Urgent advice. DMP now or default first. Please help on a plan

Holyt

tRob5342 said:

Holyt said:

sourcrates said:

"Device plans" are one of the lowest priority non essential debts out there, stop paying them, let them default, in about 2/3 years some bottom end debt collector might try to contact you about them.

Your rent and CT arrears are priority debts here, get them sorted whilst you retain payment on the rest of them.

Once you have done the above, and have a nice emergency fund saved, then choose what to do, you may have to keep paying the credit union loan, as some of them can go straight to legal action if more than a couple of payments are missed.

Then, if you feel like a challenge, you can easily self manage this, or if not, let stepchange do it.

Nothing to be scared of, its only money, there may be some argy bargy at first, but your not going to get your local manager of Santander knocking on your door with a baseball bat demanding money now are you.

No of course not, it will all be terribly British and terribly polite, you`ll get letters asking you to "please pay this now".

Once in an arrangement all will go quiet again and tick along nicely.

Just not sure if should default on all the credit cards. I assume having 5 defaults is better than  7 or 8?

Once you have got 5 it's going to be difficult to get any sort of credit, so having 7 or 8 isn't going to make much difference. It's best to go all, learn to live without credit and get everything sorted in once and for all. 

Thanks Rob - one further question. i hope to be mortgage ready in say 5 years with a decent savings. is it still possible to get a mortgage with many defaults. better if they are all satisfied i assume? Do you think i will have high chances i will have better settlement offers if i pay less in years to come to say O2 who i owe 5k for the device plans. 

Holyt

Grumpelstiltskin said:

Smudgeismydog said:

I’m sure most of us on here would suggest you learn to live without access to credit, this is what your emergency fund or rainy day pot is for. 

This 100 times over. If you leave one credit card open it is the top of a slippery slope, so don't go there.

You need to completely change your mindset, you do not need to use credit if you get into the position where you have savings, OK maybe in your eyes an old fashioned idea but it works and you don't have the worry you have now.

makes sense thank you. but what about mortgage. surely some sort of positive repayment history is better than one and having a thin file? 

Holyt

my plan is to be mortgage ready in say 5 years before the defaults drop off. can you advise further on satisfied or partially satisfied defaults and how to tackle them. once i default, should i pay the minimum i can to negotiate better settlement offers in years to come? 

Grumpelstiltskin

Once your debt has defaulted it stays on your credit report  for 6 years from that date. It doesn't matter if you have paid it off in full, partially paid it off or not paid another penny off it.

So getting a mortgage before the 6 years are up isn't impossible ( go across to the mortgage board and ask the opinions of people on there ) but it won't be at a good rate.

So the sooner you can get defaults the better.

ManyWays

It is possible to get a mortgage with unsatisified or only recently satisfied defaults, but it will be very expensive.

It is MUCH better if they have all been satisfied, fully or partially, at least a year before tyhe mortgage application and preferably two. So if you are planning on accumulating savings while you clear the debts, it's typically better to clear the debts faster and then save fast once the debts are gone, as this makes the debt settlement dates earlier.

This gets a BIT better when defaults have dropped off your credit record. A mortgage lender will still see the payments to them though on your bank statements, but they usually only look at 6 months of statements, so you can be mortgage-ready 6 months after the last debt is cleared. 

Holyt

ManyWays said:

It is possible to get a mortgage with unsatisified or only recently satisfied defaults, but it will be very expensive.

It is MUCH better if they have all been satisfied, fully or partially, at least a year before tyhe mortgage application and preferably two. So if you are planning on accumulating savings while you clear the debts, it's typically better to clear the debts faster and then save fast once the debts are gone, as this makes the debt settlement dates earlier.

This gets a BIT better when defaults have dropped off your credit record. A mortgage lender will still see the payments to them though on your bank statements, but they usually only look at 6 months of statements, so you can be mortgage-ready 6 months after the last debt is cleared. 

makes sense thank you. 
i have a further question regarding LBA if any of you can answer.
What if i get a LBA before defaulting? Pressuring me into a plan before defaulting what do i then do? Just thinking of all scenarios here. I owe 02 and Sky about 5k in device plans. can they go to court to get a CJJ before defaulting? my plan is to wait to default then make smaller payments each month. Lets say i miss payments for 3 months before a default is applied, i receive in the post a LBA. I havent yet defaulted, i politely acknowledge it and say i am still struggling? what if they skip the default part due to the balance being very high for mobile company. 

Holyt

Grumpelstiltskin said:

Once your debt has defaulted it stays on your credit report  for 6 years from that date. It doesn't matter if you have paid it off in full, partially paid it off or not paid another penny off it.

So getting a mortgage before the 6 years are up isn't impossible ( go across to the mortgage board and ask the opinions of people on there ) but it won't be at a good rate.

So the sooner you can get defaults the better.

please see my comment above when you have time about LBA. any thoughts or suggestions are appreciated. 

Grumpelstiltskin

They can't take court action before a default, so forget that.

Remember only a tiny proportion of debts ever end up with court action and then usually only if you have been ignoring the debt.

Holyt

Grumpelstiltskin said:

They can't take court action before a default, so forget that.

Remember only a tiny proportion of debts ever end up with court action and then usually only if you have been ignoring the debt.

understood, so LBA is just an empty threat if no default on my account? obviously i will still respond but stress i want it all in writing and i am currently seeking independent debt advice. 

Grumpelstiltskin

Almost impossible for you to get a LBA before a default, just open anything you get by snail mail to be sure. Ignore any threats sent by text, E Mail etc.