A reader said she was scared about starting a Debt Management Plan (DMP). Her worries were that her husband’s credit rating would be affected and that she would get lots of phone calls from creditors. Another reader has asked if he can get a new mortgage fix if he is in a DMP
I thought it would be useful to look at the most common concerns people have about DMPs.
Contents
Setting up a DMP
Will I get lots of phone calls from creditors?
You should stop making your usual payments to your creditors while a DMP is being set up.
This sounds scary – aren’t you going to get a lot of phone calls?
You will get some calls, texts or emails in the first month or two. They may be asking why you haven’t paid them last month and would you like to pay right now?
Just tell them you can’t afford the payments, that your DMP firm will be writing to them and they will be making all payments from here on.
Don’t make a payment yourself! This complicates things and delays moving on to “the new normal” where your DMP firm pays and you don’t.
The creditor may say they can’t see a record of your DMP. That doesn’t mean anything is going wrong or the creditor won’t accept your DMP. It’s just that the DMP hasn’t yet been recorded on all the creditor’s systems yet.
The phone calls really do stop!
There are hundreds of thousands of people in Britain happily in DMPs – and they wouldn’t be happy if creditors kept ringing them.
My DMP payments is low – will it be approved by my creditors?
A DMP can’t be vetoed by one or two creditors, there isn’t a formal vote on it.
Your DMP firm will send each of your creditors your income & expenditure sheet. This shows that you don’t have any spare money to pay them more.
It’s up to each creditor to decide whether to accept the offered monthly payment. They normally do! But if they say it’s too low, don’t offer them more.
Talk to your DMP firm if you are very worried, but this usually gets sorted pretty quickly in the first 2 months. leave a comment below this article if you have a problem.
Will interest be frozen on all my debts?
Your DMP firm will send your creditors an Income and Expenditure statement which shows you can’t afford to pay more money than is being offered. S0 most creditors do agree to not add more interest and charges.
The proof of this is the very large number of DMPs that are running. People wouldn’t bother if their debts kept going up!
If unusually a creditor is still adding interest after a while, you can write to them and ask them to stop – there are template letters here. And you can complain to the Financial Ombudsman if they don’t.
But at the start of your DMP there is no reason to expect this will be a problem.
I would like to keep my overdraft outside my DMP
This isn’t a good idea at all. Including your overdraft in your debt management plan means that the charges will stop.
You need to switch to a new bank account. All the major banks all offer good basic bank accounts to people with poor credit records.
If you aren’t using your overdraft at the moment, you may feel tempted not to switch bank accounts so you still have the overdraft there as a cushion. But DMPs are flexible – if you have a sudden financial problem, you can ask for your payment to be reduced or suspended for a few months.
Overdrafts are some of the hardest types of debt to pay off. And some of the most expensive!
Getting a clean start from your debts is one of the main aims of a DMP, and that includes getting rid of your overdraft.
And if you have been using your overdraft for most or all day a month for a long while, look at making an affordability complaint winning that will speed up your DMP a lot
During a DMP
What is it like living in a DMP?
A DMP is a big change for you. Before you had lots of debts to pay but also credit cards and an overdraft to use. In the DMP you are living on your income each month without borrowing and you only have to make a single debt management payment.
A few people find a DMP very restrictive but many people in practice don’t. Some people find they actually have more money to spend on everyday things without all the debts being paid first.
And if you have been juggling debt repayments for a long while it will be a huge relief to stop. Gradually the anxiety about money and letters from debt collectors fades.
If you feel the DMP payment proposed is too high because you have specific costs that aren’t included – perhaps someone in your house has a disability – you need to talk to the DMP firm about these.
Self-employment with a fluctuating income can be difficult. Talk to Business Debtline about this situation.
Will my debt be sold to a debt collector?
Possibly after a while. The longer your DMP goes on, the more likely this is.
But this doesn’t matter and you don’t have to do anything:
- your DMP firm starts paying the debt collector the same amount instead;
- if interest wasn’t frozen before, it normally is by the debt collector; and
- if later you want to offer a full and final settlement, this is often easier with a debt collector!
So this isn’t something to worry about at all. It’s admin hassle for your DMP firm, not for you.
Will I get CCJs?
Legally a creditor can go to court and get a CCJ even if you keep paying the monthly DMP payment.
But this is pretty rare.
The people that are usually taken to court for a CCJ are the ones that aren’t making any payments to their debts. Not the ones who are doing their best by setting up a DMP.
It’s very unusual at the start of a DMP for typical consumer debts such as credit cards, catalogues and loans. The court often sets your CCJ payment at the same level that your DMP payments is … and creditors know this.
