Advice needed before starting a DMP

Debttoeyeballs

hi all

Very new here. Have been reading a lot over the last few days and it’s been so helpful and supportive and has helped my worries no end so I want to start with a thank you.
I’ve got myself into a lot of debt and I think self managing a dmp will be the way to go but want to sense check it and also ask a few questions.

My debt is made up of the following

Tesco credit card £15,553. Pay £320 a month

NatWest credit card 11,970. Pay £320 a month

HSBC credit card 14,789. Pay about 390 a month

Lloyds bank credit card 10,000 pay 300 a month

Santander credit card 5851 pay 120 a month

Aqua credit card £2054. Pay £30 a month

Marbles credit card 1831. Pay 50 a month

HSBC loan 9334.92 pay £333 a month

Updraft loan 17112.35 pay £333 a month

HSBC overdraft £1,500

HSBC mortgage

You can see how the minimum payments are crippling. My mortgage is 1333 a month. We owe 235,000. House is worth 400,000 and we are on a fixed rate with HSBC until July 2027. Initially I was hoping to get there and combine everything but I’ve learnt from here not to secure my debt or keep going. I really want to keep the house separate. Our deposit was my husband inheritance from his mum when she died which was significant. None of the debts are his.

With my salary I get 4000 a month. My husband transfers me £700 a month (much lower salary) and that is his contribution to household. Only joint names is the mortgage. My husband owns my car outright and pays the finance on his car, both in his name.

I’ve read lots about stopping direct debits and building an emergency fund. I think I could probably save £1000 a month to put towards the debt. Stepchange online calculator suggested I would have £600 free but I think I could cut back further.

I know I need to change bank accounts and direct debits. I already have a Monzo so will move to that.

I was diagnosed with a meningioma last year (benign tumour in the lining of the brain) I’m on watch and wait with this and have another MRI to check soon. This could carry on as it is for many years, or I could need significant surgery. When budgeting I do need to include hospital parking etc, but think I also need a bigger emergency fund as main wage earner in case I can’t work. How would this work with a DMP? Should I still self manage? Would stepchange be more appropriate in this case?

I’m wondering whether in my case with a condition that could change I should let stepchange do the work or if I could still manage it myself. I’m also so worried that these are large balances and would go straight to CCJs.
any help or advice would be great as I feel like I’m drowning and don’t know what to do for the best.

sourcrates

Nothing goes "straight to CCJ`s".

There is a long legal process first, and I think in your case I would take things a step at a time.

All your creditors are mainstream, and follow pretty much similar debt collection practices, balance isn`t that important really, considering if they were to sell the debts on, they would do so for a ridiculously small percentage of their actual face value, less that 20% in most cases.

You have a good plan, don`t fret about CCJ`s, they usually only occur after a very lengthy period of non payment and ignoring every letter you get sent.

A CCJ is just a court approved payment plan in reality, and as long as you stick to the payments, no further enforcement action can happen.

That should not be a worry, you have a plan in mind that works well for most homeowners, no reason why it shouldn't work for you too.

Makingabobor2

Just wanting to wish you luck, and if you start a diary to monitor your progress, I will be sure to subscribe and cheer you on. Self managed DMP is working for us, I'm sure you would do ok.

ManyWays

I am less sanguine than some people here about large card and loan debts to banks and updraft; they are not always sold on, and sometimes they do take you to court for a CCJ. You may not care about a CCJ, it is not a problem for many people, but it's something to be aware of if you try to not pay them anything after the debt has defaulted.

I also think affordability complaints about the 2 large loans are a good idea and some of the cards if you have paid a lot of interest.

Unless you were very cautious, Stepchange budgets are rarely so generous you can trim £400 a month off them . If you go with Stepchange, I strongly suggest not trying to do this. If you think you can save more, go with the lower Stepchange amount and shovel the extra into an emergency fund.

Debttoeyeballs

thank you.

That’s interesting about the loans. I’m really worried about CCJs as don’t want to get to that point. I would negotiate payments as soon as they have defaulted but my concern is they just don’t accept and take to court anyway. I cannot get to the point where is affects my house.
I need to call stepchange and speak to someone properly I think. Has all been done online so far.

fatbelly

As Sourcrates says, one step at a time. Get these defaulted, banking sorted and emergency fund started, then start to make payments. Court action would not see your house affected and won't happen quickly. If Stepchange say different, post it here and we'll discuss it.

RAS

Just to add, if you currently have a fixed deal with your mortgage provider, when that runs out, you log in (3-6 months prior) and choose the best deal they are offering. No credit check, not even if you have consumer debt for the same provider.

Debttoeyeballs

thank you. That’s helpful about the mortgage.

Are debts this size ever in DMPs? I’m now worrying about the size of the debts and more likely to get to the point of ccjs and then even a charge order on the house.

I’m really not fond of the idea of IVA as think the budget would be really restrictive and I don’t know if I will need serious surgery in this time. The time of the dmp isn’t a worry to me, but think creditors may have other ideas.
sorry lots to think about and just typing all thoughts at the moment. Really appreciate all advice.

fatbelly

Based on what you have told us a dmp seems a sensible strategy for now.

You need to take these first steps and stop worrying.

Yes an IVA might have advantages but that is s formal solution. We can discuss that later.

Yes, if there was court action you might get a ccj and have a creditor look to secure it. But that is too many ifs for now and it's no big deal anyway.

ManyWays

I think an IVA when your health and hence income is uncertain is a very bad idea. DMPs are much more flexible, which you may need.

sourcrates

Obtaining a CCJ in no way magically alters your ability to pay back the debt, you would still pay according to your budget whether the creditor went to court or not.

A judgment followed by a charging order secures the debt against your property, but as long as payments are maintained, nothing else can happen.

Courts typically take the view that all options be exhausted before an order for sale would be granted, forced sales are so rare, they no longer keep official figures for them.

Its best to stop thinking "worse case scenario" as it detracts you from concentrating on matters at hand.