Advice needed on DMP please...

DebtGirl2025

I started a DMP plan with StepChange at the start of this year to tackle growing debts and finally put a plan in place to move forward after many many years of battling debt - I have made 4 payments towards my total debt of £45k (£605 per month).

I hadn't defaulted or missed any payments at the time of setting the plan up and have also realised since that I forgot to include one of my creditors (there are many) on the plan initially.

I am looking for some advice please because I have read that it's perhaps better to wait until defaults appear to enter a DMP plan. That coupled with missing one of the creditors off has made me question what I should do going forward.

Should I cancel the DMP, wait for all (or just some) debts to default then re-enter a DMP?

Also, is it best to self-manage and agree reduced total payments to my creditors to bring the total cost down.

Any advice appreciated please....

I have searched long and hard in the forums but can't seem to find anyone who has entered a DMP then cancelled and started again once defaults appear so I need to understand the best course of action as I could really do with saving a few months of the DMP payments for an emergency pot.

Thanks!

gwynlas

There are a number of threads on the forum regarding these  and similar issues,
.
You  do not need to use Stepchange but many consider it easier as they deal with the hassle  of talking to your creditors. You can adjust payments by talking to them particularly if the amount you are paying each month leaves you short

Many advise self managing your plan building up your emergency fund and opening a new bank account if one of your debts is with your current bank. You can allow debts to default before agreeing payment terms.

However you choose to do it you need to be honest with yourself about what you can afford to comfortably pay and how long it will take you to become debt free

fatbelly

Plenty of people do what you are proposing. I actually feel it'sensible for you as you seem to have no emergency fund.

I doubt Stepchange will agree to it so your options would seem to be to move to Payplan or go self-managed.

Rob5342

I would stop paying and wait for defaults as that is far better for your credit report in the long term. Work out how much you'll be paying each creditor, and then put each of those amounts into an emergency fund each month. As each account defaults then start paying each amount to the creditor instead. That should let you ease into the dmp while building up a good emergency fund. Longer term you can work on making reduced settlement offers, you could save a certain amount each month towards settlement offers and then try making an offer when you have enough.

Stepchange/Payplan have their uses but they work in the creditors best interests rather then yours. If you have defaulted and are happy making a proportionak payment to each creditor then they can save you a bit of admin. If you want to do anything else, like pay more towards one debt or stop paying one while you wait for the cca then all they do is create extra hassle. 

kimwp

I've seen quite a few people mention having done this by accident (eg they became unable to pay their dmp amounts, so they end up defaulting and re-entering a dmp later) or wishing that they had done it in retrospect, usually posting in support on someone else's thread. I don't recall any threads on the subject (til now of course!), which might be why you didn't find anything.

Rob5342

I started with Stepchange but later learnt that it would hsve been better for me to default first. By that time a few had already defaulted but I wantrd the rrst to default first. I switched to managing it myself, maintaining the payments to the ones that had defaulted and stopping them to tgose that hadn't. Virgin money were very difficult and took a long time to default me, I think partially because I was already on a payment arrangement with them. They have all defaulted now so I have a fixed date when my credit report will be clear, but I regret starting straight awsy with Stepchange as my credit report will have defaults for two years longer than it would hsve done otherwise. 

tigergambit

@DebtGirl2025

A couple of questions:
How are you finding the DMP - Do you have enough to live reasonably on?

Have StepChange got your creditors to suspend all interest and charges?

If the answer to either question is "no" I would be seriously considering leaving the DMP and awaiting defaults from your other creditors.

DebtGirl2025

Thank you so much for all your advice and comments. As you know the burden of debt can make you feel like a really bad person a lot of the time so speaking to others is really helping. 

I have only defaulted on 1 (out of 9 creditors) ao far so I think I will cancel my DMP and pay what I was paying via StepChange towards the defaulted credit card (Barclays) then save the rest of the payment I was making as an emergency fund until I default on the next one and re-evaluate every time I default. 

Once debts are sold onto other companies is it best to leave until they send a reduced repayment offer? Or enter a payment plan immediately?

fatbelly

I think the way forward is a low payment plan and save on the side

When you have a lump sum saved, you take the initiative and propose a settlement

kimwp

I'd advise focussing on building your emergency fund ahead of paying any more than token amounts to Barclays and any others that default. You can increase payments to creditors later once you have your emergency fund, but you can't get the payments back if you get lose your job/car breaks etc and need the fund.