DMP Advice

bipolarcleric

Hi guys,

Realised I'm pretty much at breaking point due to several years of chronic overspending. Not that you need my life story but I lost both parents in the same week during COVID. As an only child I inherited everything and being mid twenties at the time I essentially got used to a lifestyle that I definitely couldn't afford to maintain, and have now ended up getting myself into a mess with.

Managed to ground myself during the last 6 months or so spending wise, I've never missed a payment in the past 6 years but got to the point where I've been making minimum payments and essentially using credit to cover priority bills.

Total unsecured debt of ~£70K, between the following creditors:

Barclaycard
Fluid
Aqua
Natwest (2 Credit cards)
Lloyds
Zable
Zilch
Virgin Money Credit Card
M&S Bank Credit card
Klarna
PayPal Credit/Pay in 3
Monzo Flex/Overdraft
Vanquis

Secured Debt - £74K mortgage:

I have a property worth 240K, with an outstanding mortgage of £74K (33 years left on term). My eventual plan is to sell the property eventually, release the available equity and to make a settlement offer, but I have my 91 year old grandmother living with me (no other relatives in this country) so I don't want to stress her out and uproot her during her twilight years. Once the inevitable happens is when I plan to proceed with the sale and hopefully move on with my life.

No other secured debt.

Income of 2K per month net, did my stepchange budget and they've recommended a payment of £86 per month.

I've read through the forum and there seems to be a lot of emphasis on self management and letting unsecured debts default before starting a DMP, but I feel like I might need my hand held by Stepchange with this one to be honest, at least at the start.

How does the plan sound to you guys? As far as I can tell, with such a low monthly payment through stepchange all these debts should default within 3-6 months automatically?

I'm just looking for some advice really. At the end of my tether with living like this and I just want to retake control of my life.

Thanks in advance guys. Reading everything on this forum gives me a lot of confidence.

Brie

I'm in the "let things default before you start a DMP" camp. You can still use StepChange to do the leg work for you but simply let them know that no payments will be made until the debts default. There have been reports that some SC people push to get the DMP set up without this happening and, as I understand it, this can cause a problem with your credit history.

While you are waiting for the defaults to happen you can build up your emergency fund so you have room to maneuver in the future.

I'm curious about your user name as it implies certain mental health struggles. If this is the case the other thing that you might want to consider is whether it was in part your MH that pushed you into your bad spending habits. A Debt and Mental Health Form might be a helpful thing that will shut down some of your creditors quicker than other things. Have a look at point 9 on the link. fyi - if you are in England there is no charge allowed for a medical professional to complete this form for you. Once done you can scan it and email it to the various creditors.

DFW Sticky-Provit/Statute Barred Letters, Defaults, Mental Health Help and Guidance, all here. — MoneySavingExpert Forum

fatbelly

Yes, stop trying to pay these. You can't service 70k of unsecured debt on a 2k income, particularly when you have a 74k mortgage.

Let them default, save an emergency fund, get your banking moved to somewhere where you have no debt.

Then use Stepchange if you want to

Don't feel forced to sell the house because of nonpriority debt

RAS

As a home owner, you need an emergency fund for anything from boiler break down to roof leaks.

So stop paying the consumer credit urgently, save an emergency fund and then go to Stepchange.

Also make sure that you and grandmother are getting all the benefits and financial aid to which you are entitled. AgeUK may be useful.

Meantime consider Brie's suggestion and/or look at affordability claims, see debtcamel for help.

Longer term, be aware that after a few years you may be offered reduced settlements. If you've been saving, you may be able to reduce the amount you pay off substantially.

And hard as it to face, you may be able to let a room to a lodger under the rent a room regulations (£7500 tax free).

Brie

https://forums.moneysavingexpert.com/discussion/comment/82140158#Comment_82140158

The link I provided includes all sorts of things including templates requesting copies of the credit agreements, affordability complaints and "prove it" letters where someone says you owe something you don't know about.

ManyWays

If all these debts have arisen since covid, also look at making affordability complaints againbst them all except the BNPLs, Zilch and (possibly) Klarna. And send any rejected to the Ombudsman, do not be put off by rejections, the lenders are hoping you will just give up.
Fluid and Aqua are the same lender, so make a combined complaint against those two.

bipolarcleric

Thanks for all the comments guys, I really appreciate the help and advice.

I guess the main reason for me wanting to go directly to stepchange is the threat of CCJs due to the debts defaulting. It's something that I don't want it to get to, does anyone have any idea of the creditors I've mentioned getting to that stage?

Also regarding mental health, the username was just random. While I struggle with grief sometimes, I thankfully haven't got a serious mental health condition.

I get paid tonight, I have a separate bank account not linked to any of the debts so will get that transferred straight over and I'm planning to change my payroll details with work tomorrow.

bipolarcleric

The idea of just ceasing payment to everyone starting now is also terrifying me but I'm trying to get past it mentally

SpireCaptain

https://forums.moneysavingexpert.com/discussion/comment/82140302#Comment_82140302

Hopefully you'll feel the relief of not robbing Peter to pay Paul. I'm 4 days since missing my first two payments on a credit card I've had a student in 2006. I thought I'd have it forever but it's just not sustainable. Nothing has happened so far, no phone calls. Just a text saying if you pay by the 17th we won't apply a £12 late fee.

Think if it as the very first step at the start of the next chapter of your life. Good luck.

Brie

Much of what you will receive from creditors regarding non payment will be a lot of bullying bluster. They try to scare people into submission and to make payments that can't afford. They will know as soon as you start contacting them about affordability and the rest that you are not simply disappearing and that they need to treat you with a certain amount of care as you will come across as well informed.

That's one reason to always communicate by letter, never by phone. If gives you time to think about what you want to say and means you have a record of your questions, comments and the creditors' responses.

Snail mail is preferable to email especially if they don't already have your email address but this is one good reason to go through a debt advisor (SC or Nationaldebtline or Christians Against Poverty or Community Money Advice or Citizen's Advice) as the emails will be from the advisor not you so you don't feel as much hassle.

Tell them that you will not engage with them by phone or text and that all communication must be in writing. If they persist in texting you, for instance, you can advise them that they are harassing you and they must erase your mobile number from their records. This is important if/when they pass the debt to a collection company as they should also abide by this.

Glad your MH isn't an issue.