About to start self-managing a DMP - some questions

Nightingale_92

Hi all,

I’m preparing to self-manage a debt management plan (DMP) to keep more control over my finances, rather than going down the formal DMP route, and I’d really appreciate some guidance from others who’ve done this or are knowledgeable.

Background:

I was made redundant in November 2024 and haven’t been able to return to work due to health issues and the difficult job market. I’m currently on benefits and hope to return to part-time work in the coming months. Previous to the worsening of my health, I’d always worked full-time. I already had debt prior to the redundancy, but it became unmanageable post-redundancy. 

Until now, I’ve stopped making payments as my benefits didn’t even cover rent, bills, and food. I was burning through my emergency fund and facing potential homelessness. I considered token payments but understood that ‘arrangement to pay’ markers could impact my credit file longer than defaults, so I decided to stop paying most in May/June. 

I notified Santander before stopping payments, but didn’t pursue Breathing Space, as I felt it would just delay the inevitable. I’ve since ignored creditor contact, and I expect my first defaults to appear shortly.

Breakdown of my debts

Here’s a quick breakdown of my debts and what I will need to default on:

·      Santander - £2250 overdraft 

·      Santander Credit Card £2847.54

·      Onmo credit card - £1200 

·      Zable credit card - £800 

·      Aqua credit card – £1900 

·      Monzo - flex account (£1,117.78), overdraft (£1500)

·      Barclays credit card - £3,937.07

·      Virgin Money credit card - £3,084.80 

Some of these are a little higher than I originally owed due to late payment fees etc. 

Self managing DMP – the next steps 

I have a few questions concerning the whole process, which I’d be grateful if someone could answer. 

Questions:

1. When should I contact creditors?
   Should I wait until a default is registered before offering a payment plan, or contact them once it’s sold to a debt collector? Do I need to wait for all creditors to default me or deal with them one by one?
2. Offering token payments:
   Once defaulted, I plan to offer around £10 per month per creditor. Do I need to provide a full income and expenditure breakdown, or is it enough to explain that I’m on benefits and can only afford this amount currently?
3. Treating creditors fairly:
   I’ve heard you should treat all creditors fairly, but I owe £700 to some and thousands to others. Can I scale token payments based on what I owe, or is it better to offer everyone the same amount?
4. Santander overdraft and credit card:
   I’ve moved my banking to Starling. I have a £2,250 overdraft with Santander, costing me £30/month in interest. I can just afford that fee, but the overdraft itself is unaffordable to repay soon. Should I stop paying the interest and let it default like the others?
5. Avoiding default vs ‘arrangement to pay’:
   Some creditors say they won’t default me if I get in touch. But my understanding is they often mark an ‘arrangement to pay’ first, then default later anyway, meaning it drags out the credit damage longer. Are there exceptions to this? I’d like to avoid defaulting with Monzo if possible, but they’ve said it’s avoidable if I contact them before October.
6. Avoiding a CCJ (very important to me):
   I don’t own a property, currently live in a rental, and will likely need to rent again in the next six years, so I really need to avoid a CCJ to pass basic landlord checks. Is there anything I should be doing now to minimise the risk of a CCJ being issued? I’m worried that ignoring creditor contact (which I’ve done so far) might increase that risk.

Am I missing anything important in this process? I’d really appreciate any input from those who’ve self-managed or been through something similar.

Thanks so much in advance!

 

Grumpelstiltskin

At the moment do not contact any creditors and don't pay anything.

Have you looked into a DRO?

How to get a Debt Relief Order (DRO) - GOV.UK

sourcrates

Answers:

(1) Wait until defaults are registered on your credit file, they, or whoever they sell the debts too, will contact you.

(2) You can explain your circumstances if you wish, when you go "self managed" you`re in command.

(3) Preferential treatment is only a "thing" in insolvency, debt management is informal, you can do as you wish.

(4) Yes.

(5) These are commercial decisions taken individually by creditors, its not possible to predict how they may mark your credit file.

(6) You can`t have your cake and eat it, if avoiding CCJ`s is a pre-requisite for you, then you should make payment arrangements straight away, as defaulting on credit agreements will always come with the possibility of legal action being taken against you.

Having said that, it is quite rare, and most defaulted debts just get sold or assigned to collectors, but there can always be an exception to the rule, but as long as the lender follows civil procedure rules, you will be given ample opportunity to come to an amicable arrangement before the matter progressed to a court claim, so that in itself should not deter you from your current strategy.