The only common exception here is guarantor loans, where the lenders often seem to go to court.
A CCJ is more likely if you have “business” debts, for example if you have given a personal guarantee. Talk to your DMP firm if you are worried about this.
If you are worried about charging orders, they are extremely rare, see Is my house safe? for statistics.
What if I can’t afford that DMP payment
DMPs are flexible, so your payment can be changed. You don’t want to do this every month – one of the main advantages of a DMP is that it is stress free and doesn’t need changing often.
So don’t be too optimistic about what you can pay. And say Yes to saving a small amount.
If you have a temporary problem such as a bigger than expected car service bill, you can ask for your monthly payments to be suspended or reduced.
Credit scores and mortgages
How will it affect my credit score?
This depends on a lot of factors, including how large your monthly payments are and how long your DMP goes on for. See How does a DMP affect your credit score for details.
But if you can’t make the normal monthly payments to your debts because they are too large, there is no alternative that will leave you with a good credit record. See Don’t let credit record worries stop you taking action on your debts for details.
You can make arrangements with your creditors yourself, but these have exactly the same effect on your credit score as a DMP.
What about my partner’s credit score?
Your partner’s credit rating is only affected if you have joint accounts with them – a joint bank account, joint loan or mortgage. With no joint accounts, they won’t be affected just because you live in the same house, even if you are married.
Can I get a mortgage afterwards?
Yes. You will need to repay the debts in the DMP, then the exact timing will depend on how long it takes to save a deposit and what your credit record looks like. See Can I get a mortgage after a DMP? for details.
This may sound like it will take a long while, but if you have unmanageable debt, there aren’t any quick routes to buying a house.
Can I get a new mortgage fix when I am in a DMP?
You may well be able to get a new fix from your current mortgage lender unless you are in arrears. See Mortgage lenders’ commitments to borrowers which says:
At the meeting [with the Treasury], lenders committed to help all their customers by: enabling customers who are up to date with payments to switch to a new competitive, mortgage deal without another affordability test.
But if you want more than just a new fix from your current lender – from a new lender, or if you want to borrow more money from your current lender – you probably can’t.
With a lot of unsecured debt you are likely to fail any affordability test from a new mortgage lender. But here it is the debt that is the real problem not the DMP. If you don’t start a DMP you probably still won’t be able to remortgage elsewhere.
There isn’t a way around this problem. If you can’t afford the normal debt repayments then you need some form of debt solution. Borrowing more only postpones the problem and makes it worse. And an IVA is a form of insolvency that will make it even harder to get a new mortgage fix than a DMP does.
Is there a better option for you?
If you are having problems repaying your debts, you often don’t have any nice options. If a DMP looks like it will take too long, look at the various ways that it can be speeded up.
But if you don’t expect your situation to improve in the next few years, you should look seriously at your other alternatives. You may find the following comparisons useful:
One option which isn’t better is muddling through for another year or two and watching your debts carry on increasing…
However worried you are about a DMP now, the problem will be harder when your debts are bigger. Putting off a decision now is likely to be the worst thing you can do.
One big advantage of a debt management plan is its flexibility. If you aren’t sure, you can give a DMP a try and see how well you can cope with that monthly payment.
If you haven’t yet talked to a debt advisor about debt management, give StepChange a ring. They run more DMPs than any other firm, and if a DMP isn’t right for you they can talk to you about your better alternatives.
Stop payments before a DMP starts?
How many DMPs work and how many fail?
Choosing a debt management firm
Chloe says
I have done a DMP with CAP and I have never felt so much relief . I am less stressed and all my creditors have agreed for me to pay what I can afford. I am not worried about my credit score. I just want to start afresh and clear my debt. Don’t be afraid to start a DMP it is a great help. Always remember don’t spend what you don’t have. Live within your budget .
Sara (Debt Camel) says
Thanks for that comment Chloe – it can mean a lot to someone who is worried when it comes from a “real person” not just a debt adviser :)
Robert says
What was it like contacting your creditors?
