Serious questions about Debt Management Plan and StepChange

lifetraveller

So, I've been on a token repayment plan for the past 4 months with StepChange. I have informed them that I've had a small bump to my income and as a result, they want me to ring them and redo my budget over the phone.

Now for transparency: My income is £29k plus a £5k part time self employed job (100 a week or so) so around £34k a year in total. So 2k a month after tax with the employed job any maybe £400 a month for the self employed job (the extra 100 is put away for tax)

My debts are: £24k Personal loan
4 credit card debts totalling £21k for a total of £41k

My budget obligations each month (including saving some money each month) are around £2100 and for the record, I am a joint owner on a house.

Would a DMP actually be realistic for me? This would take around 15-20 years I think to pay off these debts?

But really, what are any other options except stop paying all together and risk getting a CCJ? I definitely don't want that to happen!

I've been told that I might have a strong case for an affordability complaint, though to keep paying any sort of token/DMP that StepChange sets up on my behalf.

I also called the personal loan company today, as I received an email from them a couple weeks ago. They were very kind and said that as I was with StepChange I shouldn't have received an email and they would remove my info from their system. Is this normal? I also asked them about what would happen if I did an affordability complaint and was told they were would be happy to put in the complaint on my behalf. This surprised me and I'm a bit suspicious that a company would be that kind to someone. Should I take what they said in good faith?

Please... no judgement. Long covid, losing my job depressions/anxiety were hard enough on me. I appreciate any insightful advice from anyone that has been in my shoes and got out of it.

lifetraveller

Keep going

fatbelly

There is no downside to an affordability complaint so start with those

A dmp is a realistic option with £300 per month available, as would be an IVA.

Do the affordability complaints and then take a decision

EssexHebridean

Have your debts already defaulted or not? Our advice here is usually to let everything default before entering a DMP - but Stepchange don't have that policy so won't have told you the advantages of doing things that way.

lifetraveller

https://forums.moneysavingexpert.com/discussion/comment/81858662#Comment_81858662

Yes. The debts have defaulted

RAS

Put in affordability complaints and see if you reduce what you owe that way.

Then play the long game with low DMP payments and aim for reduced settlements in a few years?

Or read up on protocol IVAs?

ManyWays

Do you have a car on HP or PCP or have you had in the past? The FCA (car finance regulator) is setting up a scheme for car commission refunds as it says about 40% of finance contracts between 2007 and late 2024 had too much commission charged.

You knew nothing about this commission, it will not be easily visible (or at all) on your paperwork and the only way to find out is to ask the lenders. The MSE free tool to do this is here:

Car finance FREE reclaim tool & guide | Martin Lewis

Do this now, as this means you will be in one of the earlier batches for refunds if you are due one. And money you get back can be used to make settlement offers to debts in a DMP. In an IVA it will just be swallowed up by the IVA and not change what you pay or how long it lasts for