DMP Advice…please help

fluffyjellybaby

hi, new here and I’ve been reading some of the threads on DMP advice and your stories, and it’s given me a little light but I’m really struggling to see how I’m going to cope with creditors rejecting proposals, defaults etc.

My story; I’m married with 2 young children and have debt in the form of 2 unsecured loans and 3 credits, and an OD, totalling £52k. My debt is in my name only, but I have a mortgage on a property for a family member as they couldn’t get a mortgage at the time. The pay me each month for the mortgage. My partner has the mortgage for our home in his name only, and we split the bills.
I called SC for advice and they’ve recommended a DMP. I am terrified that firstly, my family will find out about my debt, I don’t want them to know. Secondly, I cannot be in a position where I have to sell their home to pay my debts. My mortgage is with my bank NatWest, who I also have one of the loans and credit cards to.
I could afford to make a monthly repayment through SC and have all my debt cleared in under just 7 years, but again I’m petrified to pull the trigger for fear my creditors won’t accept, will send notices, take court action and then I’ll lose everything including my family. I’ve been in a really really dark place and I want to be free mentally and physically from this debt. sorry my post is all over the place but any help or advice would be greatly appreciated

fatbelly

Credit cards, unsecured loans and overdrafts are nonpriority debts. All mortgage lenders care about is having the monthly payments come in. If you can't afford to pay the nonpriority debts without affecting the priority ones then you stop paying. Let them work through their standard letters and then pay what you can afford. If you want to use Stepchange, that's fine. All lenders understand that.

The one thing I note from your post is the overdraft. Have you got another bank account ready for income and essential direct debits? Because you will be walking away from that one.

Brie

I agree with fatbelly about stopping paying the loans and cards. You normally want these to default before you start the DMP.

And presumably the overdraft is with Natwest too? So again, as suggested you need to go to a different banking group (Barclays, Santander, NOT RBS as the same group as NatWest) and open a new account and change any income and direct debits manually to that account (don't use the Switch system).

You say you don't want your family to know about the debts. Does your partner know? It's best to be open at least that far to avoid any awkwardness about the amount of post that might come your way from the creditors. The rest of the family doesn't need to know any more than what you are comfortable to say to them.

fluffyjellybaby

thank you both for your replies. Yes my OD is with NatWest also, and I’ve opened a new account with Monzo and will have my wages paid into that and everything else switched.

Brie you mentioned that I normally should default first, is this not a bad thing? I thought it was good that I was seeking help before I defaulted on anything. I would default within the next month or two anyway as I’m on mat leave and just cannot afford to pay everything

Brie

re defaulting…. as I understand it by defaulting you are drawing a line under the debt. And that limits the amount of time it affects you. It also means that interest should stop being accrued.

If you simply start paying tiddly amounts then you have an ongoing obligation and they will want you to pay the interest at least which won't easily decrease the amount owed.

SC can talk you through this but I've heard of cases where (for whatever reason) SC has helped someone set up a DMP without the debts defaulting and that has caused issues further down the line. Don't get me wrong - SC is a great organisation but I think perhaps a few individual may have wanted to "close a case" and not exercised a bit of patience.

sourcrates

Please don`t overthink things, with debt management, there is no accepting or rejecting payments, your house isn`t going anywhere, and once DMP payments are started, it all runs very smoothly, its all very straightforward.

You pay what you can afford from your budget, and the creditor has no choice in the matter.

Its not imperative to default first, but it can be useful, as all interest gets stopped, and your credit report has a clear 6 year window till it improves, regardless of what else you do.

Stepchange or do it yourself, self managed is simple, and gives you more control, if you just want to pay and forget, then use stepchange, easy really.

fluffyjellybaby

thank you all so much; that advice has been really helpful and given me more insight re defaulting.

RAS

You do need to talk through with your partner. Do you have any shared accounts? If so, separate them to protect their credit record.

Yoh also need to work through your joint finances now, as mat pay changes and the if/when you return to work with child care costs.

fluffyjellybaby

I will be talking to my partner about this over the coming days. We don’t have any shared accounts.

I’m hoping to have my debts paid within the next 6-7 years fully under the DMP, but if my family decide they want to sell the house (which I have the mortgage for), will the profit of that be taken and used against my debts? It’s not my money as they have always paid me for the mortgage payment monthly

Grumpelstiltskin

Who is going to know you have received profit from the house?

Your creditors and/or DMP providers don't see your bank accounts unless you show them, which you don't have to do. Don't worry about that it won't happen, concentrate on the moment.

sourcrates

Quote:

"will the profit of that be taken and used against my debts? It’s not my money as they have always paid me for the mortgage payment monthly"

I answered this on the DMP thread, I don`t know where you get the idea from that unsecured creditors can just steal your house money willy nilly, that would be known as theft to most people.

Only debts secured by a charge can be deducted first from any profits from a house sale, so don`t worry, your money would be perfectly fine.