StepChange v Self-Managed... £85k+ Debt

Avante_2

Hi all,

I am trying to decide whether to pursue a DMP via StepChange or Self-Manage. Any thoughts? I am nervous given my debt is so high... I cannot go formal insolvency as I work within the financial industry (I have checked and I do not need to declare and I am not credit screened in my role).

1. Currently in Breathing Space until 14/12/25. (I did this in a rush as I panicked and I thought my problems were cash flow based, turns out they are but a HUGE monthly deficit so not recoverable).
2. I am going through the process of setting up DMP with StepChange, it's taking a long time with emails back and forth.
3. After reading the advice on here I am now considering self-managed e.g. allowing all debts to default and then setting up payments with the lenders/DCA

I feel so ashamed of myself for letting my financial situation get to this... For background I am 34/M and have a well paid job, however despite this well paid job - I have been living a life I cannot afford and most recently when I was rejected for debt consolidation - the whole thing has blown up in my face. Time to deal with it!

I have a 10 month old baby and my partner is currently on extended maternity leave, I have got further into debt to provide due to no savings and a reliance on credit.

I am fortunate that I earn a good salary and can pay c.£1k pm to creditors although this will take c.7years I think this is the best option?

Not really sure what I am asking... I think I just needed to put this in black & white and send out to the universe to keep me accountable and see the mess as it is?

My SOA is attached: Apologies I could not locate interest rates for all, I did send all to StepChange and they are all 20%+ and none of them are affordable.

[font=courier new][b]Statement of Affairs and Personal Balance Sheet[/b][b]

Household Information[/b]

Number of adults in household........... 2

Number of children in household......... 1

Number of cars owned.................... 0[b]

Monthly Income Details[/b]

Monthly income after tax................ 3735

Partners monthly income after tax....... 0

Benefits................................ 0

Other income............................ 0[b]

Total monthly income.................... 3735[/b][b]

Monthly Expense Details[/b]

Mortgage................................ 0

Secured/HP loan repayments.............. 0

Rent.................................... 925

Management charge (leasehold property).. 0

Council tax............................. 149

Electricity............................. 260

Gas..................................... 0

Oil..................................... 0

Water rates............................. 69

Telephone (land line)................... 0

Mobile phone............................ 85

TV Licence.............................. 15

Satellite/Cable TV...................... 55

Internet Services....................... 0

Groceries etc. ......................... 400

Clothing................................ 40

Petrol/diesel........................... 0

Road tax................................ 0

Car Insurance........................... 0

Car maintenance (including MOT)......... 0

Car parking............................. 0

Other travel............................ 0

Childcare/nursery....................... 200

Other child related expenses............ 200

Medical (prescriptions, dentist etc).... 0

Pet insurance/vet bills................. 70

Buildings insurance..................... 0

Contents insurance...................... 10

Life assurance ......................... 0

Other insurance......................... 0

Presents (birthday, christmas etc)...... 50

Haircuts................................ 60

Entertainment........................... 95

Holiday................................. 0

Emergency fund.......................... 45[b]

Total monthly expenses.................. 2728[/b]

[b]

Assets[/b]

Cash.................................... 750

House value (Gross)..................... 0

Shares and bonds........................ 0

Car(s).................................. 0

Other assets............................ 0[b]

Total Assets............................ 750[/b]

[b]

No Secured nor Hire Purchase Debts[/b]

[b]Unsecured Debts[/b]

Description....................Debt......Monthly...APR

Fluid (CC).....................4471.1....181.5.....0

Barclays (CC)..................5365......150.......0

Natwest 1 (Loan)...............9769......298.3.....0

Payment Assist  (CC)...........299.58....18.72.....0

Creation (Store Card)..........145.......20........0

Klarna (Store Card)............1944......54........0

Credit Spring (Loan)...........166.......97........0

Jaja (CC)......................891.85....26.2......0

AO (Store Card)................4028......197.......0

Novuna (Store Card)............1814......100.......0

Tesco (Loan)...................8874......181.1.....0

118 Money (Loan)...............5019.9....167.3.....0

Updraft (Loan).................9735......205.......0

Credit Union 2 (Loan)..........5292.41...170.6.....0

Credit Union 1 (Loan)..........16642.....387.9.....0

Very (Store Card)..............1714......85.7......0

Natwest 2 (Loan)...............9279......301.......0[b]

Avante_2

p.s. I wanted to add that when my partner returns to work in Jan/Feb 2026 - my outgoings will decrease (I think.. depends on childcare etc). She also covers all car costs and the plan is will assist with food shop when she is earning again.

fatbelly

Get a payment plan sorted with the credit union loans. Default on the rest

Use stepchange if you wish, at the point they have defaulted.

Breathing space has just delayed the process and now you can't use it for 12 months should you nerd to.

But the only one likely to be a problem is the unregulated credit union.

You could consider bankruptcy which would see you debt-free sooner. You will get a hefty payment order for 36 months but then it would be over.

RAS

Credit unions are more likely to take legal action because they aren't part of the standard reporting system. Which you is why you need to treat them differently.

Don't expect them to default, then make arrangements. Get in there first.

The others, wait for the default first.

You might also look at affordability claims, see debtcamel for information.

Rob5342

Stepchange have a very rigid approach to handling debts. If you are happy with that approach then they can save you a bit of admin but if you ever want to do anything different then they just become an awkward go between making a simple thing far more complicated than it ever needs to be. I've done it both ways, and found managing myself very simple and easier than using Stepchange. A few examples:

1, You have a small debt you want to clear earlier by increasing the payments. Stepchange wouldn't let you do that so you'd have to tell them to leave it out and then make the payments yourself.