Sara (Debt Camel) says
Chloe left that comment 4 years ago – I doubt she will see your question…
Hannah says
This is a great article I am now debt free but I did have a DMP for around 8 years I was really scared to enter into one but I had no choice I couldn’t keep up my my repayments and owed around £7,000
When I first contacted a DMP they explained I would be debt free in 5 years and need to pay £150 a month after going through my expenditure which sounded great and I opted to go with this I changed my phone number purely because I couldn’t deal with the stress if any of my debt companies phoned me I just gave it to my DMP company and contacted them if I received any mail from them as I am paying them to deal with my debt companies
I will be honest the £150 I was paying to the debt companies didn’t leave me much to do anything with for the month like going out with friends which you do need once in a while and 8 years is a long time, the good part about my debt company was that if I did have any emergencies to pay out for I could ring them and explain the situation and they would allow me to basically just pay my DMP fee and a small amount to my debts. The downside was they told me it would be 5 years until I was debt free and it wasn’t I’m not quite sure how it wasn’t but I think I have an explanation I was paying £150 a month and my DMP company took £50 of that a month for their fees so in actual fact I was only paying £100 a month off my debts so it took longer another negative was the DMP company fees went up every few years so I would look at going with a company like step change where every penny you pay goes straight off your debts
Also you do have to do a yearly expenditure review with your debt company every year which I also found stressful as I was in such a low frame of mind with my debts but I know this had to be done
My circumstances changed towards the end of my DMP I got a better job and could afford to pay more but I didn’t want my DMP company fleecing me every month so I picked up the phone with my debt companies and explained I could afford to pay more and they agreed to let me deal directly with them again and split my remaining debt into 3 monthly payments and here we are today debt free and the happiest I’ve ever been
Sara (Debt Camel) says
Without that extra £50 in fees, your DMP would have been a lot shorter as you say – it really does make a huge difference.
Hannah says
It certainly does in no way am I trying to slate the DMP companies they do STOP baliffs turning up at your door, they dealt with my creditors when I mentally couldn’t take no more but I think people need to see the bigger picture, I was paying £650 a year just for my DMP fees I wish they would of been going off my debt instead so I really would urge people to use the companies that do it for free you will be getting out of debt far sooner
Chloe says
My DMP is by CAP and they are free ( do not charge any fee) . Try CAP they might be able to help you.
Sara (Debt Camel) says
Yes, the 3 major free DMP companies are:
StepChange, Christians Against Poverty (CAP) and Payplan
SB says
Hi Sara,
I have also just started a DMP with Stepchange and I do feel much better. Please could you advise me whether it’s worth me trying to claim any refunds from my creditors, who I do feel lent to me in a irresponsible manner?
I only started my DMP last month, is it worth waiting a few months or would it be ok to start now do you think?
Thank you.
SB
Sara (Debt Camel) says
Start right away! Your finances are now in a safe position, so it doesn’t matter if it takes many months, you won’t be under pressure to accept a poor offer.
SB says
Thank you Sara. I will do so today.
Sar says
I am have been in contact with StepChange recently am waiting for the paperwork to set up a DMP as when going over my finances I realised there was just no way I can keep up with my repayments at the moment I am not in arrears with any of my debts but will be soon but my main concern is that my creditors will start phoning me at work is there any way I can stop this from happening as I will be horrified if this happens? as I am going to have a DMP with StepChange do I still need to contact my creditors because there is about 11 of them and I really don’t want to
Sara (Debt Camel) says
You don’t have to contact your creditors, but it may be best if you email them and say you are setting up a DMP with Stepchange and you are happy to correspond by email but you no longer want to be contacted by text or phone.
Have you cancelled the payments to them? That often gets the message through to creditors faster than if you are still paying and StepChange is telling them about a DMP.
Michael Swan says
Sara is spot on….stop paying them. They will soon be contacting you! You will also get a few months breathing space? I doubt they will phone you at work. How would they know your number(s) there? They also have confidentiality rules to follow. It’s not like you are going to be put in the stocks or anything! Loads of people are crashing out of this crazy (financial) world at the moment. I know I have. Over the last twenty years I have gone from a business owner with a three bedroom house in Sussex, to unemployable, in a dinghy flat in Birmingham….and these pariahs STILL think I can pay them money that I simply don’t have. Never mind aye! Mike ;o)
Dennis says
Hi Mike/Sara
is it down to the discretion of a debtor to give some breathing space & for how long.
I only ask as I’m having trouble meeting the payments of my amigo loan & they gave me 4 days breathing space.
Sara (Debt Camel) says
Hi Dennis,
guarantor loans are different, unlike anything else, because if you don’t pay the lender has the right to go after your guarantor.
I think you have put in a complaint? And Amigo rejected it? Can you say some more about your situation and also your guarantor’s situation. Over on the main guarantor loan page https://debtcamel.co.uk/how-to-complain-guarantor-loan/ may be the best place as that’s where it will be read by other people who are dealing with Amigo.
