Starting a DMP? Help please!

Hess28

Hi all, 

So I’ve been on with step change who have recommended a DMP for my debts. 

Here’s a list if needed:

NatWest loan - £4500
Aqua credit card - £2500
Zable credit card - £1000
Very catalogue £800
Monzo over draft - £400 < although this doesn’t cost me anything so I’m not sure I want to include it as a DMP?

Now I’ve budgeted with stepchange for £100 a month, which is 8 years 11 months repayments, a long time to get it off my credit file. 

So I have some questions as to the best route forward and hope you can help! Thanks for your help in advance.

1) Because I bank with NatWest I understand I need to move bank accounts prior to any defaults - is this correct? If so I assume I’ll need to do it manually rather than a switch service, I get paid end of the month so have I left it too late?!

2) in an effort to minimise the longevity of the impact to my credit score, am I best to hold off the DMP and let the creditors send everything to default FIRST as this only shows for 6 months on the credit reports?

3) Am I best allowing step change to then step in once it’s defaulted and set up the DMP?

4) Can I use breathing space as an option?

I am SO frustrated that I’ve let my debt build up, but I want to try and get on top of it with the shortest amount of impact to my credit score.

Thanks all 

MattMattMattUK

Hess28 said:

Hi all, 

So I’ve been on with step change who have recommended a DMP for my debts. 

Here’s a list if needed:

NatWest loan - £4500
Aqua credit card - £2500
Zable credit card - £1000
Very catalogue £800
Monzo over draft - £400 < although this doesn’t cost me anything so I’m not sure I want to include it as a DMP?

Now I’ve budgeted with stepchange for £100 a month, which is 8 years 11 months repayments, a long time to get it off my credit file. 

So I have some questions as to the best route forward and hope you can help! Thanks for your help in advance.

1) Because I bank with NatWest I understand I need to move bank accounts prior to any defaults - is this correct? If so I assume I’ll need to do it manually rather than a switch service, I get paid end of the month so have I left it too late?!

Yes you need to open a new account and not use a switching service. Do it now, make sure you set up any essential payments from the new account, transfer any money over.

Hess28 said:

2) in an effort to minimise the longevity of the impact to my credit score, am I best to hold off the DMP and let the creditors send everything to default FIRST as this only shows for 6 months on the credit reports?

You want everything to default, yes. Defaults show for six years, not six months. The important part is that they show for six years from the default date, where as the non-defaulted debts show for six years from the last payment as something like "arrangement to pay", "payment agreement" or missed payments. 

Hess28 said:

3) Am I best allowing step change to then step in once it’s defaulted and set up the DMP?

You can, entirely up to you.

Hess28 said:

4) Can I use breathing space as an option?

You can, but there is not a lot of point. Breathing space is designed to give people time to get advice and figure out a plan, you have already done that, using it will just delay things moving forward.

Hess28 said:

I am SO frustrated that I’ve let my debt build up, but I want to try and get on top of it with the shortest amount of impact to my credit score.

Thanks all 

Your score is meaningless, ignore it.

This will have an impact for years, you will not be able to borrow again until it is cleared, but the point is you do not want to be borrowing again anyway.

You are doing the right thing, but it will put you under pressure when the letters start arriving. If you need support or advice then you can always ask on here.

Grumpelstiltskin

You must make sure you have an emergency fund before you start your dmp as you won't have access to credit when you need something in an emergency.

Stop paying your debts and save as much as you can over the next few months before you jump into a dmp.

Hess28

Thank you. 

Yes I meant 6 years not 6 months sorry. I’ve been on the forum reading up & mis typed. 

So,

Step 1) new bank account & get all bills/wages transferred 
Step 2) cancel all direct payments to creditors and allow them to default, how do I know when they’ve defaulted? How long does that typically take? 
3) Once all creditors have registered as a default, I can either set up my own DMP or allow step change to do so.

Is there anything I am missing? Do I need to write to each creditor and ask them to freeze interest or just sit back, ignore and hope no bailiffs turn up before the default is registered? 

Thanks

RAS

Çreditors can't even start legal proceedings until defaults are issued, so forget bailiffs.

Providing you start to engage/pay once the default is issued, legal action is very rare and you get plenty of warning. Given how confusing creditors' letters are there's more risk that you start to pay before the default.

