DMP - is that it?

SpaceCadet12

Been reading a long time some wonderful advice on here which directed me to Step Change and a DMP.  It definatley feels the rights step. Just seems a bit strightfroward....do I just cancel by DDs and send my payment to StepChange and thats it...???? 

fatbelly

Have you actually spoken to stepchange? What did they say?

13thlegion

The usual advice here is to stop paying, wait for defaults and save an emergency fund, then enter a DMP, possibly with step change.

You are right it seems simple, because it is. And sometimes the simplest things are very very hard to do emotionally, like stopping payments.

tigergambit

SpaceCadet12 said:

Been reading a long time some wonderful advice on here which directed me to Step Change and a DMP.  It definatley feels the rights step. Just seems a bit strightfroward....do I just cancel by DDs and send my payment to StepChange and thats it...???? 

Pretty much but you need a break of around 6 months between stopping payment and talking to StepChange to allow everything to default. During that period you save the payments into an emergency fund and create a budget you can live on.

sourcrates

You may not be aware of it, but the Banks pretty much have you under their thumb.

They tell you how to pay, when to pay, how much to pay, they extend credit to you to keep you in that forever debt spiral, basically they keep you coming back for more.

Now this is great for them, a customer for life is what every bank strives to make you, this is how they make their money, they lend you money they don`t have, and what you pay them back, they lend out again, many times over.

And when you over extend yourself, they write you off, they sell your debts to a debt purchaser for a fraction of their face value, they write the rest off to tax, and they move on, to attract more desperado`s onto the debt train.

So yes, a DMP, especially one you run yourself, is all about you re-taking control of your financial life from your lenders, where you call the shots, not them, you tell them how and when and how much they will get, not the other way around.

So if you want to be in charge of your finances again, we can help you.

RAS

You are aware that when debts are defaulted all further charges and interest are halted? 

So it's important that you allow debts to default before making payment arrangements. It also means your credit record cleans up after 6 years even if you still owe money. 

If you make payments earlier, and get AP markers, they damage your credit record for 6 years after the debt is paid off.

DankVielen

SpaceCadet12 said:

Been reading a long time some wonderful advice on here which directed me to Step Change and a DMP.  It definatley feels the rights step. Just seems a bit strightfroward....do I just cancel by DDs and send my payment to StepChange and thats it...???? 

You do not have to use Stepchange, you can self manage

I wrote to all of my creditors saying

"Dear Sir/Madam

Re: Account 123456

Due to a massive change of circumstances that I can't imagine changing in the foreseeable future, I will no longer be making any payments to the above account.

Yours faithfully

A Debtor"

I think once they get a letter like that they act more quickly, I am not sure if it in FCA rules but they skipped the chasing by internal departments or companies like Moorcroft who had been used before when I got behind.  Each company will have it's own policies so you may still wait months.

The usual tasks are

1. Change your contact details (email and SIM) via their portal or inform them you have changed your number and email due to scammers and spammers, this gives you control as you can turn that sim on and off.

2.  Open and change bank account if ANY of your creditors are affiliated with your current bank, it is good to have things spread around, savings from no longer paying could be put in a cash ISA or Premium Bonds.  You might need what is known as a BASIC bank account.

3. Make a list of your expenditure and income, called an SOA on here round the figures to avoid identifying yourself and post it back here if you want to get some help cutting back on expenditure or which debts are worse than others.

https://www.lemonfool.co.uk/financecalculators/soa.php

4. Get a lever arch file with dividers for each debt, put the default letter at the bottom and every new letter after that above it, this helps because sometimes the debts may be sold to different or same Debt Consolidators, Debt Managers and Debt Collectors, 

5. Write a letter informing the creditor that due to a massive change in circumstances that you can't envisage changing you will not be making any further payments to the account, that is it, not more needs to be said, it is a less is more situation.

6. Have your income paid into the new bank account you created in step 2

7. Cancel all the Direct Debits relating to consumer debt be mindful not to cancel but move direct debits you care about, e.g. Energy, Broadband, Mobile, DO NOT USE bank account transfer promotions.

8. Wait until all of your debts have defaulted, do not make ANY payments or accept any offers because of threats or FOMO, I can assure you that any offer made today will be improved at a later date, the best I had was 95% albeit that one took a while.

9. Create a spreadsheet to track the progress of your DMP, this does not have to be super smart, really you just want to track the current status, so use one sheet to record date, debt ref, event description.  Do not worry about the balance changing, any charges added by debt collectors are fake and will be removed when they are sacked in 3 to 6 months.

10. Understand your situation, every financial event can impact the decision by a lender to make a good offer, so you are better to go completely off radar when it comes to spending and borrowing.  Some firms are more tech savvy than others, some will invest in alerts from the credit ref agencies only if you move, others bulk barter by sharing their own relevant data on debts under 6 years old.  They might still share the address they have for you even if nothing else, some broadband companies and mobile companies do this too. If a creditor has no data they are not encouraged to throw good money after bad, so make all of your social media strictly locked down, ideally do not make social media posts.  If a creditor sees you got a new car or went to Spain on holiday then that is evidence of spending beyond your means. Also if they see someone else lending to you that tells them you are worthy of repaying, this can make the difference between them giving up in year 6 or getting a CCJ in Year 5.

I went full nuclear on my debt, but that was not my original intention, I went totally off radar nobody had my actual current address and I got myself off the voters roll.  I am not suggesting you go this far, I responded to pressures and anxiety of my life situation as a whole, it was a coping strategy.  The more I learnt about how they invent debt and how debt is sold the more I lent towards not paying them a penny.  I had paid the original creditors with whom I had an agreement loads of interest, so they made plenty, if you want to see how grotesque this can be then create a spreadsheet or use the MSE Interest calculator to see how much interest they make on any amount you want.

Consider that the money never existed in the first place, how people quickly become compliant and live close to their credit limit and how the lenders objective is to keep you locked in a position where you can just about afford the repayments but can't afford to pay it off.  In these circumstances the amount of interest is far far higher, but just for illustration below is the cost of 10k of monopoly money using the MSE minimum repayment calculator

Making the minimum payment of: The greater of 4% of balance or £100 a month

This £10,000 debt will take 12 years and 8 months and cost £18,581 in interest at 39.9%

Doubling the monthly payment barely saves £3.5k

Making the minimum payment of: The greater of 4% of balance or £200 a month

This £10,000 debt will take 8 years and 2 months and cost £14,925 in interest.

https://www.moneysavingexpert.com/credit-cards/minimum-repayments-credit-card/

No Calculator can accurately predict how often you will grab £300 of available credit on the card once you have freed that up in your credit limit, but consider this.

On a £10k debt paying 4% or £200 min payment it will take four months of paying close to £400 a month to free up £300 in your credit limit, during that time only around £80 of the £400 reduces the debt and over £1260 is paid in interest.

All of this on money invented in a computer that costs the lender 3% which they get back when they sell the debt.  In the old days they called this a license to print money, these days it is a licence (by the FCA) to invent money.  This is the system and the credit reference record is the main deterrent backed by the potential of a CCJ for 6 years from last payment or acknowledgement or formal default notice ending the agreement.

ManyWays

If you have been reading a lot on here, you will know we ask for a Statement of Affairs https://www.stoozing.com/soa.php.

At the moment we know nothing about your situation so its impossible to say if a DMP through StepChange or self managed is a good idea. It often is, but why take the risk that there isnt a better option? And why not check if any of your creditors are likely to be difficult? Or see if anyone has some specific tips?