Waiting for debts to default before entering a DMP?

ChrisWLA

https://forums.moneysavingexpert.com/discussion/comment/81912792#Comment_81912792

Thanks again mate, sorry I fell asleep mid conversation.

I will get that SoA filling in. From what I can tell, most of my debts are mainly second rate rate credit cards, like Aqua, Zopa, Jaja etc.. (with others from from major banks - Barclays, Capital One, Monzo etc.) and also two personal unsecured loans (not from credit unions), so hopefully they won't jump straight to court.

ChrisWLA

Thanks Ras, I have looked into that and will get one signed by my GP & neurologist to give to StepChange when I talk to them. I am a bit wary though, as I kept taking on more credit even after I knew the medication was having a bad effect on me.

ChrisWLA

Hi ManyWays - I am currently in social housing (housing association).

ManyWays

do you own a car worth more than 4k or have one on finance?
If not, then a Debt Relief Order (DRO) could clear the debts in a year, with no payments at all, getting you a clean start.

ChrisWLA

https://forums.moneysavingexpert.com/discussion/comment/81913225#Comment_81913225

No, I don't own a car. My major possessions are a badass TV and PC - apart from that, I don't own anything of value really.

I have looked at the DRO route, but I'm a bit worried going that way - as on a few accounts, I took out more credit even after I knew I was out of work and injured, and I don't want to get done for application fraud when it is sent to the official receiver.

I'm happy to pay the debts off but it will take some time, it was my own fault, and I don't want to end up even more trouble!

Altior

https://forums.moneysavingexpert.com/discussion/comment/81913128#Comment_81913128

All good! You're probably already aware of this, but if going down the DMP route, part of the recommended groundwork before pulling the trigger is to mitigate the risk of set off. That's done by manually moving all of your ongoing regular payments/positive balances/priority bills to a basic bank account in a bank that's in a different banking group to any of your unsecured debt accounts. To separate your regular activity from the debts. That has two positive impacts, it prevents them from using old/deleted DDs to try and pull money out, and from using any positive balances you may have to set off against any defaulting liabilities in the same banking group.

ChrisWLA

https://forums.moneysavingexpert.com/discussion/comment/81913308#Comment_81913308

I have a Nationwide account that I have never used for anything really, I will start changing things over to that. My overdraft on my Natwest is in the green, should I move those funds to Nationwide too - or is that digging me a deeper hole? I'm just thinking that the more readily available cash I have at hand, the easier this will be.

Altior

https://forums.moneysavingexpert.com/discussion/comment/81913313#Comment_81913313

Overdrafts can be awkward in a DMP as there is no end point as such. Personally I would just transfer the positive balance. The OD facility will probably be withdrawn once the missed payments/default activity hits your credit report. Some posters on here might say take the OD money out, I suppose it's a preference. I lean towards not doing anything that is palpably cynical, but it probably wouldn't matter too much.

In regard to Nationwide, sounds fine but don't forget that they are formally taking over Virgin Money next month. So not ideal if you have any liabilities with Virgin.

RAS

https://forums.moneysavingexpert.com/discussion/comment/81913138#Comment_81913138

The whole point is that even though you knew the medication had an adverse effect, the medication also impaired your ability to act in a way that prevented you taking out more credit.

ManyWays

Application fraud - this is incredibly unlikely given your health problems and the side effects of the drugs. And you are only now going for the insolvency route as you have recently broken your back so have no hope of getting back to work soon.
Please talk to a good debt adviser about this, such as your local Citizens Advice. You have no realistic chance of paying of a lot of this debt in the next few years, and a DRO has almost no downsides for you as you have no assets and have a secure tenancy. Get yourself the clean start you need without any of the stress of dealing with all these creditors.