Debt Advice

ManyWays

I suggest you offer all your debts a token £1 a month and save up the absurdly high £680 fee for bankruptcy. In bankruptcy you will not have to make any monthly payments as your only income is from benefits.

This will all be over sooner than a DMP and then later a switch to a DRO.

missbohojangles

Thank you, everyone, for all your advice. It was really helpful to have a couple of options to think about overnight.

I think, going forward, the best option for me personally is to let everything default and then go onto a DMP until my Transitional Protection has fully eroded, and then potentially move onto a DRO in the future if I’m eligible.

I did consider bankruptcy, but I don’t owe anything to my bank and have always been in good standing with them, so I would prefer not to risk having my FlexAccount frozen, as this is the account my essential direct debits are paid from. I also have a FlexBasic account where my benefits are paid into. I need both accounts as it helps me keep my spending money separate from the money set aside for bills, so I don’t get confused about what I have available to spend.

The only other question I have is whether the companies I owe money to generally accept DMPs. These are:

• Tesco – loan and credit card
• Zopa – loan and credit card
• Plata – loan
• Aqua – credit card

Thank you once again for all your help and advice. It’s been really appreciated.

RAS

It's not really a matter of whether your creditor accept DMPs. They price in defaults and will just accept what you can pay them. You decide how much and set up the Standing Order. End of.

Whilst you wait for defaults, you need to save everything that you can into an emergency fund. So maybe an instant ISA or another better paying instant access saving account.

ManyWays

freezing an account in bankruptcy is just a temporary measure, just a few days.
Nationwide may close the Flex account in bankruptcy, but in that case it will probably also close it in a DRO.

missbohojangles

https://forums.moneysavingexpert.com/discussion/comment/82138266#Comment_82138266

Would I be able to open a second FlexBasic Account specifically for my direct debits?

Having just one account unfortunately isn’t an option for me, as I really struggle to manage my bills. This is why a family member helped me set up two accounts. When my Universal Credit and other payments are paid into my main account, I have a standing order set up to automatically transfer the money for my bills into the second account, ensuring that I don’t miss any payments.

They’re coming over tomorrow to help me cancel my direct debits and contact my bank to cancel a continuous payment authority that was set up by Plata.

ManyWays

I have not seen anyone try this; you could ask Nationwide.

Alternatively you can open another basic bank account with a bank you do not owe any money to for a second account. This is possible immediately after bankruptcy.

Also tell Plata you cannot afford to pay this and will be making a token payment. (The issue often discussed here of getting defaults first to reduce the long term effect on your credit record is irrelevant if you intend to either go bankrupt or later get a DRO.)

missbohojangles

Thank you for the advice. I’ll ask Nationwide tomorrow, and worst-case scenario, I know The Co-operative Bank will allow me to open a basic account if need be. They’re not part of any banking group that I owe money to, so at least I have that option if Nationwide isn’t able to help.

missbohojangles

https://forums.moneysavingexpert.com/discussion/comment/82138200#Comment_82138200

Thank you for the advice. I’ve just finished opening an ISA with Nationwide. I’ve put £10 into it for now, but I’m hoping to build it up into a decent emergency fund over the next three to six months, circumstances permitting.