Repayments are greater than income - DMP?

RAS

Once the default on an account is registered, interest is frozen, which is why it is in your interest to avoid anything that encourages the creditor to delay default.

Rob5342

The other thing to remember is that once defaulted the debts often get.sold to a debt collector for a small fraction of their value. That means at some point down the line you can settle them for a much reduced sum. 

Kauto5

Other than the two credit unions I have loans with, are all the other lenders normal consumer credit act lenders as far as everyone is aware? Meaning, if I stop paying then they'll all default my accounts rather than go for a CCJ like the credit unions might

Kauto5

Another question sorry, just to make sure I've got my head around interest with loans if they default...

If a loan defaults then no interest or charges are added after the default date?

For example, one of my loans has £1,699.99 remaining to pay. But it shows a current settlement quote of £1,360.20 which would be the cost if I could pay it off in full today. 

If for example this loan defaulted today, would the amount I'd owe as part of a DMP be £1,699 or £1,360?

ManyWays

Lenders sometimes say that the interest was legally added at the start, so they arent adding any new interest. Other lenders keep the settlement amount as the amount going into the DMP. 

sourcrates

When a loan defaults, the full balance you would have paid had the loan term completed, usually becomes payable as its a "fixed sum credit agreement".

With a credit card, interest stops from the date the account defaulted, as they are what`s know as a "revolving" form of credit.

enthusiasticsaver

Looking at that soa the spending seems fairly frugal so do you know how you got into that amount of debt in the first place?  Are you going to be able to keep to the budget you have set yourself?

This is a long process and some of your debtors will take months to default so you won't necessarily get the interest stopped immediately. 

I agree that a DMP seems the way to go but I would be concerned that you have not been realistic with the soa. 

Debt_Overload

You and I owe similar amounts (I am in the process of beginning a self-managed DMP). I had one observation. I see you're planning to go with StepChange for the DMP and exclude the two loans. I'm not sure StepChange take kindly to that but I do know they are likely to squeeze every spare penny out of you (they act in the banks' best interests, not in yours). This might be problematic while you've still got the two interest-bearing loans to deal with. It's not in your interests to pay more than token amounts to all the other debts, because once they default, interest stops. Others have given you good advice on dealing with those loans but you might want to consider self-managing the DMP part so that you can offer everyone else £5 a month while tackling the two dangerous ones first. When you go it alone, none of the lenders know what you're paying the others, but StepChange actually tells them, so it's something to keep in mind as they might not be happy to accept a fiver if they know you're giving £500 to a loan, etc.

Kauto5

Debt_Overload said:

You and I owe similar amounts (I am in the process of beginning a self-managed DMP). I had one observation. I see you're planning to go with StepChange for the DMP and exclude the two loans. I'm not sure StepChange take kindly to that but I do know they are likely to squeeze every spare penny out of you (they act in the banks' best interests, not in yours). This might be problematic while you've still got the two interest-bearing loans to deal with. It's not in your interests to pay more than token amounts to all the other debts, because once they default, interest stops. Others have given you good advice on dealing with those loans but you might want to consider self-managing the DMP part so that you can offer everyone else £5 a month while tackling the two dangerous ones first. When you go it alone, none of the lenders know what you're paying the others, but StepChange actually tells them, so it's something to keep in mind as they might not be happy to accept a fiver if they know you're giving £500 to a loan, etc.

It's great to know there's so many of us in this boat together, I feel pretty terrified of it all to be honest but so much better since I reached out to this forum. 

Did you contact your creditors at all before your accounts defaulted? If I self manage, I'm just wondering if it's best to contact them all one by one as and when each account defaults and set up a plan or wait till they all default then contact them all? I'm going to see what the two credit unions can do to help me, maybe they will agree a payment plan that I can manage with

Grumpelstiltskin

Whatever you do don't be tempted to phone your creditors, it is a total waste of time and money, you don't get to speak to anyone who has any authority.