Help Needed- despite sticking to DMP, my debt has hardly reduced in 3 years :(

km801227 · 17 January 2018 at 3:35PM

Hi there

I have been doing a review of my finances for the new year and have to admit am feeling very disheartened with my Stepchange DMP right now, so am here to seek some advice if possible.

I started the DMP in May 2015. I included all my debts, which at the time came to just over £7000, including 3 credit cards, an overdraft, 2 catalogue accounts and a few payday loans. My agreement was to pay £200 per month so this means up to now, I've paid in the region of £5600 (accounting for a few missed DMP payments - which were agreed with Stepchange, due to unforeseen but necessary expenses such as car repairs).

Based on my original debt total, in theory I should only have around £1400 left to pay, however to my horror when checking my credit report on Clearscore/Noddle I actually still owe just under £5000.

I will admit, after setting up the DMP I did kind of bury my head in the sand, thinking that as long as I pay Stepchange as agreed every month, everything would be fine, and I'd be debt free within the estimated 3 years they told me at my initial debt review. I suffer with anxiety so thinking about my debts often triggers panic, I hate making phone calls, so it was easier for me to just pay Stepchange and hope for the best.

I realise now with hindsight, that perhaps I should have been a bit more proactive and engaged with Stepchange and my creditors because I am now left in the position that my original debt total, has in reality only reduced by £2000 in spite of paying nearly £6000 because interest charges have not been stopped (Also just to clarify, I have not taken out any additional credit since starting the DMP!)

My question is, in order to get the best resolution to this moving forwards, do I:

A) Contact Stepchange and ask them if they can try negotiating with my creditors again to freeze future interest charges (The DMP was sold to me as a way of paying off your debts without having to worry about contacting creditors - I appreciate Stepchange cannot guarantee any will freeze interest payments, but clearly in my scenario by continuing to charge me interest has made my situation much, much worse).

Ditch Stepchange and try a self-managed plan, where I try to negotiate with my creditors myself.

I am also wondering if it worthwhile trying to claim back some of the interest and fees I have paid over the last 3 years? Whilst I take full responsibility for every penny of my debt, and intend to pay it all back as soon as possible, it seems somewhat unfair that I am in the situation whereby my interest charges have increased my debt so significantly even AFTER I have taken the action to get help because I was struggling in the first place.

I am just finding this whole situation very frustrating and stressful and I want to get to a position where I have paid all my debts, and can draw a line under this part of my life as soon as I can!

Any advice will be gratefully received!

National_Debtline · 17 January 2018 at 4:26PM

Hi km801227 and welcome to MSE,

It is understandable that you would be frustrated in a situation like this but, as you already know, the interest and charges are never frozen as a guarantee. That being said, I would suggest going back to Step Change first of all, and asking them to try again to get creditors to agree to this as it is quite a discouraging process without it. It is unusual for them not to get the interest and charges frozen. Alternatively you could self manage, but whether or not you will have any more success in this area is hard to say.

Unfortunately, you cannot really reclaim interest and charges that have been added as they were permitted under the original agreement. The focus now is getting them frozen going forward.

The only other option may be an administration order. If your debts are now under £5000, and you have a CCJ or parking ticket you could do a repayment schedule through the court (known as an administration order). This guarantees the freezing of interest, charges and enforcement action. You can also make an application for this to run for 3 years and (as long you maintain the payments) any remaining debt can be written off (a bit like a mini IVA). Unfortunately, if you don't have a CCJ or parking ticket it is not a suitable option. If you think this may be possible there is more information available online - https://www.nationaldebtline.org/EW/factsheets/Pages/administration-orders/what-is-an-administration-order.aspx

Laura
@natdebtline

marliepanda · 17 January 2018 at 5:00PM

As you have found out, it is in no way guaranteed that interest and charges would be frozen.

You have also missed payments to stepchange, and whilst stepchange may have agreed, your original creditors do not.

However, you say you are in a worse position, but that isn't true, as your debt is now lower than when you started!

km801227 · 17 January 2018 at 7:26PM

Thanks for the responses. I do not have any CCJs or parking tickets so thats not an option.

''However, you say you are in a worse position, but that isn't true, as your debt is now lower than when you started!'' marliepanda - It very much depends how you look at it.

For me the fact that my debt at the time of setting up the plan was around £7000, and now after paying £5600 if the interest had been frozen, I would only have £1400 left to pay - however I have £5000 left to pay meaning that I have accrued an extra £3600 of debt just purely from interest charges alone.

Surely I am not unreasonable to think that is a ridiculously astronomical figure to slap on top of the existing debt, of a person who in good faith tried to take ownership of the situation 3 years ago. Had I ignored this debt, and not paid anything, everything would have defaulted, interest charges frozen, and I would now be in a much better position having £3600 less to pay! So yes as far as I am concerned I am very much worse off, and now seeking any practical advice to try and rectify this situation as best I possibly can.

January2015 · 17 January 2018 at 7:44PM

km801227 wrote: »

Thanks for the responses. I do not have any CCJs or parking tickets so thats not an option.

''However, you say you are in a worse position, but that isn't true, as your debt is now lower than when you started!'' marliepanda - It very much depends how you look at it.

For me the fact that my debt at the time of setting up the plan was around £7000, and now after paying £5600 if the interest had been frozen, I would only have £1400 left to pay - however I have £5000 left to pay meaning that I have accrued an extra £3600 of debt just purely from interest charges alone.

Surely I am not unreasonable to think that is a ridiculously astronomical figure to slap on top of the existing debt, of a person who in good faith tried to take ownership of the situation 3 years ago. Had I ignored this debt, and not paid anything, everything would have defaulted, interest charges frozen, and I would now be in a much better position having £3600 less to pay! So yes as far as I am concerned I am very much worse off, and now seeking any practical advice to try and rectify this situation as best I possibly can.

Without seeing the figures I assume the creditors have just added interest that would have been due had you not been on a DMP anyway - so in that sense they have not been unreasonable. You are probably in a similar place to where you would have been had you not entered a DMP and carried on paying minimum payments.

Some creditors do not automatically freeze interest - Barclaycard are a prime example. If your payments were over 1% of the outstanding balance they would continue to charge interest. I found that out to my frustration. I had to reduce to token payments to force a default and finally zero interest.

Ignoring the debts and not paying anything would have ensured the debts defaulted more quickly, but there was potential that if you had not contacted creditors they could have loaded interest and charges on whilst you were not paying. It's a balance / strategy game to pay nothing or as little as possible to ensure prompt defaults whilst also ensuring no additional charges are incurred and minimal or zero interest charges.

You can't really blame the creditors if you didn't engage with the process and keep on top of what was happening with each account.

You are better off than you were. You have reduced your debt and you are now living within your budget.

All that said, if I were you I would write to each creditor and ask them to refund interest. Advise you did not take the decision to enter a DMP likely and are extremely disappointed they have not supported you to clear your debts. You feel you behaved responsibly in taking advice and support to deal with your debts. Say you feel they are discriminating against you - if you had not paid and ignored the debts they would have been defaulted in a timely manner and interest zeroed at that point. They are therefore treating non-payers preferably to you. As I said, ask for all interest from the date they were notified you entered a DMP to be refunded

Give it a go - you have nothing to lose. I've had 18 months interest refunded and defaults backdated to almost the start of my DMP.

Help Needed- despite sticking to DMP, my debt has hardly reduced in 3 years :(

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