Defaulting before DMP

Chunkydog1305

Hi all

I have found this forum so helpful so thank you in advance. After a lot of consideration we are planning to enter into a DMP with Stepchange. IVA is not suitable for us as we owe too much so creditors unlikely to accept the small payment we can make. Bankruptcy was an option but with the cost of rent in our area losing our home (which has little equity) and car would mean we are worse off. We may explore this option further but it’s very complicated as we have shared equity on our property so 30% is winded by the housing association and we have a secured loan against our 70% so I think a can of worms would be opened as reading the small print of our contract I should never have taken this secured loan out but due to circumstances I panicked and did.

So DMP at present seems safest option for us it will run over 30 years but we are hoping to overpay (husband is hoping to get a new job) and get this down much quicker. I obviously do not want this to be on my credit file for 36 years if I have a DMP AP marker applied so reading all the advice I think I’m doing the right thing by allowing the unsecured loans and credit cards to default. This is the first month of missed payments and I’m having massive panic attacks etc just thinking about it. I’m just looking for confirmation am I doing the right thing or should I enter the DMP now.
Thanks in advance

13thlegion

Take a deep breath. Yes you are doing the right thing.

It is also natural to feel the way you do. We're led to believe that these big companies are in charge of us. When really we are in charge of ourselves.

Whatever solution ends up working for you - the DMP or changing your mind later to an IVA etc (having read your other thread) - it's all ok.

As the creditors for unsecured debt contact you, remember yes they can ask, but that doesn't mean they will get.

What may also help you is to start a diary here. That way if you need any support or cheering on the lovely people here can do that.

Grumpelstiltskin

OK You have made he best decision, the first thing to remember is debt collection is a slow process, nothing terrible is going to happen when you stop paying.

As long as you haven't got any bank accounts with any banking group you owe money to and you are going to save as much as you can in an emergency fund there will be no problems.

You will get communications from your creditors, remember they are computer generated and there is not a human being behind them, don't speak to them, block their phone numbers but do open any letters you get by snail mail.

What you have to remember is that from now on you are in charge not your creditors and don't panic.

13thlegion

1 thing I forgot to ask in my reply above. Have you though through your budget to try and account for everything, including regular expenses that are not every month (Xmas and birthdays etc) and irregular surprises (washing machine problem etc)?

The emergency fund will become like the credit you used before so does need to be fed regularly and as a higher priority.

But don't feel disheartened if it takes a few months to get settled into the routine. Everyone feels like they get the first couple of steps wrong.

ManyWays

This secured loan, is it expensive? A big cause of your difficulties?
What is the cost of the mortgage plus the secured loan plus the rent you are paying at the moment?

ArtyJ931

I am about 5 months in to waiting for my debts to default /the DMP process. I would recommend blocking unknown numbers and changing your email address on all debt accounts to a new one you make specially for the DMP. That way you won’t feel bombarded with these automatic communications. I have also got a lever arch folder to store all the letters that come through while I wait for the debts to default.

I have to say the fear is worse than the reality so far! I’m expecting some to default soon but I’ve been surprised by the slowness so far.

I have also made affordability complaints about most of mine that are plodding on at the moment so actually not much happening.

Chunkydog1305

https://forums.moneysavingexpert.com/discussion/comment/82113817#Comment_82113817

Thank you so much for this it means a lot that people take time to reassure me

Chunkydog1305

https://forums.moneysavingexpert.com/discussion/comment/82113824#Comment_82113824

yes I think so, I have set up an account with Revolut and have created pockets for house emergencies/xmas/clothing etc I have completed the budget on Stepchange and maximised it as much as possible to put away as much as I can. My thought process being if at some point in the next few years we have saved a lump sum and nothing has gone wrong in the house then we could offer this to the creditors to see if they would settle?

Chunkydog1305

https://forums.moneysavingexpert.com/discussion/comment/82114017#Comment_82114017

Thank you so much for this it’s so scary as we have always paid on time. I have blocked all unknown calls and as emails come through I have blocked them as well to try and help the anxiety. Creating a folder is a good idea so I will do that

Chunkydog1305

https://forums.moneysavingexpert.com/discussion/comment/82113822#Comment_82113822

Thank you so much (again) my bank account has moved to Revolut who I have no debt with and blocking calls and emails as they come

Chunkydog1305

https://forums.moneysavingexpert.com/discussion/comment/82113931#Comment_82113931

The unsecured debts were the biggest problem. The cost of the secured loan is £640 plus our mortgage at £230 = £870 total to rent in our area we are easily looking at £1300 a month plus we would have to hand back our car on finance and we need a car to get to work etc