Quick Query pls re: defaulting/not paying and contact with creditors

earlyriser55

First post last month I reached a decision that action was needed over unsecured debts that have just become too much to manage. I scanned over the threads and have followed all advice and have stopped paying, had no contact with creditors and am waiting for default. I am wobbling a bit on the no contact with creditors part as they say they will add interest daily - which would of course massively increase what I owe. I am debating sending a brief email asking them to freeze interest, explaining that I am experiencing financial difficulties, setting up a £1 token payment a month and then coming back to them with what I can afford in a couple of months (a self managed DMP really) - would this brief contact be ok or shall I just ignore and wait for the default? Many thanks in advance for advice.

Smudgeismydog

I’m sure other posters will be along shortly, but now you’ve started this process, try and stay strong to ignore the contact and wait for the defaults. Asking to freeze interest, or making token payments at this stage will just delay the defaults

Smudgeismydog

Just to add, are you saving what you were paying into your contingency pot?

earlyriser55

Yes I am saving what I was paying. Thank you for your advice, I really appreciate it.

tigergambit

earlyriser55 said:

First post last month I reached a decision that action was needed over unsecured debts that have just become too much to manage. I scanned over the threads and have followed all advice and have stopped paying, had no contact with creditors and am waiting for default. I am wobbling a bit on the no contact with creditors part as they say they will add interest daily - which would of course massively increase what I owe. I am debating sending a brief email asking them to freeze interest, explaining that I am experiencing financial difficulties, setting up a £1 token payment a month and then coming back to them with what I can afford in a couple of months (a self managed DMP really) - would this brief contact be ok or shall I just ignore and wait for the default? Many thanks in advance for advice.

It's very difficult to go down the no contact route - it goes against everything we have been brought up to believe, but then again we have been brought up to believe that banks will treat us fairly and that hasn't worked out too well for many of us. 

Ignore what they say - yes, they may add some interest but they were going to do that anyway and once you default they can't add any more.

Keep saving your emergency fund and if it gets too much tell them to only contact you by snail mail. 

Rob5342

If you are going down the default route then just ignore them. You want them to give up on you and contacting them will just delay that. You'll get extra interest as be charges now, but the sooner you default the sooner the debt will be sold. Once sold you will be able to make settlement offers which will probably outweigh any extra interest now. 

sourcrates

earlyriser55 said:

I am wobbling a bit on the no contact with creditors part as they say they will add interest daily - which would of course massively increase what I owe. 

This is interest you would have paid regardless of your choice to enter debt management.

Creditors will not always freeze interest indefinitely, and any that do agree to do that would likely require an "arrangement to pay" to be agreed first, which would then reflect in your credit file.

You and your creditors are both bound by the terms of the agreements you signed, until they default that is, at that point no further fee`s or interest can be added, and your financial relationships would end.

As debt management is an informal and flexible arrangement, there will be the possibility of settlement offers at a later date, which would see some considerable savings in the balances owed, thus negating much of the interest added prior to defaulting.

It`s quite rare to repay the full amounts owed in a DMP, as some sort of deal can usually be done further down the line.