DMP advice please help!

Paddledebtfree

Hi all

Thank you in advance for any guidance or advice you can offer me as I begin my journey to becoming debt free. 

I am intending to enter into a DMP as I find myself drowning in debt after a change in circumstances and honestly years of bad choices. I was planning on doing this via step change but have been reading the forum before posting and reading about the self-manage option. Could you offer me any advice on the pros and cons of doing it both of these ways? 

I was intending on asking for ‘breathing space’ to allow me to build up an emergency fund over the next couple of months with the intention to start paying via a DMP in January but reading advice on here I am now wondering if I would be better off just defaulting from this month as the sooner the defaults are registered the sooner the six year clock is ticking? Which do you think is the best route? If I cancel all of direct debits that are due to come out on the 1st do I then have to completely ignore any communication chasing those payments until they have defaulted? And then at that point enter a DMP? 

I owe money to Virgin (2 x credit cards) Barclaycard, NatWest (3x credit cards) and have loans from lendable and lending works. Does anyone have any advice about these specific credit providers? 

My current bank account and savings account is with Starling. Am I ok to keep this as it’s not linked to any of my debt? 

Finally does anyone have any advice on completing the SFS? Do they give you realistic figures for food for example? How are adult children considered within this as I have a 19 year old son at home who doesn’t contribute currently (which is a story in and of itself) and a 16 year old son who is studying for his A levels. They eat a lot! I want my budget to be reasonable and sustainable as I expect it to be necessary for 6-7 years.  

Iv changed my email address on the accounts I can and also intend to change my phone number so all communication is via letters only to protect myself as much as possible! I have read somewhere mention of stating GDPR as a means to get your email and phone number removed and for all communication to be via letters? Is this correct and if so Is there a template for this? 

Sorry for all the questions I just really want to make sure I’m making an Informed decision! I’m terrified!

sourcrates

Hi,

Debt management is not something that should terrify you, its a common sense way to repay unaffordable debt at a rate you can afford, just over a longer period of time.

Creditors/lenders are all well aware people get into financial difficulty, this is why they fund debt charities such as stepchange and payplan.

You seem to be well versed in how this all works, your lenders are just run of the mill high street banks, they all follow similar collection patterns, and your bank is fine as its a stand alone digital bank.

Wouldn`t bother with breathing space, I`d stop paying now, on average it takes between 3 and 9 months for an account to default, dependant on the creditor, so that`s up to 9 months to add to your savings as standard, you don`t need formal breathing space.

Self management over stepchange every time, its much more flexible as you run the show, not them, but that`s down to personal choice I guess.

ManyWays

Picking up some specific points:

If I cancel all of direct debits that are due to come out on the 1st
That is urgent as it is getting very late to do this

Loans from lendable and lending works
probably a good idea to make affordability complaints against both of them. Lending Works closed quite a while ago, so do not delay complaining about this waiting for defaults. And any of the credit cards where you limit is too high and you have been paying interest, eg a complaint about 3 NatWest cards

My current bank account and savings account is with Starling. Am I ok to keep this as it’s not linked to any of my debt? 
Yes that should be fine

How much do you think you spend on groceries at the moment? And why is your 19 year old not contributing, are you ducking a difficult conversation or is there some good reason?

fatbelly

All standard nonpriority debts. Cancel d/ds immediately and start to save your emergency fund

Smudgeismydog

I would also suggest completing and posting your Statement Of Affairs (SOA), you can find the link in the bottom of sourcrates post.

This can be helpful to really understand where your money is going. You’ll have some feedback on areas you could perhaps consider reducing or cutting back on, and it does help you to work through a realistic budget. You will need to move to a place of not relying on credit, so it’s useful to get a grip of your incomings and outgoings.

Paddledebtfree

https://forums.moneysavingexpert.com/discussion/comment/82151455#Comment_82151455

I spend between £500- £600 a month for the three of us. He started suffering massively with mental health in his last year of high school. Didn’t do well in GCSE’s after being predicted high grades, managed to scrap into college, started medication to try and get through college but only managed to get 2/3 of his subjects then has basically spent the last year in his bedroom not leaving the house at all. Really horrific mental health where iv been worried to walk into his room sometimes. Been trying to get a job since January with no success until I managed to get him a job at my workplace as a cleaner ten hours a week. He’s been doing this since August He can just about manage this but the salary he is getting is going towards completing his studies and just general spends. I am aiming for him to start contributing minimal amount to household but right now I want him to prioritise his education and trying to get back out into society in some way and not be so isolated. I also think he’s about to be diagnosed with ME. Which I also have. Sorry, long story like I said…..

Paddledebtfree

https://forums.moneysavingexpert.com/discussion/comment/82151303#Comment_82151303

Thank you so much for you advice. Just to clarify…. Do I not acknowledge or engage with them at all until the defaults occur or have some comma but don’t commit to a payment plan?

If you self manage do you just make an individual offer to each creditor. Do they review it annually as they would via step change? Should you offer a portion relevant to the amount you owe to each creditor if that makes sense?

what can I expect to happen in those 3-9 months? Sorry for all the extra questions !

Paddledebtfree

https://forums.moneysavingexpert.com/discussion/comment/82151455#Comment_82151455

sorry more questions! is there a template or guidance on writing affordability complaints?

Paddledebtfree

https://forums.moneysavingexpert.com/discussion/comment/82151518#Comment_82151518

I’ve just cancelled all my direct debits linked to my consumer debts….. It feels strangely liberating and terrifying at the same time!

RAS

Good first step.

You'll probably get a lot of communications from creditors. This isn't personal and some of it is required by law. For example they have to write giving you time to make up the payments you just cancelled before reporting on your credit record. Then they'll work through a raft of messages already pre-programmed.

Anything important has to be sent by snail mail. So read and file that by creditor.

Meantime you need to start an instant access savings account and put everything you don't spend into that to create an emergency fund.

For affordability information look at the debtcamel website.

Paddledebtfree

Thanks for all of your advice so far everyone. Iv written the affordability letters today to be sent off and intend to do my SOA to share this weekend.

Could someone clarify do I ignore all commutation from my creditors until the accounts have defaulted and then open a dialogue about a payment plan?