It's only if the creditor actually gets a CCJ and you fail to make any financial arrangement to pay that creditors can consider bailiffs, and those are court bailiffs who are reasonble.

Do you have any CT or credit union debt?

Rob5342

Stepchange don't do anything you can't do yourself so it's completely up to you how you handle it. They have a very fixed approach that favours creditors rather than you, but they can save a bit of admin. Some people uae them to get going and then switch to managing it themselves when they are more familiar with things. That's what i did, they were useful at first in sending all the payments and correspondence but i soon found them to be an inconvenience that just made everything more difficult. 

Make sure you default first as that is far better for you in the long term, and however you decide to do it don't go anywhere near Stepchange when it comes to making settlement offers. They will juat want you to pay the whole lot to everyone instead of making reduced offers to each one. 

Hess28

RAS said:

Çreditors can't even start legal proceedings until defaults are issued, so forget bailiffs.

Providing you start to engage/pay once the default is issued, legal action is very rare and you get plenty of warning. Given how confusing creditors' letters are there's more risk that you start to pay before the default.

It's only if the creditor actually gets a CCJ and you fail to make any financial arrangement to pay that creditors can consider bailiffs, and those are court bailiffs who are reasonble.

Do you have any CT or credit union debt?

Hi,

No I don’t have either of those. 

Stepchange said NOT to default first but reading here I understand why it’s best (ie drops off after 6 years ect) so I understand to do that. 

How do I know that it’s defaulted, just check my credit rating? Or am I looking for a certain letter?

is there someone on this forum for the letters I should send them to arrange payments myself? 

Thanks for replying 

Hess28

Rob5342 said:

Stepchange don't do anything you can't do yourself so it's completely up to you how you handle it. They have a very fixed approach that favours creditors rather than you, but they can save a bit of admin. Some people uae them to get going and then switch to managing it themselves when they are more familiar with things. That's what i did, they were useful at first in sending all the payments and correspondence but i soon found them to be an inconvenience that just made everything more difficult. 

Make sure you default first as that is far better for you in the long term, and however you decide to do it don't go anywhere near Stepchange when it comes to making settlement offers. They will juat want you to pay the whole lot to everyone instead of making reduced offers to each one. 

Makes perfect sense thanks 

im leaning towards doing it myself - is there anywhere for letter templates ect? 

Thanks 

Grumpelstiltskin

OK there are template letters in this thread.

DFW Sticky-Provit/Statute Barred Letters, Defaults, Mental Health Help and Guidance, all here. — MoneySavingExpert Forum

At the moment do not contact any of your creditors. You will get texts, E Mails and calls from them. Ignore them and block all numbers you can.

Open any letters you get by snail mail, you should get a default letter and also check your credit reports.

It could take some months before  your debts default.

Nothing moves fast in the debt world.

Use this time to get an emergency fund together as you won't have access to credit in an emergency.

You need a bank account that does not have an overdraft, a basic account and as you say move all vital direct debits manually.

sourcrates

Hess28 said:

How do I know that it’s defaulted, just check my credit rating? Or am I looking for a certain letter?

The lenders must send you a default notice, sent under sec 87(1) of the consumer credit act.

Defaulting on a credit agreement, and a default on your credit file, are two very separate events, although the former must happen prior to the latter.

allystar

Hi, just to share...I was overwhelmed around end of November, early December 2024 and reached out to Stepchange and set up a DMP.  Thankfully, before the first payment, I found this site and took advice from the experts on here.

I cancelled the DMP and waited on defaults for 8 separate debts (3 loans & 5 credit cards) - I ignored all calls, blocking numbers as they came through.  Only opened and filed the letters.

So far all have defaulted with Virgin Credit Cards (x3) still to default - that's 8 months now of no payments and pretty much no contact, other than computer generated letters.

Since the defaults, 1 loan has been passed to Wescot - I'm paying £10 a month & 1 credit card passed to ARC Europe - paying £5 a month.  the other 2 loans and 1 credit card are silent, so I'm not doing anything.

Additionally, in that time I have raised affordability complaints, all were rejected, so I filed them with the FOS.  1 has been upheld (Zopa), 1 was rejected, so I have escalated to the Ombudsman & I have 3 pending for Virgin CC's.

So, from being super worried, I am now fully in CONTROL...

I was keen to share as it really does move slowly in the world of debt.

Good luck!