DMP Advice

OliverCol

Hi all, I'm currently in the process of a DMP with stepchange.

Total debt is 33k across credit cards & 1 overdraft.

1 of 4 has accepted the DMP

1 has declined and no reply from other 2 as of yet.

I spoke to stepchange this morning who advised me to close my bank account with the overdraft as I can't have an DMP with one. Nobody had told me this setting up the dmp so I'm late to it as it starts in 3 weeks.

My bank is with virgin, and I have a shared joint account with my partner for all our bills and mortgage payments with the same bank (virgin) but a different account number ect. Stepchange said aslong as it does not have a overdraft I can leave that account active but reading up on here people are saying close that account aswell even without a overdraft? It doesn't have a overdraft btw.

I'm pretty confused. Should we make a new joint account together for bills ect?

The first to reject is also the same banking group of another card so I'm assuming that's also going to be rejected too. Whats likely to happen after they've rejected because wouldn't the interest keep being added?

I'm a sick with worry, I'm a right mess at the moment and it's taking its toll so much now. I can only get through to stepchange first thing in a morning usually after a good 50 mins waiting and by that time I'm in work so it's difficult.

If my overdraft is with virgin what bank would you recommend I use? As I was going to use nationwide but just seen that they're part of virgin now.

Stepchange told me to speak to my creditors to ask the reason why they've rejected so I'll try to do that when I finish work today.

Ive missed payments on all my cards now upto 2-3 months on each so well in arrears

Sorry for the long winded post, I have so little time in a morning so just having some advice on here will help me massively in the long run.

Grumpelstiltskin

OK cancel the DMP now, today.

You have made the mistake of wanting to start the DMP too soon, Stepchange have encouraged you to do this.

You cannot have a joint account whist in a DMP, your DMP will affect the other person if they apply for any sort of credit.

Debt collection is a slow business, you should wait for the debts to default before you think about making any payments and in the mean time save as much money as possible in an emergency fund, a cash ISA is the best way to do this.

OliverCol

https://forums.moneysavingexpert.com/discussion/comment/82091424#Comment_82091424

So do you advise I create a new solo current account, and also my partner create a new solo account for the shared bills ect but leave my name off the account and just manually send money?

Thank you btw

Grumpelstiltskin

https://forums.moneysavingexpert.com/discussion/comment/82091492#Comment_82091492

Yes, you can send money to that account no problem.

Please don't let the DMP start yet it is too soon.

Rob5342

I agree, cancel the Stepchange DMP, stop paying everything and wait for defaults, and then once defaulted start making payments with a DMP.

Don't concern yourself with what your creditors think, you simply pay what you can afford and if they don't like it they can sell it on to someone.

The important thing with your current account is that it's not with a banking group that you owe money to, otherwise they have the right to take money from it to cover the debt. Any current account with a bank that's not linked to your debts will do the job, I always suggest Monzo and Starling as they have good apps with lots of helpful budgeting features.

ManyWays

if the joint account has no overdraft, you can just remove your name from the account. There is no need for your partner to get a new account.

"Rejected by the creditors" normally means little in a DMP, they are likely to take what is offered, freeze new interest and default you, which is what you want.

RAS

If you are being rejected for a new bank account, you are applying for a standard account.

You need to specifically apply for a basic account, for which there is no credit check. Starling and Monzo are similar.

OliverCol

I've spoken to stepchange about the concerns about the bank account when I finished work before looking at this forum but I'll relay anyway.

They advised me to continue ahead, if I can afford the first payment which I can, then there isn't any reason to delay payments being sent. They mentioned my partner's credit would only be hit if we applied for joint credit together, not personal credit just her, but I'm removing my name from the account to be safe.

Im in the proccess of setting up a starling bank right now just waiting for the id checks.

I also asked Lloyds about their rejection and they said because stepchange hadnt included the MBNA card they can't accept one without the other, that was the only note of rejection on their system, stepchange now have the number for my MBNA so will be resent to them.

Alot of confliction between advices from here and them, alot to take in right now, thank you all for your replies just reading the odd message helps more than you'd realise. Thank you all

Grumpelstiltskin

Do you know why we say don't start your DMP until your debts have defaulted?

If you do start to repay before defaulting your credit record is marked Arrangement to Pay, that means it doesn't drop off your credit record until 6 years after the final payment is made, so if it takes 5 years to clear it will be 11 years before it goes from your credit record.

Once a debt has defaulted id goes from your credit record 6 years from the default date even if you never pay 1 penny off the debt. Stepchange don't tell you this.

OliverCol

https://forums.moneysavingexpert.com/discussion/comment/82091767#Comment_82091767

No they don't, thanks for explaining that more for me

RAS

The other reason is that during the 3-12 months you wait for debts to default, you put the money left over from paying your essential costs in to another account, possibly an instant access ISA.

We don't know what your life involves but rental may require a month's deposit upfront before the old one is returned, you may have an urgent repair if you are a householder, or white goods or car breakdown.

Dave Ramsay was asked this year if the recommended $1k was adequate now? Hell no, it wasn't adequate a decade ago but people just got so nervous without any financial back up. We see it less but it was common for people on recent DMPs to come here in a panic because the car needed work and they couldn't afford it or get to work. Or the kids needed winter coats.