Has anybody experience with StepChange and call tell me about it?

[StrugglingwithDebt]

Hello,

I am in a bad financial situation at the moment and found out about StepChange online. My mother was diagnosed with cancer last summer and as she lives abroad I reduced my days at work from 5 to 4, meaning I had more time to visit her at weekends BUT less income and more expenses. I took out payday loans, borrowed money from a friend and used my credit cards a lot. I ruined my credit rating, due taking out lots of payday loans and basically taking out new ones to pay off old ones. Sometimes I was late and defaulted. I didn't care about all that but I am now back on my old salary as of tomorrow and really want to be debt free again.

If I enter a DMP now does it mean I will never be able to use my current bank account and credit cards again? I was very responsible with my cards etc. before, paying them off every month or in two month when a bigger purchase was being paid for e.g flights and I would like to keep them for emergencies. Will their contact my employer?

My total debt comes out at just under 4k excluding 1.6k I owe my friend. StepChange has calculated that by making payments of 450GBP every month I can be debt free in 9 months.

Can you tell me about your experience if you have any, thank you.

Do you have debts on the credit cards and bank account?

watching and waiting

I have an unplanned overdraft on my bank account and some debt on the credit cards. I am able to make my monthly payments on the cards but of course I have to tell them all my debt including cards. My main concern are defaulted payday loans that I am unable to pay off and it keeps getting more and more.

I use step change, they have been nothing but fantastic
Really give them a call

Oh I see - they are a charity. I must admit I thought this was some kind of planted advert for a loan company!

If you enter a DMP you have to include all debts so yes, the credit cards would be cancelled as would the bank account, you would need to open a basic account elsewhere with no association to your current account. No, your employer will not be contacted however some jobs require regular credit checks (generally if you work in financial services, you will be aware of it if you are in such a role) so in these circumstances it would be better to speak to your employer rather than it be flagged up when your credit check comes back.

Once it is all repaid you can apply (if you wanted) for a new credit card however in all honesty you would be far better off putting aside the £450 per month you will have been paying off the DMP and using cash for large purchases - only buying things you have the money for. The interest rates you could get on a credit card following a DMP will be so unattractive I'm pretty sure you won't want to use them unless you can repay it all in one month :)

Step change are fantastic, they will deal with contacting your lenders so you don't have to, they are happy to give you advice when you need it. Personally I think that if you are struggling to keep your head above water then its what you need to do.

Also don't look at it as there is only the payday loans causing you problems - if you didn't have the credit cards you wouldn't be in such a mess with payday loans, you are in an unauthorised overdraft, it is all your finances causing you issues and so it needs to be all your finances that get sorted. Sorry if that sounds harsh but I've seen too many times where someone has only wanted to sort part of their finances and ends up in a worse situation because of it - you need to go into this with your eyes wide open. Good luck.

No they are the new credit consumer counselling service. They help you manage your debt. I've needed a debt management plan setting up, some companies trick you and charge you to do it and say it gives you the routes to ccjs and things.
SC have been nothing but kind, and helpful to me. I give them ingoings and outgoings. I pay my rent and household bills, all my credit cards, they have taken out of my hands. They don't start it til sept, so I make no payment yet. Gets the pressure off even though I haven't missed payments. They've made sure I have more than enough to live on. As long as I take out no more credit and make my payments or let them know I can't- it's all out of my hands.
Ill be debt free in 3 years this way.

I deal with step change in a professional capacity and they are excellent.

If you have an overdraft on your bank account and include it in your dmp then you will no longer be able to use your bank account. However, if you don't include your overdraft in the dmp you can usually operate your account as normal. If your bank are aware of your dmp then you will be excluded from additional borrowing for quite some time.

Step change don't always include your overdraft in the agreement. It depends on many factors, ie, the amount of facility and how the account is operated.

When you enter into a dmp your creditors will register your debts as defaulted and this will stay on your credit file for 6 years.

Any credit cards included within the dmp will be blocked so they cannot be used. If you keep a credit card and use it you will invalidate your agreement with step change. If they find out they will end their relationship with you.

I found Stepchange really helpful with my debts. I don't know much about their DMPs as my debts were higher and so they recommended bankruptcy for me. They advised me on the form filling, and how to get it sorted out in court and how to minimise the chance of having to make further repayments, they really know their stuff. I am debt free now as I was discharged last year and it will drop off my credit report in a few years. They are one of the best advice agencies to go to as they are a charity, some DMPs take fees and I would definitely avoid those.

Step Change may be a charity but they are funded by the banks. To find other debt advisors (and I would recommend you speak to 3 to make sure you are getting the best advice) go to iva.com - there are reviews on all the providers. Most private providers do not charge for advice or for setting things in place so avoid any that ask for this. They are more likely to have your interests at heart rather than those of the banks, credit card providers etc.

I’m with stepchange but owed a lot more than you. They will close you CC accounts and in my case had to close my bank account and open a new one elsewhere as I was paying back an overdraft. TBH In your situation id look at the snowball method, don’t enter into any arrangements to pay back creditors if you don’t need to and just start by paying off the priority debts like pay day loans first. If you enter into something like a DMP or IVA you’re credit will be ruined for at least 6 years. If you can afford £450 a month then I think you can be smart, sort this yourself and safe a lot of hassle and keep your CCs in place for emergencies etc. As it stand I have absolutely no credit and can’t get any credit if I needed it. I love stepchange for what they’ve done for me but in your situation I’d sort it yourself

That’s a lot per month, can you realistically afford it?

I have a DMP with StepChange - they are brilliant. So helpful and practical. They only let you pay what you can afford, so although it may take longer to pay off your debts they won't let you pay so much each month that you then struggle or go without.
Your credit cards are cancelled and you can't apply for credit, but the best thing I've found is that generally the debts are frozen, so no more interest or charges, and no more demanding/threatening letters!

Get in touch with them and explore what they can do for you -it might be the best decision you make!!