Big Debts - Considering DMP but have assets.

afewdollarsmore

I owe around 25k across 4 credit cards through stupidity and overspending plus an income reduction of £700/month due to redundancy a couple of years ago. 

I earn only £1700/month net but am paying over £700 in repayments which isn't making a dent due to high interest, then I end up using the cards to make the end of the month so it's just a debt spiral.  I'm never going to pay this off.

I have completed a realistic (generous) monthly budget on the StepChange website which SC also judge realistic.  Works out at around £50/month free to pay creditors.   In truth it will leave me some spare money for some breathing room/emergencies/savings/living.  I have not yet pressed the button on a DMP.   Would be for 35 years-odd if I did.

However...  I do have one big asset.. the home I live in, which is thankfully free of debt.  SC also want to know about assets which presumably they will send details of to creditors.  I'm worried about exposing this if I default and that perhaps one or two creditors won't accept a DMP for such a low amount, instead going after a CCJ or bankruptcy which I absolutely cannot have due to my employment - and of course I cannot put the place I live in, in jeopardy.

Would be grateful for any advice/thoughts.

sourcrates

afewdollarsmore said:

However...  I do have one big asset.. the home I live in, which is thankfully free of debt.  SC also want to know about assets which presumably they will send details of to creditors.  I'm worried about exposing this if I default and that perhaps one or two creditors won't accept a DMP for such a low amount, instead going after a CCJ or bankruptcy which I absolutely cannot have due to my employment - and of course I cannot put the place I live in, in jeopardy.

Would be grateful for any advice/thoughts.

Never disclose information you are not comfortable disclosing, leave it blank if you don`t want to answer, this is a free country, you can do as you wish, assets only count in bankruptcy, not debt management.

No creditor will ever refuse money from you unless they deem it to be unaffordable for you, most debts end up with debt collectors anyway, or are sold, and have debt collectors appointed to manage them, they will accept whatever your budget says you can afford.

Your debts are unsecured, so bankruptcy is not an option for creditors, plus its not a road they would go down anyway as the costs involved make it ridiculously expensive for them.

Honestly I doubt a 35 year DMP will be sustainable, but there are ways and means to reduce that timeframe quite significantly.

fatbelly

Just posted a link to this for another poster - suitable for you too.

https://forums.moneysavingexpert.com/discussion/6496941/in-debt-and-wannabe-debt-free-first-steps-to-take -are-here-please-read-then-ask-questions


If it's only 4 credit cards I suggest you handle this yourself and don't involve stepchange.

As long as you can live on your income, nonpriority creditors are nothing to worry about

RAS

Please read the link in fatbelly's post.

The amount of debt you have isn't small beer given your income but it's a lot less than many people here. There will be ways to improve things.

But right now, relax. Don't let your fears panic you into anything. Consumer debt collection is a slow process.

Do you pay you salary into an account with any of the banking groups to whom you owe money? If so you'll need a new bank account, maybe Monzo or a basic account which doesn't require a credit check.

born_again

afewdollarsmore said:

I owe around 25k across 4 credit cards through stupidity and overspending plus an income reduction of £700/month due to redundancy a couple of years ago. 

I earn only £1700/month net but am paying over £700 in repayments which isn't making a dent due to high interest, then I end up using the cards to make the end of the month so it's just a debt spiral.  I'm never going to pay this off.

I have completed a realistic (generous) monthly budget on the StepChange website which SC also judge realistic.  Works out at around £50/month free to pay creditors.   In truth it will leave me some spare money for some breathing room/emergencies/savings/living.  I have not yet pressed the button on a DMP.   Would be for 35 years-odd if I did.

However...  I do have one big asset.. the home I live in, which is thankfully free of debt.  SC also want to know about assets which presumably they will send details of to creditors.  I'm worried about exposing this if I default and that perhaps one or two creditors won't accept a DMP for such a low amount, instead going after a CCJ or bankruptcy which I absolutely cannot have due to my employment - and of course I cannot put the place I live in, in jeopardy.

Would be grateful for any advice/thoughts.

Shh.
CC's may want to put a charge on the property 🤦‍♀️

afewdollarsmore

fatbelly said:

Just posted a link to this for another poster - suitable for you too.

https://forums.moneysavingexpert.com/discussion/6496941/in-debt-and-wannabe-debt-free-first-steps-to-take -are-here-please-read-then-ask-questions


If it's only 4 credit cards I suggest you handle this yourself and don't involve stepchange.

As long as you can live on your income, nonpriority creditors are nothing to worry about

Thank you, and to the other posters who offered advice.

The reason I was thinking Stepchange rather than self managed is just because it takes away some of the admin and dealing with creditors, also I was thinking perhaps they are more likely to accept a DMP if it comes from SC?  Might be wrong on that of course.

RAS

You need to re-think a few things.

1. Stepchange expect you to start your DMP immediately. That means you'll get AP markers on your credit record. These remain on your credit record for 6 years after the debt is paid off. In practice we no longer see people whose credit records have been wrecked for decades but repair could easily be some years later that if you default first.

We suggest that you delay making payments until the debt is defaulted, so the credit record clears 6 years after the default, even if you've never paid a penny.

2. You need an emergency fund. We don't yet know your circumstances but as a house owner, you'll definitely need a good maintenance and repair budget, which is hard to find on the £30-50 per month Stepchange allow.

It's not unusual for people who rush into a DMP to have to suspend it regularly to find money for family emergencies, repairs and replacement etc. Getting the emergency fund sorted (and proper budgets for irregular but predictable items) massively reduces stress. And stressed people manage less well and make more mistakes.

Creditors don't accept a DMP. They get told what's going to be paid, perhaps with a promise that if your income increases, they'll see some benefit.

fatbelly

Creditors are not allowed to discriminate against those who self-manage. It's in the FCA guidance

afewdollarsmore

I am here to make a quick update on my situation.

So I did go through Stepchange and they approved a budget with very generous monthly expenses. To be honest I did inflate these as much as possible as I cannot live like a hermit on a shoestring for the next 10 years. Kept my property and assets completely off my details provided.

Result - a very low monthly payment, and I have my life and salary back again. Some time down the tracks I intend to make lowball F&F offers.

Theres always a chance that a creditor will not accept the low DMP but it has been a very smooth process so far.

Not intending to take out credit in the future so unconcerned by default dates etc.

Thank you all for the advice.

SpireCaptain

https://forums.moneysavingexpert.com/discussion/comment/81921354#Comment_81921354

Glad to hear you've got sorted and happier in your future.