Debt management plan question...

Bromptotoo · 03/12/2023 21:38

Speak to a reputable charity like Step Change or National Debtline.

As ever, I'll append the standard caution when googling for debt advice. Make sure you're 100% on the right URL; way to many charlatans out there.

Original poster

nhsmumm · 03/12/2023 21:46

Yes I'll definitely be speaking to them- just wondered if anybody knew before I get hold of them tomorrow

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uselessatnames · 03/12/2023 22:18

Through a third party such as Stepchange, they will likely insist on each debtor to be treated equally, so all debts included and an equal percentage received of available money for debt (this was the advice given to me on speaking with them). I self managed instead and chose which debts to include and how much to give and had no issues with the companies, however the credit cards will likely issue you with defaults. You need to be well informed on the impact to your credit before reducing payments but I found it quite easy and straightforward to manage the creditors myself.

Original poster

nhsmumm · 03/12/2023 22:27

uselessatnames · 03/12/2023 22:18

Through a third party such as Stepchange, they will likely insist on each debtor to be treated equally, so all debts included and an equal percentage received of available money for debt (this was the advice given to me on speaking with them). I self managed instead and chose which debts to include and how much to give and had no issues with the companies, however the credit cards will likely issue you with defaults. You need to be well informed on the impact to your credit before reducing payments but I found it quite easy and straightforward to manage the creditors myself.

Thank you- I might try with the one I owe the most too and see how I get on!

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SpringingJoy · 04/12/2023 01:39

A DMP will result in Defaults on any included debt anyway. However, IME unless you really really struggle with finances, DMPs are more trouble than help and you lose a lot of control. Sometimes the Defaults are delayed, impacting your credit for longer.

You'll have the same result but quicker and with more control by self-managing the default process.

Just select what unsecured debts you want to default. Stop paying them entirely, go total radio silent with the lender. Wait for the default and final demand letters. Once the final demand date expires, call them and arrange a token payment to keep them off your back.

As the default ages there will be good opportunities to offer a settlement figure for a much reduced amount.

TheSilkLady · 04/12/2023 01:47

I personally wouldn’t recommend a dmp if you’re on Facebook have a look in the group beat the Baliffs. You’ll get lots of advice on how to manage your debts esp if your looking to keep some credit. Contacting your CC and asking them to freeze the interest and ask if you can set up a payment plan.

so much advice DMP are normally set up so the company makes money. It’s not a good motivation to help people.

Bromptotoo · 04/12/2023 09:11

A commercial DMP administrator has to make money or he's no susttainable business. It might also drive innapropriate advice in some cases.

Compared with the wild west miss selling of IVAs though this is low level stuff.

uselessatnames · 04/12/2023 10:18

Asking them to freeze the interest and set up a payment plan will also result in negative markers on a credit file and potentially defaults because it is a version of a debt management plan.

uselessatnames · 04/12/2023 10:22

nhsmumm · 03/12/2023 22:27

Thank you- I might try with the one I owe the most too and see how I get on!

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Good luck! I have a lot of experience with this and have places to point you to for good, impartial advice on whether this is right for you and how to manage it so let me know if you have more questions after calling them today.

Soccermumamir · 04/12/2023 11:36

nhsmumm · 03/12/2023 21:28

Hi- I am considering a debt management plan as things are becoming really difficult.
I will obviously speak to debt change- but can you have debt management plans on selected debts or does it have to be all?

I have loans and car finance I can manage but a number of credit cards that since interest has been added have become unsustainable. Can I just have DMP's on the credit cards??

Thanks

My mum went through step change and had to declare all debt.
To be honest she didn't have a lot. She had one business loan and a business credit card, but when her business failed due to covid etc. She couldn't keep up with repayments. She is now debt free and living her life to the fullest again. She always praises step change and have recommended them to others who were in the same position. Good luck. I really hope you get sorted X

Movinghouseatlast · 04/12/2023 11:44

The easiest is to self manage a DMP. You will have to send each creator a statement of your outgoings. If you miss off some of your outgoings you give them a scewed picture of how much you can afford to pay.

Please check out Money Saving Expert debt free wannabee forum for advise. Communication with your creditors is vital. Going 'radio silence ' as advised above is not a good idea.

Also Step Change is a free service. Donr do a paid for plan. But look on Money Saving Expert.

Original poster

nhsmumm · 04/12/2023 20:49

Thanks all- I wouldn't do radio silence nor would I pay for a DMP.
I have spoken to my mortgage advisor and will hopefully have some options to consolidate so fingers crossed.

