Improved situation but still unstable income — best next steps? Self-managed DMP?

Nightingale_92

Hi everyone,

I posted about six months ago after being been made redundant and my debt was mounting up quickly. At that point I was in a really difficult position, pretty much having to choose between paying debts or keeping a roof over my head, so I stopped paying most of my creditors. I did continue paying a few of the lower interest ones. My health was in an even worse state then as well, so I just didn’t have much capacity to seek help through an official plan. 

As a result I now have 6 defaults on my credit file. I knew this would happen, and defaulting was really the only feasible option with how little money I had at the time.

Total debt (including what I’m still paying) is just over £20,000 (hurts to write that!) The cards I’m still paying I’m not using at all anymore, so the balance is going down. My unpaid debts have inflated a bit due to interest/missed payment charges, too.

My income has improved compared to last year, but I still don’t have steady work.

I earn a very small amount self-employed. 

I receive PIP and UC including the LCWWRA element. When I defaulted last year, I was still waiting for the outcomes of these assessments. 

My health is a major factor in my financial situation: I have complex physical and mental health issues. Physically I have limited mobility and need to work from home, and mentally things are ongoing — I’m waiting on a psychiatrist referral following a severe manic episode last year (possibly bipolar, which could explain some of the unmanageable debt I’ve racked up over the years.) I’m very stable at the moment, but I know that may not remain a given given my history. 

Even though my income isn’t what it used to be, I’m in a much better position than I was when I originally posted, and I want to start dealing with things properly. Some of these defaults dropped end of Nov/beg December 2025, so I do need to start addressing this soon. 

Options I’ve considered

I’ve thought about a Debt Relief Order, but I’m worried about the impact it could have on renting. I may need to rent a different house in the next year or so, and that’s the main thing putting me off going down the DRO route for now. Even if I don’t, it’s likely I’ll need to move before my defaults drop off in six years. Avoiding CCJs is also a major concern for this reason. 

So instead I’m thinking a self-managed Debt Management Plan (DMP) could be the best option.

The main reason I’m leaning towards this is I need some flexibility. My monthly budget may fluctuate a bit because:

• I need to start private therapy while waiting for NHS support
• Depending on NHS waiting times, I may also need to go private for psychiatry appointment(s)
• I need an occasional cleaner to help me stay on top of things - I know this is typically a luxury, but I just don’t have the mobility to do it myself anymore. 

I feel like having a bit of wiggle room would be easier self-managed than via StepChange etc. I’m hoping to gradually increase my self-employed income this year and possibly work towards a part-time job if/when my health allows. I also probably don’t fall into the £75 or under money to put towards debt required by a DRO. 

My questions / concerns

• Looking at my situation, does a self-managed DMP sound like the best plan?
• One specific concern: my Aqua credit card and my Santander card are currently with Moorcroft. I’m happy to start paying towards them. However, Santander has defaulted and Aqua has not defaulted yet. 

I’m really keen to avoid an “Arrangement to Pay” marker with Aqua because my understanding is it can drag things out / affect when my credit file finally clears, whereas a default drops off after 6 years. I’d like to make a clean fresh start once the defaults eventually fall off.

So, what is the best way to handle Aqua (with Moorcroft)? If I start paying, will that risk an arrangement-to-pay marker rather than a default? Would it be better to push for defaulting first, or does it not work that way?

I’m also thinking about putting in some affordability complaints, as I believe I may have justification — especially given my circumstances and how the lending built up.

With self-managed: I know it might not be recommended for everyone, particularly given my mental health concerns, but I’ll have support from friends/family to help keep me on track, so I feel confident I can manage it.

If anyone could advise on:

• whether self-managed makes sense in my circumstances
• whether I should still speak to StepChange even if I don’t use them
• how best to deal with Aqua/Moorcroft to avoid an arrangement-to-pay marker 

…I’d be really grateful.

Thank you in advance.

Grumpelstiltskin

I would get all the information about getting a DRO. It does sound to be the best way forward.

ManyWays

I may need to rent a different house in the next year or so, and that’s the main thing putting me off going down the DRO route for now.
is there anyone in your family that could be a guarantor for a new tenancy? 

RAS

Given your situation, you could be advised to get your GP to complete the mental health form, and then with that and your physical health issues apply for write offs. 

Mean-time stop paying your smaller debts as it does little to advance your case for forbearance. 

You need a good emergency fund to cover you in case of income reduction based on either your mental or physical health issues, and to cover the cost of moving.

Nightingale_92

https://forums.moneysavingexpert.com/discussion/comment/81848055#Comment_81848055

Thank you - I’m going to look into this.

If write-offs are possible, do you know if this would still be through DROs or is it a more informal arrangement?

RAS

If you are doing a DRO, write offs would only be relevant if you need to reduce the debt below £50k.

They are useful for a DMP.

You are basically asking them to accept that given your previous health issue and on-going health issues, you were not fully able to manage your finances, and asking you to repay fully is unreasonable.

Someone may take the pragmatic view that pursuing you for the debt is not a useful use of their resources. Others may consider affordability which is a key issue these days and decide expecting you to repay given your benefit situation is unreasonable.

Nightingale_92

https://forums.moneysavingexpert.com/discussion/comment/81878114#Comment_81878114

Thank you for explaining. I was planning to ask for breathing space, as with my conditions, everything takes me a while and I want to have a little bit of time to investigate if write-offs etc. may be possible. Do you know if applying for breathing space will affect my ability to apply for write-offs on medical grounds? Many thanks again.

sourcrates

Breathing space is a bit of a white elephant, it was originally proposed as a six month hiatus from collection activity, but it was discussed and debated, and eventually introduced in a watered down form of only 60 days, which in the world of debt collection is nothing to be honest.

When you consider it takes the average debt collector around 9 months to go through their standard letters with you, and the usual response time to any letters is about 30 days, what good would another 60 days be.

Just ignore breathing space and go with your plan regardless.

Nightingale_92

Hi all,

Just bumping this thread rather than starting another one. Thank you for the advice again, concerning pursuing breathing space. I've followed the advice to move forward with my plan and not apply for breathing space.

It's been a bit slow moving, but since I last posted, I've written to Monzo recoveries and Moorcroft (Moorcroft were threatening to send someone around, so I thought it best to make contact.) Both have written back saying they've noted down my circumstances, and Moorcroft in particular said they've won't be taking any court action etc. while the account is with them. However, both asked me to fill out a budget. I get this is fairly standard procedure for agreeing repayment plans.

I assume with Monzo, since the debt is still in-house that I should fill out the expenses/budget form, but given that Moorcroft are a debt collector, I've heard conflicting things on whether it's best to clue them in in detail over your financial situation or not? I have about £40 leftover, which they might actually see as me being able to pay more, but that £40 will actually have to go towards the other debts, so it's not 'spare money' (I will, of course, explain this).

Many thanks for any advice on this!

RAS

I'm on my way out, but briefly. Doorstep collectors have as much power as next door's cat. They are their to try and persuade you to communicate with the creditor. Nothing more.

sourcrates

The clue is in the letters Moorcroft send you, do they say they are "acting on behalf of their client"?

If so, that means the debt has only been assigned equitably, which means all Moorcroft can do is collect the balance, they cannot take enforcement action to force payment.

Sometimes they buy the debts they chase, sometimes they only act as a collector, there is a big difference between the two.