Is StepChange the best option?

sash_berry · 29 September 2016 at 1:35PM

Hi All,

Could please someone advise if there is a better option to get rid of debt that is already getting paid off via StepChange?

My partner had few CC and loans after divorce. So he went to StepChange and paying around GBP450.00 per month now. Total debt is around 35k. What as I see will be around 7 years before he pays everything off.

Also Credit rating is very bad. But no missed payments or CCJs.

Is there anything we can do to pay these debts off? Or just try to pay them off as much as we can?

Thank you

sourcrates · 29 September 2016 at 1:47PM

Hi,

The law provides three regulated debt solutions, they are :

(1) Bankrupcy

(2) Individual voluntery arrangement

(3) Debt relief order

Plus the unregulated DMP your partner is on now.

If you have savings you can try full and final settlement offers to his creditors, I suggest you Google the options available, see if any are more suitable.

sash_berry · 29 September 2016 at 1:50PM

Thank you Sourcrates,

So the best option would be try to pay debt by debt off as I see.

Magi74 · 29 September 2016 at 10:21PM

Make sure that your partner's DMP doesn't contain debt that continues to charge interest. One of my DMP debts charged interest that was more than the payment I was making (thanks again Lloyds) - I ended up practically begging them to default that loan.

Most debtors will suspend interest. They don't have to, but why pay extra when the credit file is taking a massive hit as it is?

Thistle-down · 30 September 2016 at 8:47AM

sourcrates wrote: »

Hi,

The law provides three regulated debt solutions, they are :

(1) Bankrupcy

(2) Individual voluntery arrangement

(3) Debt relief order

DRO's are only available for debt less than 20K

chevalier · 30 September 2016 at 9:36AM

whilst 7 years seems ages, he may get a pay rise, could sell stuff, get a second job, do surveys all sorts to get those payments down. It just depends on how hard he wants to work at it. Not being snarky, just to say that don't take the 7 years as being set in stone.
chev

sash_berry · 30 September 2016 at 9:58AM

Thank you Magi74

It is his post-divorce debts. Been left with all the credit cards, storecards, lawyer expences...Had to buy a house for Ex.. So its not just missed payments or smth like that. But very hard indeed

Will check the interest.

chevalier,
We both have a good income and he has his own business. Just cant decide would it be better to squeeze the most possible out and then be free of debts or pay a bit every month and enjoy the life?
That`s the question

chevalier · 8 October 2016 at 12:03AM

If the debts are paid off quicker then wouldn't the defaults drop off the credit file faster? Sorry I am a bit hazy about that so maybe someone else could advise. That being the case I would be paying them off as fast as I could.
regards
chev

fatbelly · 8 October 2016 at 5:48AM

chevalier wrote: »

If the debts are paid off quicker then wouldn't the defaults drop off the credit file faster? Sorry I am a bit hazy about that so maybe someone else could advise. That being the case I would be paying them off as fast as I could.
regards
chev

If there's a default on the credit entry then the whole entry drops off six years from the default date.

Nothing you do, short of a specific agreement with the creditor to remove it (and that's rarely going to happen), is going to change that.

The problem with a dmp is that sometimes the creditor DOES NOT default, but puts an arrangement to pay marker. Then the entry stays (with its marker) until six years after it is satisfied/settled.

This is the debt-free wannabee board so we're unlikely to say 'pay your debt off more slowly and enjoy life a bit more'. Your plan (if Sourcrates' insolvency options are not appropriate) should allow you a reasonable standard of living and clear the debt in a reasonable period. Seven years is the far end of what is considered reasonable.

Is there a better option than Stepchange? Not really, if you want a debt management company to handle things and not charge a fee (Payplan is equivalent), But many consider a better option to be a self-managed plan, and to use any lump sum to do full & final settlement.

A self-plan also makes it easier to check enforceability (via a CCA request maybe) and to stop payment if they can't comply,

DrWatson1 · 8 October 2016 at 7:23AM

I owe a similar amount of money to you (around £30k) and I'm also with Stepchange.

Overall I've found them pretty good. It does what it say's on the tin, and I've certainly no complaints.

However, I take a different view to paying my debts back. Over the last two years, I've tried to pay as little as possible to my creditors, and save whatever spare money I have. I now have around 6k saved up, which not only gives me some security if I need some money urgently, but I'm also now in a position to start offering F&F settlements.

I owe up to £8k to some of my creditors, and for two years they have been getting £5 per month. The way I see it, I have a far better chance of them accepting a lowish F&F settlement if I'm paying them £5 than if they are getting £100 a month.

In my experience, paying your debts off quickly isn't about paying them as much as you can each month. It's about adopting an approach that gives you flexibility and the greatest amount of leverage in any potential future negotiation.

fatbelly · 8 October 2016 at 10:13AM

That certainly is an effective approach.

I'm surprised Stepchange have allowed you to take it, though; and I don't think they would do that now that the FCA have stamped on them.

But it's certainly something the op could try with a self-managed plan and I agree with your comments.

Good luck with the F&Fs and you should also try cca requests where they are appropriate.

Is StepChange the best option?

Comments

Categories

Get our FREE Weekly email full of deals & guides - and it’s spam-free