2, You've made a CCA request and want to stop payments until they reply. With Stepchange you'd have to contact them and ask then to pause payments and they might not agree. If you self manage you can simply change the standing order in your banking app.

3, You have a lump sum you want to pay off. Stepchange would want to split that between all your creditors and then leave you paying them all until you had paid the full amounts. If you contacted the creditors yourself you could negotiate a reduced settlement amount and then you'd need to contact Stepchange and ask them to stop paying that debt.

As you can see, as soon as you want to do anything outside their rigid approach they jbecome a hindrance making everything more difficult. You aren't tied into either approach so you could start off with them initially and follow their approach, and then move to self managing when you are familiar with the process and want to handle things differently.

Either way default on your non credit union debts first as it's vastly better in the long term 

Grumpelstiltskin

As fatbelly says the Credit Union loans need  sorting, they do seem to go for CCJs much quicker than commercial
 lenders. Contact them and arrange affordable payments.

You do realize you will have to stop using credit full stop, so use what ever spare money you have by not paying the rest of the debts to save an emergency fund.

Open an easy access ISA ( with a banking group you don.t owe money to) for this purpose.

You need to get a new basic bank account ( no overdraft ) again with a banking group you don't owe money to and manually transfer all vital direct debits to it. ( Don't use the banking switch service )

You have to realize nothing terrible will happen when you stop paying your debts, things move slowly and the main thing is not to panic.
+

Avante_2

I appreciate all your replies thank you.

I am leaning towards defaulting and self managing DMP as StepChange are very rigid and I would like to attack my debts.

Currently building an emergency fund (one months payments missed) and going to continue building this until defaults start.

Please could I ask regarding the 2 Credit Union loans, how do I structure a repayment proposal to them? 

Assume I need to pro rata my disposable income to all the debts or should I offer them more so that they don’t go CCJ direction?

(is there a template I could use to work out creditor offers? I tried the SOA template but does not give amounts perhaps because I’ve not filled in interest rates?)

Avante_2

fatbelly said:

Get a payment plan sorted with the credit union loans. Default on the rest

Use stepchange if you wish, at the point they have defaulted.

Breathing space has just delayed the process and now you can't use it for 12 months should you nerd to.

But the only one likely to be a problem is the unregulated credit union.

You could consider bankruptcy which would see you debt-free sooner. You will get a hefty payment order for 36 months but then it would be over.

Thank you for your reply.

Bankruptcy is not a viable option as any formal insolvency would impact my employment. Although it would be the “easy” way out in terms of getting this all sorted in 3 years.

I am in this for the long haul, or until defaults lead to reduced settlement offers way down the line! 

Avante_2

Grumpelstiltskin said:

As fatbelly says the Credit Union loans need  sorting, they do seem to go for CCJs much quicker than commercial
 lenders. Contact them and arrange affordable payments.

You do realize you will have to stop using credit full stop, so use what ever spare money you have by not paying the rest of the debts to save an emergency fund.

Open an easy access ISA ( with a banking group you don.t owe money to) for this purpose.

You need to get a new basic bank account ( no overdraft ) again with a banking group you don't owe money to and manually transfer all vital direct debits to it. ( Don't use the banking switch service )

You have to realize nothing terrible will happen when you stop paying your debts, things move slowly and the main thing is not to panic.
+

Appreciate your reply, yes no more credit for me! 

Query on the Credit Union loans… my plan is as to default and settle later down the line but I understand this approach will not work for my 2 credit union loans.

if I set up a payment arrangement with them below minimum payment I will have AP markers for longer than defaults, is it better for me to maintain full payments to both credit union loans and reduced payments to all other unsecured? 

Thanks! 

Grumpelstiltskin

There is this problem with credit union loans of AP markers versus defaults.

Hopefully they will agree to reduced payments and then default fairly quickly, but in the big picture it will make very little difference in the long run. Some commercial lenders can take up to 18 months to default, so all your defaults are not gong to happen at the same time.

Defiantly don't pay any of the other creditors anything at all and don't contact them, ignore phone calls from them ( block numbers ) texts and E Mails but open any letters you receive by snail mail.

What to pay credit unions? try 50% of your normal repayments and you will have to contact them and explain you are in the process of sorting a solution to your problems.
You may be lucky and they will accept your payments but you will be prepared if they are not prepared to cooperate with you.

Avante_2

Grumpelstiltskin said:

There is this problem with credit union loans of AP markers versus defaults.

Hopefully they will agree to reduced payments and then default fairly quickly, but in the big picture it will make very little difference in the long run. Some commercial lenders can take up to 18 months to default, so all your defaults are not gong to happen at the same time.

Defiantly don't pay any of the other creditors anything at all and don't contact them, ignore phone calls from them ( block numbers ) texts and E Mails but open any letters you receive by snail mail.

What to pay credit unions? try 50% of your normal repayments and you will have to contact them and explain you are in the process of sorting a solution to your problems.
You may be lucky and they will accept your payments but you will be prepared if they are not prepared to cooperate with you.

Thank you for your fast response.

I am going to call the Credit Union today and request 50% reduced payments whilst I review my finances. I will let you know how I get on, I have re-jigged my SOA so that my 2 Credit Union loans are secured (I know they are unsecured but treating them as such to avoid CCJ).

118 Money were cheeky and although I cancelled DD, they used CPA to take the loan payment from my debit card. I am going to call them and cancel this and raise a dispute with Monzo about this too.

Before I make any calls, I am revisiting my SOA, to prioritise some form of payment to the credit unions (to be confirmed) and the rest is going into my emergency fund.