DMP where to start

Teaandbiscuits21

Apologies not sure if I’ve stuck this in the right place so if I haven’t sorry.

So I’ve accumulated just under 10k of debt. And I don’t feel like I’m in control of my finances anymore, moneys coming out here and there and more debt letters seem to be coming or I owe more money somewhere that I’ve forgotten about.

I’ve had a tough year this year as I’ve been whacked with a CCJ (unfairly might I add but that’s a different story). And I’ve had a car repo as well (I take full responsibility). 

There’s a hell of a lot of info on here so I don’t know where to start on here. So I’ll ask some questions and I am very sorry if the answers are on here already. 

1. Do all debts need to have defaulted before I can set a dmp up? I have got a credit card with Zable which I pay the min every month for example. I’ve got a loan with finio loans which has a couple of payments missed now which I wouldn’t be surprised if they defaulted it sooner or later. 

2. Am I best going solo or going with stepchange etc

3. anyone got a template or where I can find to write to all creditors? Presumably that’s where I start?

im struggling to make ends meet and I’m behind with council tax (arrears , I am in an arrangement however) and I’m getting way behind and building up a debt with octopus energy. Ultimately I don’t want to be struggling every month and I want to be able to stick money away in an emergency fund. So surely this way I can pay the very little I can afford ?

also after the car repo I am hoping to save slowly for a cheap run a round but this is impossible at the moment.

thanks for any help 

fatbelly

Council tax and elec/gas are priority debts so stick with sorting those for now.

1. Yes
2. Go do-it-yourself
3. All the resources you need are on

https://nedcab.cabmoney.org.uk/remedy_4.asp

I'll ask for this to be moved to dfw

sourcrates

Moved for you.

RAS

Sorry life has been a bit carp recently.

First thing is do you have a basic bank account with a banking group1 to whom you owe nothing? Get your income paid into there. You may need to check with HR etc when the deadline is for the next payment. Then move the essential DDs to that account, including CT and utilities, manually. The Switch service moves all the DDs for your creditors as well and it's a nightmare sorting it out.

Then stop paying everyone except pay any extra towards the CT debt and the Octopus account. Do you have an order to pay towards the CCJ?  Everyone else can go whistle. Now start to revise your Statement of Affairs so you pay all priority debts and know what "spare" you have. Remember to account for things like Christmas presents, clothing, medical and dental monthly and stash that annual amount in a separate account so you have it to hand when it's needed.

If you can clear the CT and utility debt before everyone defaults, put every brass farthing into an emergency fund. 

A lot of creditor letters mention the word default but aren't a prelude to a default. You are waiting for the letter that demands that you repay the entire debt. That should be followed by the default, keep tabs on your credit records at that point.

You don't have to wait for all the accounts to default before you pay the ones that have defaulted. The creditor will write telling you where to pay and your account reference. At that point write and tell them you have CT debts if that is the case, and can only make a token payment at present. £1 is quite adequate in the short term.

However it can take 6-18 months for debts to default, so you may already have a decent emergency fund. And by then you should have a much better idea of how much you can afford to pay towards your debt. Pay the creditors by standing order, not direct debit.

Teaandbiscuits21

RAS said:

Sorry life has been a bit carp recently.

First thing is do you have a basic bank account with a banking group1 to whom you owe nothing? Get your income paid into there. You may need to check with HR etc when the deadline is for the next payment. Then move the essential DDs to that account, including CT and utilities, manually. The Switch service moves all the DDs for your creditors as well and it's a nightmare sorting it out.

Then stop paying everyone except pay any extra towards the CT debt and the Octopus account. Do you have an order to pay towards the CCJ?  Everyone else can go whistle. Now start to revise your Statement of Affairs so you pay all priority debts and know what "spare" you have. Remember to account for things like Christmas presents, clothing, medical and dental monthly and stash that annual amount in a separate account so you have it to hand when it's needed.

If you can clear the CT and utility debt before everyone defaults, put every brass farthing into an emergency fund. 

A lot of creditor letters mention the word default but aren't a prelude to a default. You are waiting for the letter that demands that you repay the entire debt. That should be followed by the default, keep tabs on your credit records at that point.

You don't have to wait for all the accounts to default before you pay the ones that have defaulted. The creditor will write telling you where to pay and your account reference. At that point write and tell them you have CT debts if that is the case, and can only make a token payment at present. £1 is quite adequate in the short term.

However it can take 6-18 months for debts to default, so you may already have a decent emergency fund. And by then you should have a much better idea of how much you can afford to pay towards your debt. Pay the creditors by standing order, not direct debit.

Thanks this was really helpful. I’ll get started asap. No the CCJ is satisfied so not paying anything there. 

kimwp

Teaandbiscuits21 said:

Apologies not sure if I’ve stuck this in the right place so if I haven’t sorry.

So I’ve accumulated just under 10k of debt. And I don’t feel like I’m in control of my finances anymore, moneys coming out here and there and more debt letters seem to be coming or I owe more money somewhere that I’ve forgotten about.

I’ve had a tough year this year as I’ve been whacked with a CCJ (unfairly might I add but that’s a different story). And I’ve had a car repo as well (I take full responsibility). 

