Persistent debts built up, 0% periods ending on cards mean its unaffordable - DMP

Invertigo

Will do. Household bills come from a separate account with a monthly standing order to pay into that as well as using pots with my bank for splitting bills out from spending automatically when paid, so that should make things nice and clear to see if my budget is realistic - aware they can be a bit hard to nail down without a few months records, which is tricky with how disorganised my spending has been while struggling to hit repayments. Hopefully that can change now.

Thanks all for the advice. What do I need to be on the lookout for now, amidst the deluge of post I suspect will come my way from creditors, is it just called a notice of default or similar along with details of the company who are managing collections from then on? I then contact them in writing and ask for payment details for a standing order and the amount I will pay them. Templates somewhere?

EssexHebridean

Congratulations on your lightbulb moment - you are now in control of your situation and can start tackling it! 

Yes - you are going to get a LOT of post! Remember that you can tell creditors that they can only contact you by hard-copy post if this suits you - it does for a lot of folk as that means that everything arrives via one route and they can create set times to deal with the admin side of things without getting emails and text messages arriving at all hours. Once you have informed a creditor that you will not speak to them on the telephone, you can block their phone numbers. 

Once you have stopped the payments, I believe that the next "important" bit of post you will receive from each creditor is the Default Notice - but that might take some time to arrive, and there is likely to be a lot of "chaff" in the meantime some of which will be designed to intimidate you into paying. If you're unsure, you can post in this thread the nature of what you have received and someone will be able to tell you whether it is relevant or can simply be ignored.

tigergambit

Invertigo said:

So, updates from last night.

Dmp has been cancelled along with all direct debits to creditors.
All other direct debits have been moved over (or a move has been requested) to a totally unrelated account. My final salary payment goes into my old account this week and will be moved immediately but all future payments are to the new account.
Ive done a very rough budget and I believe I could afford up to 1400 a month repayments, however following the advice above I’ll be limiting it to around 1000 max and putting the rest into a settlement fund in a cash isa

Does the above seem the right consideration? Next steps seem to just be wait for defaults and then set up payment plans? I’ll look to do a SOA over the next couple of weeks and post it up.

You need to work on your budget so that you are saving more than half of the surplus. Max to creditors should be around £600, preferably £400. Remember that they have no means of checking it. You can post a draft on here for others to critique. It's important that you get this right.

Personally I feel that sharing a SOA with creditors helps build a story to aid a F&F settlement down the line (always adjust it down each year to cover cost of living) but you don't have to share it, it's your choice. You don't need to rush this - you will have at least three months - but start now and refine it. This is a long game.

Rob5342

Invertigo said:

Thanks all for the advice. What do I need to be on the lookout for now, amidst the deluge of post I suspect will come my way from creditors, is it just called a notice of default or similar along with details of the company who are managing collections from then on? I then contact them in writing and ask for payment details for a standing order and the amount I will pay them. Templates somewhere?

You will get a load of letters, text messages etc telling you that you have missed payments, and and at some point your account might get referred to a debt collector. There may be threats of court action etc but until the debt has defaulted that can't happen so you can just ignore all of that. The important bit comes when you are sent a default notice which tells you what you need to pay to avoid a default, so ignore that as you want a default. Some time after that you should get a letter saying the debt has defaulted and saying the full amount is due, don't get alarmed by that as it's just standard wording. When you are at that point you can start thinking about starting your repayments, there's no need to rush though, you can just wait until someone writes wanting payment. Normally the letter will have details of how to pay and there is often a website you can log in to to set up the payment plan. Make sure you pay by standing order, not debit card or direct debit as they often prefer, as that keeps you in control of the payments instead of them. 

It's all a bit of a game and the better you can play it the better the outcome will be for you. Essentially you need two plans, the real one that you keep to yourself that has your actual figures and includes what you are saving for settlement offers etc, and a second one that you show to your creditors to make you look worse off than you actually are. You want to create the impression that you can't afford much and that it will take them a long time to get their money back, so when you do offer something they are more likely to accept it. Debt purchasers pay something like 10% or 15% for debts so can easily afford to settle them for a lot less than their value. They'll try and make out that they are hard done by and are being generous by giving you a 10% discount, so don't feel any guilt about using the same tactics towards them.

