Stepchange & DMP

kimblesb

Hi, I have been thinking about starting a DMP with Stepchange, and have filled the forms in. They say I will be debt free in 2 years. Debt is just over £16k. Credit cards x3, catalogue, next, creation x 2 (one of those payments finishes in September) & overdraft. I make the minimum payments each month, or just over. The main credit card with MBNA is the main one that is affecting me as the interest is so high now that the hold on the interest has come off. They say that there is nothing else they can do regarding the interest as after going through ingoings and outings I am able to make payment each month. Santander’s interest is all I’m paying too really.
I will be in debt for so many years if I don’t go down the DMP route. 

Knowing that I will be debt free in 2 was a relief. Now I’m panicking about it all again. I suffer with anxiety and ocd, and it’s got worse the last few days.

Worried about getting CCJ’s. We are looking at moving out the area in 3 years, and will be renting. Don’t want to jeopardise this. 

Worried that I’m going to affect my husband’s credit record. Only share a joint savings account, with his bank. Has no money in it. 

I’m also reading about defaulting, this really worries me and is part of the anxiety increase. I have already made contact via online chat with Santander and MBNA about a DMP & Stepchange. If I was to default would this put me in a worse situation? Especially with MBNA knowing I can make the minimum payments each month? 

Half of me is just thinking to go ahead with DMP, and just except that it’s a couple of acres years of bad credit.
My credit score is really bad, but not great either. 

Sorry for such a long post. 

x

Grumpelstiltskin

Do you understand why we always tell you to default before you start making any DMP payments?

Once the debt has defaulted interest stops and the debt is removed from your credit file in 6 years ( 5 years if you live in Scotland ) even if it hasn't been cleared.

If you start repaying before it has defaulted it is marked 'Arrangement to Pay' This doesn't go from your credit file for 6 years after your final payment. So if it takes 4 years to pay it doesn't go for 10 years.

kimblesb

Thanks, for the info. 

Does it matter that I have already approached two of the credit card companies, and that I’m able to make minimum or just over the minimum payment? Don’t want them coming back saying I can afford the payments and purposely putting myself in the situation. 

With regards to the joint saving account, should so get my name taken off of it? 

Grumpelstiltskin

The mistake you have made is talking to your creditors. I know you think you are doing the right thing by keeping them in the picture but you are not.

All they are interested in is getting as much money out of you as they can, they are not interested in the bigger picture.

I would get my name off the joint account just to be on the safe side.

13thlegion

kimblesb said:

Thanks, for the info. 

Does it matter that I have already approached two of the credit card companies, and that I’m able to make minimum or just over the minimum payment? Don’t want them coming back saying I can afford the payments and purposely putting myself in the situation. 

With regards to the joint saving account, should so get my name taken off of it? 

Yes I think it would be a good idea, as this will mean you and your husband are no longer financially linked and so you won't affect each others credit record.

On the point about making minimum payments. Just because you have been making minimum payments doesn't mean you can afford them. For example if you needed to replace a washing machine or do a car repair can you do this without taking on more debt? If no then you need to be saving an emergency fund and that need come before paying for unsecured debt.

If you can, completing a Statement of Affairs (and sharing here if you want to get more personalised advice) will help you see what you can actually afford. This thread is a great starting point for many questions you will have https://forums.moneysavingexpert.com/discussion/6496941/in-debt-and-wannabe-debt-free-first-steps-to-take-are-here-please-read-then-ask-questions

Rob5342

It's completely counter intuitive but if you talk to your crediors they will treat you much worse in credit report terms than if you completely ignore them until the debt defaults. 

sourcrates

Grumpelstiltskin said:

Once the debt has defaulted interest stops and the debt is removed from your credit file in 6 years ( 5 years if you live in Scotland ) even if it hasn't been cleared.

Just to clarify, defaulted accounts still show on your file for 6 years in Scotland, its only the limitation period that is shorter there, at 5 years instead of 6, the default period is the same in the whole of the united kingdom.