DMP - the beginnings

mrlplates

Hi everyone,

Unfortunately I’ve been in this position before (about 16 years ago) where a DMP seems the only way out so will be going down this route shortly. I’m fairly happy with the process but wanted to ask a specific question.

What happens if I don’t default on all my outstanding debt? For instance, I have an AO credit account which is useful for spreading payments for white goods etc. at a low/no interest rate. I have a few items on there now which will take care of themselves over the next 12-24 months.

From reading, the perceived wisdom on here seems to be just to default on all debt but does that have to be the case? Has anyone done this?

Thanks in advance for any advice.

SpireCaptain

Hello, from what I can make out reading these forums it seems that if you're self managing (rather than using a DMP charity who like you to follow their rules of treating all creditors fairly from what I gather) you're pretty much free to do as you see fit and what works for your situation. From what I've read in here some people keep lines of credit open such as car finance etc.

I've not started defaulting yet but I was thinking of keeping PayPal Credit in good standing as it's the lowest limit of £1000 and I find PayPal Pay in 3 good for my self employment business expenses and wouldn't want to jeopardise that facility.

However when defaults do start appearing on my credit file I do wonder if other credits will get nervous and start dropping credit limits or withdrawing services so it'll be futile keeping payments up to date.

Following and wishing all the best on your journey and interested to hear how things compare now to 16 years ago with your first DMP.

mrlplates

Ok thanks, yes I’ve got the same concerns as you but then I think, what’s the worst that could happen.

Yes, I’m pretty down that I’ve arrived back at the same point again but I know from bitter experience that a DMP is very liberating. I just need to learn some very hard lessons to change for good. Good luck to you.

Rob5342

DMPs are informal arrangements so you aren't bound by any rules and can do whatever you like, however you really need a solution that puts you back in a sustainable long term position. The general advice is to default on everything and sort things once and for all, then you get used to living on your budget and carry on living like that afterwards. The danger of taking a partial approach is that you maintain your old habits and slip back into what you were trying to escape from.

mrlplates

Thanks Rob, of course you’re 100% right.

I’ve relied on credit to get by way too much, when in reality, if I didn’t have so much debt to service I wouldn’t need it. A vicious cycle that definitely needs breaking. I’ll think some more about that.

kimwp

Maybe check your AO account terms and conditions - is it definitely unsecured debt or could they take those goods back if payments stop.

Grumpelstiltskin

What you need to do is use the money you are not paying towards your debts to build up an emergency fund so you will have money to cover unforeseen circumstances instead of using credit.

Cash may be old fashioned but if you want to get out of debt permanently it is the way forward.

Sunbakedscobble

I went cold turkey on all debt. self managing my DMP just got me into worst debt. I wasn't strong enough. So I went for a manged one best thing I ever did and now only 2 payments left of a 34k debt.

sourcrates

https://forums.moneysavingexpert.com/discussion/comment/81964950#Comment_81964950

The practicalities of recovering white goods where payment has been stopped, precludes these companies from doing so, as you cannot just enter private property and remove goods unless you have a court order, and even then you cannot force entry, and the customer only has to take a hammer to the washer and its all been for nothing.

This is why they choose to chase the debt rather than the goods bought with it.

mrlplates

Thanks all for the advice so far. First missed payments to come next week, a healthy chunk of my salary is stashed in savings and two (strong on paper) affordability complaints are in with MBNA and Novuna.

Just the waiting time now ready for the barrage of calls, emails, texts and letters. Despite all this, the relief is enormous and I finally feel like I have some control back.

RAS

You can remove your phone and email from the creditors files if you wish, as all important information has to be posted. Do open mail every week, and file. Meantime, Best wishes