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Movinghouseatlast · 05/12/2023 13:14

No, no, no do not consolidate! You are turning unsecured debt into secured debt. Meaning if you can't pay that debt you risk losing your home. Money Saving Expert is really clear that you should never do that.

I know 3 people who have consolidated debt multiple times. One now struggles to pay his mortgage, one has no equity at all in his house after paying it for more than 40 years and the other is stuck renting as he ran out of options to consolidate.

Original poster

nhsmumm · 05/12/2023 15:35

So- I couldn't consolidate as we have more coming out than we do coming in.
Debt management plan is our only option.

I could cry- I feel like such a failure and this is going to take so long to sort out!

I must say stepchange have been great

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KarateSchnitzel · 07/12/2023 19:35

I'm considering a DMP at the moment but a self managed one. There's a wealth of information on the money saving expert debt forum. Very informative and there are regulars on there who are specialists on debt. I'm still thinking through my options but if I do decide DMP then I won't be using stepchange. They are free and very informative but from what I've researched their plans do not help in the long term as they restrict your budget meaning you often end up leaving yourself short. If you manage your own plan you have more control over payments. Good luck!

Original poster

nhsmumm · 07/12/2023 21:51

@KarateSchnitzel
I actually feel like it's the opposite! They've taken everything into account and we've got more money to put aside than ever!
You can go through their budget online and see what they're proposing you spend without having to commit to anything.

I actually feel ok about it now, I've slept for the first time in weeks!

Having to contact everyone would have been stressful and v overwhelming for me so I'm grateful to StepChange.

I've certainly learned a lot this week!!

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QforCucumber · 08/12/2023 10:43

Definitely look at the Debt Free Wannabe Board on MSE,

before starting your DMP with StepChange stop paying your creditors for a few months months - put those payments into a savings account to build up an emergency fund. Once your debts start defaulting then start the DMP, each defaulted debt can be added to the DMP as it defaults. A default drops off your credit file after 6 years no matter what, an arrangement to pay remains on there for 6 years AFTER the debt is clear leaving your credit file adversely affected for much longer.

KarateSchnitzel · 08/12/2023 12:04

QforCucumber · 08/12/2023 10:43

Definitely look at the Debt Free Wannabe Board on MSE,

before starting your DMP with StepChange stop paying your creditors for a few months months - put those payments into a savings account to build up an emergency fund. Once your debts start defaulting then start the DMP, each defaulted debt can be added to the DMP as it defaults. A default drops off your credit file after 6 years no matter what, an arrangement to pay remains on there for 6 years AFTER the debt is clear leaving your credit file adversely affected for much longer.

This is excellent advice and exactly the reason I'm not going through step change. They pay creditors equally from the start which means you have agreement to pay markers on your credit file. These downgrade your credit score and stay there until fully paid. If you allow debts to go to default then it stays for six years only. Therefore, defaults should be removed much sooner than agreements to pay. I also believe step change want to start payments straight away so you don't have an opportunity to maximise your emergency fund. If you self manage you stop payments immediately and put the money you would be normally paying for debts into an emergency fund. This can then be used for essential things that you would normally have used credit for.

Definitely look at the money saving expert forum. There's a dmp specific thread which has all the info. I would suggest you read this before starting your dmp, there's a lot of advice on there from people going through step change who now say they wish they would have read that thread before agreeing the dmp.

Soccermumamir · 12/12/2023 18:26

KarateSchnitzel · 07/12/2023 19:35

I'm considering a DMP at the moment but a self managed one. There's a wealth of information on the money saving expert debt forum. Very informative and there are regulars on there who are specialists on debt. I'm still thinking through my options but if I do decide DMP then I won't be using stepchange. They are free and very informative but from what I've researched their plans do not help in the long term as they restrict your budget meaning you often end up leaving yourself short. If you manage your own plan you have more control over payments. Good luck!

My mum would disagree. She used stepchange, they took everything into account, she had more money left atthe end of the month and the payment went out each month like a DD so she didn't miss it.

She finished her plan 2 years ago now and still does not own a credit card and has no loans and is better off than she ever has been.

Debtfreegoals · 18/12/2023 16:43

Hi OP, I am also on a DMP and I do agree with other people not to use secured debt to pay off unsecured - it's more risky. It's certainly unnerving when you start getting your defaults on a dmp - but if you are prepared not get out anymore credit for the next 6 years, then you'll be fine. Stepchange usually encourage you to include all your debts (although not really the mortgage) so I would expect some pushback with not wanting to include some loans.

Hope this helps and good luck whatever you decide.