There’s a hell of a lot of info on here so I don’t know where to start on here. So I’ll ask some questions and I am very sorry if the answers are on here already. 

1. Do all debts need to have defaulted before I can set a dmp up? I have got a credit card with Zable which I pay the min every month for example. I’ve got a loan with finio loans which has a couple of payments missed now which I wouldn’t be surprised if they defaulted it sooner or later. 

2. Am I best going solo or going with stepchange etc

3. anyone got a template or where I can find to write to all creditors? Presumably that’s where I start?

im struggling to make ends meet and I’m behind with council tax (arrears , I am in an arrangement however) and I’m getting way behind and building up a debt with octopus energy. Ultimately I don’t want to be struggling every month and I want to be able to stick money away in an emergency fund. So surely this way I can pay the very little I can afford ?

also after the car repo I am hoping to save slowly for a cheap run a round but this is impossible at the moment.

thanks for any help 

1. No, but it's better for you if they default first  due to a shorter term impact on your credit record.

2. It's entirely down to whether you prefer to have someone looking after it for you, but you have to stick with their approach (start the dmp straight away after engaging them) or do it yourself where you send the money to your creditors each month, but you have a bit more flexibility. Unless it causes you lots of anxiety, it's better to do it yourself, because the aim is to get into.a position where you are capably managing your finances.

3. It sounds counterintuitive, but if you want your accounts to default, then you are best off going radio silent with your creditors.

Smudgeismydog

In terms of getting to grips with your incomings and outgoings, a Statement of Affairs can be really useful. If you look through your last few months bank statements, complete and post this (kimwp has a link), then we can make suggestions or help identify any areas for savings.

Teaandbiscuits21

kimwp said:

Teaandbiscuits21 said:

Apologies not sure if I’ve stuck this in the right place so if I haven’t sorry.

So I’ve accumulated just under 10k of debt. And I don’t feel like I’m in control of my finances anymore, moneys coming out here and there and more debt letters seem to be coming or I owe more money somewhere that I’ve forgotten about.

I’ve had a tough year this year as I’ve been whacked with a CCJ (unfairly might I add but that’s a different story). And I’ve had a car repo as well (I take full responsibility). 

There’s a hell of a lot of info on here so I don’t know where to start on here. So I’ll ask some questions and I am very sorry if the answers are on here already. 

1. Do all debts need to have defaulted before I can set a dmp up? I have got a credit card with Zable which I pay the min every month for example. I’ve got a loan with finio loans which has a couple of payments missed now which I wouldn’t be surprised if they defaulted it sooner or later. 

2. Am I best going solo or going with stepchange etc

3. anyone got a template or where I can find to write to all creditors? Presumably that’s where I start?

im struggling to make ends meet and I’m behind with council tax (arrears , I am in an arrangement however) and I’m getting way behind and building up a debt with octopus energy. Ultimately I don’t want to be struggling every month and I want to be able to stick money away in an emergency fund. So surely this way I can pay the very little I can afford ?

also after the car repo I am hoping to save slowly for a cheap run a round but this is impossible at the moment.

thanks for any help 

1. No, but it's better for you if they default first  due to a shorter term impact on your credit record.

2. It's entirely down to whether you prefer to have someone looking after it for you, but you have to stick with their approach (start the dmp straight away after engaging them) or do it yourself where you send the money to your creditors each month, but you have a bit more flexibility. Unless it causes you lots of anxiety, it's better to do it yourself, because the aim is to get into.a position where you are capably managing your finances.

3. It sounds counterintuitive, but if you want your accounts to default, then you are best off going radio silent with your creditors.

Thanks. So how does letting them default have a shorter term impact? Trying to work it out ha. Thank you 

Grumpelstiltskin

Defaults disappear after 6 years even if you haven't repaid the debts.

If you start to repay before a default your  credit record will be marked Arrangement to Pay, these don't disappear until 6 years after your final payment, so if it takes you 4 years to repay it takes 10 years to clear from  your credit report.

RAS

If you start making reduced payments before the debt defaults, you'll get Arrangement to Pay (AP) markers.

If you stop paying, you'll get nil payments followed by default.

Default markers are removed from you credit record after 6 years even if you never pay another penny.

AP markers stay on you credit record for 6 years after the debt is paid off, so damage your credit record much longer.

OK those accounts may eventually be defaulted but even if that happens could easily mean it takes 10 years to clear your credit record instead of 6 years. Counterintuitive, but that's what happens.

I'd add that one reason folk here often recommend defaulting first is that you can use that time to build up an emergency fund. You won't have access to credit and you need to be able to replace the bust white good, repair the car, attend a family emergency.

So often we've encountered distressed people who rushed into a DMP without an emergency fund. They just need to suspend their DMP payments for a few months but the stress of living hand to mouth doesn't help their mental health and that lack of control makes it harder manage life effectively.

ManyWays

How many creditors do you have? Finio and Zable are both very expensive. You can also look at affordability complaints against both of those, win and the balance that needs to be repaid will be reduced and your credit record may get cleaned sooner.