Help with starting a DMP

System

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

debtfreehopeful28

Hello 

I feel a complete sense of shame posting here but I have accrued a large amount of debt being in a DA relationship however, I have now left this and am taking steps to recover my finances. 

I am looking at a DMP however, I have read here that I may be better to let the payments default to minimise impact on my credit file. Is this correct? 

sourcrates

Hi,
The support thread doesn't see as much traffic as the main forum, so I have moved this for you.

Yes, basically if you enter a DMP before your accounts default, its classed as an arrangement to pay, and your credit file will be marked accordingly, these AP markers stay on file for 6 years after you repay the debts, so potentially a very long time indeed.

A default on the other hand gives you a clear 6 year window until its removed, also interest isn`t always stopped at first, but at default, all interest stops.

We recommend stopping payment on your non essential credit debts until your lenders default you, in the vast majority of cases you just get normal collection activity, letters, calls etc, and then once defaulted, you can make whatever arrangements you see fit with lenders, either going it alone or using one of the free debt charities to do it for you.

RAS

You would be better allowing the debts to default. It doesn't minimise the impact, it ensures that your credit record recovers after 6 year even if you still owe money. You need a new basic bank account, transfer in income and organise essential DDs. Then cancel the DDs to consumer creditors.

If you don't wait, then the impact continues until 6 years after the debts are repaid.

Depending on your situation, you might also want to spend a bit of time checking out charities that help with financial abuse? You might even get some debts written off?

MEM62

There is no shame.  Many have experienced hard times and not always of their own making.  There are times when we do not have much choice in what life throws at us but we do have a choice in how we face it.

And yes, the collective wisdom is to let your debts default before making any payment. Not only does that give you breathing space to put aside an emergency fund but it also ensures that any negative markers will drop off your credit report earlier.      

ManyWays

I have accrued a large amount of debt being in a DA relationship
Would you say the debt was because of the abusive relationship? If it is, then you may have better options that a DMP - it may be possible to get some of the debt cleared and help to clean up your credit record. 

EssexHebridean

@debtfreehopeful28 First up a big well done for getting yourself out of the situation you were in, and absolutely an echo of the “no shame” reassurance too - you should be proud that you have come through and are now in a position to take control and repair the damage. 

If you feel comfortable to give a little more detail about whether for example the debt was incurred due to your ex partner being financially controlling then that might help people to give more targeted suggestions to help. If not though everyone will understand, just beat in mind that the advice might be more general or might be given using hypothetical situations so illustrate what could work for you.