Pre-Stepchange DMP questions

Mikuhar

Hi everyone,

I’ve recently joined the forum and read through many threads but have a few questions if anyone who’s entered a DMP is able to help?

For a bit of background, I’m approximately £22k in debt, this is split across seven lenders which I’ve been juggling for years but don’t seem to be getting anywhere with paying them off. I note that I have never missed a loan payment and pay atleast the minimum on credit cards but I’m having to use credit each month for food / travel once all priority and debts have been paid as what I have left over from my wage doesn’t last.

Debts -

Bamboo Loan -£9750

Monzo Loan - £5200

Very Catalouge - £830

Marbles CC - £1200

Lendable Loan - £2700

Vanquis CC - £2010

Capital CC - £180

Once I entered all of my information above and monthly expenditure into the stepchange calculator, they suggested £350 payments monthly for just under 5 years which is a lot less than I’m paying now and I believe this would be doable. I currently take home £1800 after tax and rent with my partner / split bills and rent payments which are all up to date.

I originally thought it would be best to enter the DMP immediately but having read the posts on this site I’m now thinking it’s best to default before setting this up as it will affect my credit score for longer if they don’t default.

Questions - 

With the monzo loan, I cannot find the account details for paying the loan back manually, this is just automatically taken from my monzo balance each month and shows on the app. Has anyone with a monzo loan been able to obtain these or would I just provide current account details to stepchange?

With the bamboo loan which was originally £6500, I have made payments for around 2 years at £260 per month however the balance remaining showing is £9750, I can see that interest was added in full the day the loan was taken out, is this correct and the amount I should be entering into the calculator or would it be the settlement amount?

With regards to waiting for defaults, should I proceed with the DMP as soon as I receive the first default or wait until they all have? If I am to wait, what do I do with the ones that have defaulted in the meantime? Do I just completely ignore them until the DMP starts?

When I provide the outstanding balances to stepchange are these verified or do they just go off what I tell them? I can provide the balances as of today but if I am to default these will likely change due to added charges and I’ve seen several posts saying people are locked out of their accounts once they have missed a few payments? Do I just go off the letters I will likely receive requesting payment?

I’m currently up to date with payments and will get my next wage on 14/02/24, my debts all go out soon after this and so I’m considering cancelling all DD’s / standing orders from then for the none priority debts and saving an emergency fund with the payments I would have made until I begin receiving defaults which I believe may be June / July going off the posts here? Then enter the DMP, would this be correct? I have a Lloyds account that my wage is paid into and all payments for household bills / debts are paid from this. (No overdraft) but I believe they may close my monzo account as the loan is linked to it.

Thanks in advance for any help, it’s a lot to take in and I’m finding it very stressful but this forum has been amazing so far.

RAS

Just to clarify, you have a Monzo loan and a Monzo bank account? Where does your salary get laid into?

Mikuhar

RAS said:

Just to clarify, you have a Monzo loan and a Monzo bank account? Where does your salary get laid into?

Hi! Yes apologies if I wasn’t clear.

I have a Lloyds accounts where my wage is paid into, the majority of my bills go from this account and I do not have an overdraft.

I have a monzo current account and a loan with them, payments are taken monthly from the monzo balance so I make sure enough is in there to cover this.

RAS

Thanks. So you are probably going to have to default both those accounts. Looks like you can keep your Lloyds account, if you've no debts to any related party?

Do you have any joint accounts with your partner? If so, close it before you take any other action, to preserve their credit record.

sourcrates

When you default on your debts, that basically means your financial relationship with those lenders is over.

Not many lenders manage their own defaulted debts, they either sell the accounts or they assign them to collection companies to manage on their behalf, whoever ends up with your debts will have the balance outstanding, be able to provide statements and have a portal where you can make payments.

Its best to wait until all have defaulted, but play it by ear, stepchange just go by what you tell them, data protection remember, applies in all situations including debt collection.

You really should not stress over entering debt management, its a well worn path lots of us have trodden, keep in mind creditors are a lot more worried about you not making payments, than you are about missing them.

Mikuhar

RAS said:

Thanks. So you are probably going to have to default both those accounts. Looks like you can keep your Lloyds account, if you've no debts to any related party?

Do you have any joint accounts with your partner? If so, close it before you take any other action, to preserve their credit record.

Thanks, there’s no debts to related party linked to the Lloyds account, there is direct debits set up from Lloyds for none priority debts but I would just cancel them?

I don’t have any joint accounts fortunately

Mikuhar

sourcrates said:

When you default on your debts, that basically means your financial relationship with those lenders is over.

Not many lenders manage their own defaulted debts, they either sell the accounts or they assign them to collection companies to manage on their behalf, whoever ends up with your debts will have the balance outstanding, be able to provide statements and have a portal where you can make payments.

Its best to wait until all have defaulted, but play it by ear, stepchange just go by what you tell them, data protection remember, applies in all situations including debt collection.

You really should not stress over entering debt management, its a well worn path lots of us have trodden, keep in mind creditors are a lot more worried about you not making payments, than you are about missing them.

Thank you, so I would wait for absolutely everything to default, obtain the balances owed and then enter the DMP with step change?

When the debts are passed on and defaulted would I just make my own payments of what I think is affordable until I enter the step change DMP and have correct balances?

RAS

Basically, you are correct. 

You need to put aside that £350 every month until you have a decent emergency fund, easy access ISA?

And once all the creditors have defaulted, you decide whether to join Stepchange or continue self management. 

Rob5342

Stepchange don't do anything you can't do yourself, nor do they carry any more weight. The advantage of using them is that you juat have one payment to make each month, but that comes at the expense of the payments being much more difficult to change if you wsnt to adjust anything. They ahow the outstanding balances when you log into your account but they don't get that from the creditors, it's just what you told them the balance was minus the payments they hsve made.

Having a good emergency fund is essential. You could delay starting payment or start with a reduced amount until you have a good emergency fund built up. 

Mikuhar

Thanks both,

I think I’m going to save the payments I would have made until they have all defaulted for an emergency fund as I won’t have any access to credit moving forwards.

Start paying what I can afford on the first defaults then go with stepchange once they have all defaulted and I’ve received letters with accurate balances following defaults.

Would I be right in thinking I would enter the debts with stepchange for the people the debts are passed on to? Or the original lenders?

Im worried about all the letters and calls etc but know its for the best in the long run, also think I’d feel better with just one monthly payment tbh

Grumpelstiltskin

Block all the phone numbers you can, under no circumstances speak to them, just check all letters you get through snail mail, if you are not sure what they mean just ask us.