Once the debts have been with purchasers for a while you might consider asking for the CCA, if they can't produce that then they can't take legal action to enforce it and you can just ignore it. You may also be able to make affordability complaints aganst the original lenders to recover some of the interest you paid.

dprovan

sorry for the silly question, how do you go about setting up new direct debits in the new account. Do you need to contact all companies individually (utilities, spotify etc etc) to do it with them manually, or is there an easier way? I know we dont want to do it automatically

Gandalf644

dprovan said:

sorry for the silly question, how do you go about setting up new direct debits in the new account. Do you need to contact all companies individually (utilities, spotify etc etc) to do it with them manually, or is there an easier way? I know we dont want to do it automatically

Some utilities websites have the facility to change the origin of DD payments, usually in the 'My Account' part. So you may be able to change the DD's online. Likewise for your other priority DD's (telecomms, internet etc).

Otherwise it is a case of contacting the companies and getting them to change source of the DD. 

I would question whether Spotify is a priority spend though?

 

Rob5342

Most companies I've dealt with let you update the direct debit in your online account, there are some old fashioned ones where you have to phone thyme. 

Invertigo

Hello all

So a bit of an update, started getting notices of defaults as expected, along with some accounts now being suspended etc which is all as expected.

Done a creditor facing SOA to start looking at repayments, this doesnt take into account my partners part time work income but the expenses are correct, so our 'real' budget is probably 1k a month more (the idea being to dump as much as possible into savings)

Monthly Budget Summary	Amount(£)
Total monthly income	3,750
Monthly expenses (incl. HP & secured loans)	3,275
Available for debt repayments	475
UNsecured debt repayments	1,940
Amount short for making debt repayments	-1,465

Personal Balance Sheet Summary	Amount(£)
Total Assets (things you own)	273,700
Total Secured & HP Debt	-205,000
Total Unsecured Debt	-72,145
Net Assets	-3,445

Household Information

Number of adults in household	2
Number of children in household	0
Number of cars owned	1

Income, Expense, Debt & Asset Details

Income	Amount(£)
Monthly income after tax	3750
Partners monthly income	0
Benefits	0
Other income	0
Total monthly income	3750

Expenses	Amount(£)
Mortgage	900
Secured/HP loan payments	0
Rent	0
Management charge (leasehold property)	0
Council tax	190
Electricity	120
Gas	100
Oil	0
Water Rates	50
Telephone (land line)	0
Mobile phone	30
TV Licence	15
Satellite/Cable TV	20
Internet services	35
Groceries etc.	600
Clothing	150
Petrol/diesel	50
Road tax	40
Car Insurance	80
Car maintenance (including MOT)	75
Car Parking	0
Other travel	30
Childcare/nursery	0
Other child related expenses	0
Medical (prescriptions, dentists, opticians etc.)	50
Pet Insurance/Vet bills	40
Buildings Insurance	30
Contents Insurance	30
Life Assurance	40
Other Insurance	20
Presents (birthday, christmas etc.)	50
Haircuts	30
Entertainment	50
Holiday	150
Emergency Fund	300
Total monthly expenses	3275

Secured & HP Debt Description	Debt(£)	Monthly(£)	APR(%)
Mortgage	205000	(900)	2.52
Secured & HP Debt totals	205000	-	-

Unsecured Debt Description	Debt(£)	Monthly(£)	APR(%)
Loan	17858	337	9.9
Loan	4825	179	9.9
Loan	2493	131	0
CC	6678	262	20
CC	6310	158	20
CC	4030	112	20
CC	4615	115	20
CC	3605	191	20
CC	16992	408	20
CC	4739	47	20
Unsecured Debt totals	72145	1940	-

Asset Description	Value (£)
Cash	200
House Value (Gross)	270000
Shares and bonds	0
Car(s)	3500
Other assets (e.g. endowments, jewellery etc)	0
Total Assets	273700

Debt Details & Offer to Creditors

Secured & HP Debt Description	Debt(£)	Monthly(£)
Mortgage	205000	(900)
Secured & HP Debt totals	205000	-

Unsecured Debt Description	Debt(£)	Offer(£)
Loan	17858	117.58
Loan	4825	31.77
Loan	2493	16.41
CC	6678	43.97
CC	6310	41.54
CC	4030	26.53
CC	4615	30.38
CC	3605	23.74
CC	16992	111.87
CC	4739	31.2
Unsecured Debt totals	72145	474.99

Invertigo

First letter fron Barclaycard today informing me theyve registered a default on my account and requesting payment in full. I understand this is typical and required legally, should be passed on to sone form of debt management company next which is when I start repaying?

Great timing to get this in order too as our boiler blew a month ago, not sure how Id have managed finding 2.5k if I hadnt been saving (equally its put a dent in the ISA…)

Rob5342

You don't have to pass it on to anyone. Once debts have defaulted you can start paying them. You can either wait for them all to default and then start paying with Stepchane or Payplan, or manage it yourself and start paying as you default. My own experience is that self managing is very easy and that Stepchange just complicate a simple process as you have to keep them happy instead of just paying what you want.