a bit worse as you will get extra interest and charges. In the long term it would be much better as you'll have a fixed 6 years after which your credit record will be clewn, and the debts will be more likely to be sold to DCAs who will be open to settlement offers.

I suggest that you post a statement of affairs so people can comment on your overall situation, there is a link somewhere. 

fatbelly

Agree with Rob.

When in a hole, stop digging.

Cancel all payments to the credit cards

EssexHebridean

Link to the SOA can be found in my signature below - once done you need to use the "format for MSE" option and then copy and paste into the thread. I suggest that you gather together a year's worth of bank and card statements before you start - then go through line by line really thinking about each category. Groceries in particular tend to catch people out - they think "well I do the big shop once a week and spend £50 so that must be £200 a month" - but they forget the 3 additional supermarket visits during the week spending £10 - £20 a time, the nights they invariably get takeaway because nobody has planned what to eat, and the fact that not all months are 4 tidy weeks, and the actual total is at least double that if not more! 

Priority 1 then is to cancel the payments
Priority 2 - get that SOA sorted! 

Hopefully having had the "lightbulb" ping on that you want to sort the situation you should already be feeling a lot less stressed about things - the next steps will improve that state of affairs still further! 

Cheeseontoast21

Thanks for the great responses.

i wish I could say I felt less stressed today, I suppose the single hour of sleep won’t be helping, but I feel burdened by the thought of not paying my debts. Do I literally cancel all my direct debits to the loan and credit card companies and wait for the defaults to register and the debt collectors to come calling? 

How do I confirm none of my debt is secured? That’s what will keep me awake tonight, the thought of it impacting my home. 

Final question - when my fixed rate mortgage ends, will they let me move to another fix if I have defaults?

Sorry that my post is all over the place. I am exhausted.

Grumpelstiltskin

OK Mortgage as long as you stay with the same company no credit check, no problem.

Secured debt is mortgage, second mortgage and some forms of car finance.

Yes just cancel all  unsecured debt payments, don't under any circumstances phone any of your creditors, don't answer any phone calls from them.

2021rdsunshine

Cheeseontoast21 said:

Thanks for the great responses.

i wish I could say I felt less stressed today, I suppose the single hour of sleep won’t be helping, but I feel burdened by the thought of not paying my debts. Do I literally cancel all my direct debits to the loan and credit card companies and wait for the defaults to register and the debt collectors to come calling? 

How do I confirm none of my debt is secured? That’s what will keep me awake tonight, the thought of it impacting my home. 

Final question - when my fixed rate mortgage ends, will they let me move to another fix if I have defaults?

Sorry that my post is all over the place. I am exhausted.

Credit cards are unsecured debt. Loans you can check your credit agreements to see if they are secured on your house.
when your fixed rate mortgage ends you can get another deal with no credit checks if you stick with the same provider according to the experiences of others on this forum. 

So cancel your direct debits for all your unsecured debt . Creditors will call and write to you, you can ignore calls, read the letters and file. When debts appear on your credit file with default applied you can start paying them what you can afford. After default if you receive a letter before action come here and the experts will advise you how to proceed. 
If you have debts related with the bank where your income goes in open another bank account not related to any of your debts and make arrangements for your  income to go in the new account and change manually direct debits like council tax, insurance..
it’s completely understandable that you are exhausted and overwhelmed but you are now starting to take action towards a debt free life. Most of us in this forum are or have been through the same or similar situations as yours. Read as much as you can here, the more knowledgeable you are about debt collection the better you will feel about it all. 

Rob5342

I've been through the process and there is absolutely nothing to worry about at all. I started off worrying about all sorts of what ifs, but everything went very smoothly and nothing I was worried about happened. 3.5 years down the line and i fell on top of everything and I'm here posting answers in other people's threads.

If you stay with the same lender you can normally switch to a new fix with no credit checks. I hsve four defaults and I switched to a new Santander fixed rate with no problems at all, it took about two minutes on their website. 

DMPs really are very simple and usually go very smoothly. When you've felt like you hsve been at the mercy of creditors for years it can take a long time to accept thst the solution is so simple. 

sourcrates

It slightly worries me that you don`t know which debts are secured and which are not, the thought that you may have unwittingly taken out secured credit and not realised is quite a shocker.

You need to list your debts for us, secured lending will be in the form of a second mortgage or secured loan, it will show as such on your credit file.

Cheeseontoast21

sourcrates said:

It slightly worries me that you don`t know which debts are secured and which are not, the thought that you may have unwittingly taken out secured credit and not realised is quite a shocker.

You need to list your debts for us, secured lending will be in the form of a second mortgage or secured loan, it will show as such on your credit file.

Thank you. My concern about secured lending is because I obtained a loan from Zopa 5 months ago and I still don’t understand how - every other line of credit was maxed, my credit score was as low as it can go and surely they could see I had no chance of keeping my head above water. It is actually this loan that has been the final straw and pushed me to realise I can’t remain afloat any more. 

Grumpelstiltskin

I think you are confusing secured lending with unaffordable lending

I very much doubt Zopa is secured lending, whether it was unaffordable is another matter.

Have you cancelled all unsecured debt payments? If not do it now.

Have you completed a SOA?

That  is important so we can see your exact financial position, so please do that.