Thinking of DMP with Step Change

SpireCaptain

https://forums.moneysavingexpert.com/discussion/comment/81865409#Comment_81865409

The general consensus on these boards are to stop all payments to non priority debts whilst paying priority bills. Save as much as you can from the amount you would normally assign to unsecured debts. Default notices usually get issued anywhere between 3 and 18 months of receiving no payments.

Once all unsecured debts have defaulted, then you can use Stepchange to set up and administer your DMP so there's only 1 payment to make and they will distribute to all the creditors. Although they have their own criteria you must adhere to with treating creditors equally.

This method minimises the effect on your credit file as defaults drop off after 6 years whether or not the debts are repaid or not.

At your age, without a fighting fund/emergency fund, and not allowing for default to register, stepchange will keep you paying that's £500+ you've suggested for years and years without much chance of settlement offers.

That remaining debt would be paid out from your estate before any money is passed onto wherever you've chosen in your Will.

For that reason I'd be inclined to self manage your DMP so you call the shots and have a better chance of settling maybe at 50% or more discount (especially with any write offs). Otherwise it may be 12 years with Stepchange and arrangements to pay to creditors without chance to build up a fund to offer F&F settlements (or pay for emergencies without credit) on the way maybe in 5 or 6 years.

SPM87

we have similar initial sized debt, there is not a single chance I am paying 1k a month to bad debt. Why nobody is advising against this is beyond me frankly.

I defaulted around oct 24 on most the debts, some I am strategically paying token payments of £1 up to £5 a month.

You must be absolutely crazy giving 1k a month to these people, just think if you invested that each month instead. in 10 years time you will be cruising.