Unmanageable debt - starting a DMP

Uturn25

Repayment to a family member for loan - wasn’t sure where to include it. Am I right in understanding that in a self managed DMP I’d have the freedom to continue to pay this off and not include it. I want to keep it as simple and stress free for everyone involved. 

Grumpelstiltskin

A few more things from our SOA
Emergency fund £100, how much do you have in this?
Holiday £75 do you have one booked?
House and contents insurance £55, can you get this cheaper?
TV licence £10 it is nearer £15 monthly

Uturn25

nothing in my emergency fund, all credit has been more or less used up. So I’m planning to build this over the next few months. 

Holiday is booked, this will fall away after July. Will look into insurance too, thank you. 

Grumpelstiltskin

It is a pity you can't tell your partner at the moment, it is easier if both partners can work together, it could be difficult to explain things away to your partner, I mean no more using any credit, what happens if something breaks and you can't afford to repair or replace it?

Rob5342

There's never a good time to tell a partner and they'll find out anyway at some point when they notice you can never afford a holiday or get a loan gor a new car etc. It's better to tell them sooner rather than later so you csn put all your efforts into tackling the debts instead of trying to stop them finding out. 

elsien

I have to ask this, although I know it’s not something you’re going to want to hear.

How realistic are your chances of sticking to that budget and is it genuinely affordable for the amount of money that’s been spent on the children’s weekend activities and nights away?

Uturn25

I do understand your comments, thank you. But it’s just not happening right now. I just need a few months breathing space. I’m assuming my emergency fund (which should build up relatively quickly) can be used for when things break etc. 

Is it not advised to speak to any of the lenders at all, not even to advise them of the fact I’m looking at a DMP? Is there an official DMP document, or I literally don’t pay anything, keep quiet until the debts get sold on. Then pay them individually? Seems so wrong.  

Grumpelstiltskin

Don't contact any of your creditors is the usual advice, if you have to then do it by E Mail or snail mail letter.

Remove all phone numbers from your phone, you can ask to be only contacted by letter.

Rob5342

Uturn25 said:

Is it not advised to speak to any of the lenders at all, not even to advise them of the fact I’m looking at a DMP? Is there an official DMP document, or I literally don’t pay anything, keep quiet until the debts get sold on. Then pay them individually? Seems so wrong.  

It does seem very wrong at first but there are good reasons behind it. If you speak to them they will try and help you and probably put you on a payment arrangement, if you ignore them completely then they are likely to give up on you and default the debt. The thing is that a payment arrangement stays on your credit report for 6 years after you finish the arrangement, but a default stays on your report for 6 years after it was applied. That means that your credit report is harmed for far longer if you have a payment arrangement, and your credit report could potentially be harmed for 11+ years instead of 6. Also if you get a default then the account is more likely to be sold to a debt collector who would be much more likely to accept a reduced settlement offer, so you could save a lot of money too.    

DMPs are informal arrangments so there are no official documents. We normally suggest the procedure above, Stepchange, Payplan etc have their own agenda and recommend starting paying straightaway, which is better for the creditors but worse for you.  

Uturn25

So nothing, not even contact to ask to stop interest ans inform them I will be setting up a DMP? I feel like I should pay say £5 min, but I guess that could count as a payment arrangement and defer a default?