Stepchange

Debtfree30s

Hi all,

finally facing the music of £38k debt, having min payments of £950 a month before all house bills and only having £30 left over a month. The cycle of using my credit cards, then them going over limit is crippling me. Can’t get any 0% interest cards.

I’ve filled out Stepchanges form yesterday online, what’s the next steps? When do they get in touch? Can they refuse your budget?

Do I keep paying? I’ve cancelled my DDs, my Tesco loan is already on a lower payment plan until September.

thank you.

ManyWays

No, you should stop making any payments to the debts going into the DMP. Cancel the lower payment to Tesco too, it is good to go into a DMP in arrears as defaults get added sooner.

If you owe any money to your bank (loan, overdraft, credit card) you need to change banks. This is the time to do it. Switch bills payments over to a new bank, switch your income to the new bank. leave all the debt payments behind as you are cancelling those.

How large will the Stepchange payment be?

How comfortable was the budget you put into Stepchange? Because DMPs do not go well if you are trying to live on too little. So money for presents, treats, replacing things around the house, dentist and say yes to a small amount of savings each month. And a healthy amount for groceries as food inflation is likely to carry on up.

Debtfree30s

Stepchange payment is due to be £395/month. I worried they’d say that’s too low

ManyWays

Does that mean your budget lines were skimpy? If they were, go back to Stepcghange now and say you have looked back at your bank statements and you actually need X for groceries and you forgot to put anything in for kids pocket money or dentist/optician.

Stepchange will not mind. A monthly payment of £250or £300 would be very respectable and give you room to breathe.

Debtfree30s

possibly.. I did put in more for budgeting and on my wage the DMP would give me £550 left over after bills/DMP/food shopping etc. I was worried they’d say that’s too much left over

MattMattMattUK

https://forums.moneysavingexpert.com/discussion/comment/82029819#Comment_82029819

If you have that much left over after essentials then they may well want that to go towards debt repayments, not to be used by you as fun money.

Could post a full SOA?

https://www.lemonfool.co.uk/financecalculators/soa.php

Brie

Is a DMP the right solution for you? Do you rent or do you own?

Since you've done the work already for StepChange maybe you could share the information in a statement of accounts (see my signature for the link) and then we can advise better.

StepChange is an excellent organisation but sometimes they are a bit premature.

edited to add this to read….Debt solutions - what is your best option?

Debtfree30s

the £550 has been accounted for in the budgeting. I’ve never actually budgeted in my life, things Stepchange allowed me to budget for (ie opticians, hobbies, gifts) all went on credit cards. Hence the difference between the amounts. Even things like laundry would go onto a credit card

Debtfree30s

the budgeting on Stepchange also allowed me to budget for my yearly professional fee, something for the last few years I had to credit card

RAS

It sounds like the Stepchange budget is more realistic than what had been happening previously but experience hare is that you are more likely to be missing or underestimating items than not.

Of much more importance is whether you understand what you were buying that made it impossible to find the funds to cover essential professional fees etc? Until you address that you will struggle to budget.

burgervanman

If you know your credit rating is toast, then one thing do so is slow down and have a proper think.

As the people on these forums say, for unsecured debt no one is going to be after CCJs or stuff after only a few month.

Keep paying your secured stuff and leccy/CT etc.

Most firms will have 2-4 months of missed payments before anything goes down the default route.

Stepchange are good, and I initially thought they would be the best route. The only issue is they want everything done and dusted ASAP which can lead you into under estimating your budget and they give you no chance to build an emergency fund. They are great for some people, others not. (My wifes on stepchange route, I'm self-managed DMP).

4 months after deciding to do my own DMP, I reckon I spend £250 extra a month easily on stuff you dont realise. Last minute school fees for kit/events, extra petrol for work, presents or anniversaries you don't account for. You'll be surprised.

I stopped paying everything (10 creditors for unsecured, total 50k ish) in feb, and only now 4-5 months later are things actually starting to default. My 5 loans have only just appeared on my credit rating, 1 card is near and my other 3 cards and paypal are still no where near. I'm paying one debt agency now via SO. (I intend to wait for the other loans until they have sent me CCA's but I'd already planned to pay them all).