Steve says
Hi, we are thinking about uaing a DMP with step changes as the payments just seem to be getting out of control, but i know in the next 6 months i will need tp purchase a new car on finance and im worried this will be affected. Without the car i cant work so would be in a worse position, has anyone else had to purchase a car or any other big finance while on a DMP?
Thanks in advance
Steve
Sara (Debt Camel) says
Sorry a lot of questions…
What is your credit record like at the moment? Have you already missed payments?
How large are your problems, are you getting deeper into debt each month?
Do you have priority debts – rent/mortgage arrears, council tax, utilities?
You say “we” do you both have problem debt?
Are you buying or renting?
What car do you have at the moment, is there PCP that is ending?
Steve says
Hi Sarah, my credit rating at the moment is good, and although we haven’t missed any payments, we have maxed our credit cards and the overdraft, so more going out than coming in.
We have a mortgage which ee haven’t defaulted on but it’s getting close.
The ‘we’ is the wife and I so a joint account,
The car was on HCP which will end in a couple of months, we can either hand it back or pay the remainder in full or refinance. In addition to this our other car is on its last legs and will need replacing. We both have to travel some distance for work as well as having a young family, so both cars are essential
Sara (Debt Camel) says
It sounds as though you are headed for a total crash unless you take action such as a DMP with StepChange. If your cards and overdraft are maxed out and you are can’t meet the minimum payments and may default on your mortgage, then nothing is going to mean you have a good credit record in a few months so you can get another car on a good PCP deal.
Yes a DMP is not good for your credit record, but there are no magic debt solutions that are.
Now obviously I don’t know much about your situation. Perhaps you have some assets you could sell. perhaps there are ways you could cut back your expenses, possibly not nice ways, but you may have no nice options. I suggest you talk to StepChange and investigate how that would work for you and talk to them about your car situation.
david d says
Hi Sara, quick question please…
currently paying x14 separate lenders £12 per calendar month, total owed is approx. £15k. i’m comfortable with this for now.
I previously did this via StepChange for 12 months, but then had a few issues with them so in Dec 2018 I took back control and now maintain all accounts directly.
Peachy are now saying that because I no longer am in a DMP, they can add interest etc onto their account so despite around 2 years of repayments, my balance has actually gone up approx. £150 since the final payment via stepchange.
is this right, can they do this and what are my options please? I want to continue paying directly, not interested in DRO, IVA etc as I feel in the future I will be able to increase repayments regularly. but for now, i’m obviously not happy that i’m making payments but my balance is going up with Peachy!
many thanks in advance.
Sara (Debt Camel) says
how many loans did you have from peachy before this one?
david d says
just the one on this particular account, closing balance was £221.83p when I went into a DMP with StepChange. roll forward a couple of years and the balance is now £387!
Sara (Debt Camel) says
what date did you take this loan out and how large was it? how much have you paid to it so far, directly or through StepChange?
David d says
It was a PD loan for £250
Without checking the accounts for exact figures I’d say approx £144. I previously only paid £6 per month but my circumstances changed recently so I upped the payments. Originally took the account out early 2017.
Sara (Debt Camel) says
So my first thought is Gotcha! – and the second is you need to double check those figures very carefully. Let me explain.
You have two reasons to complaint to Peachy.
First that it is unreasonable and unfair to add interest just because you are not in a formal debt management plan. You can point out that the FCAs CONC rule 7.3 has a general duty to treat customers fairly and exercise forbearance and there is no reason to restrict that to formal DMPS and that 7.12.2 puts repayment plans from a customer direct or through third party company on the same footing.
Second that that appear to be in contravention of the payday loan price cap rules. You borrowed £250 and hence should never be asked to repay more that £500. yet you have paid £144 to the debt and you have been told that the balance is now £387 which would give a total repayment of £531.
That second argument depends crucially on your numbers being right. so you need to double or treble check them. If you are absolutely sure, then you I suggest you ask for all interest to be removed from the loan so you only repay 250-144 = £106 balance.
david d says
appreciate your responses, i’m pretty sure my repayment figures are accurate but i’m confirming with them as we speak and will then cross reference against my records and take it from there based on the two “options” above.
many thanks for this!
david d says
wait, no sooner had I sent this, I got a response from them saying the following:
“Please note that the agreement is only Temporary. When you are able to make more payment, the overdue interest will be removed.”
???
Sara (Debt Camel) says
ha! They still can’t breach the payday loan price cap.
Mr S says
I am currently in a DMP and have been for 2 year’s I have 5 credit cards with Vanquist, Barclays, MBNA, Bank of Scotland and Capital One. all of these accounts have DEFAULTS against them apart from Vanquist.
I am currently saving up and offering these company X amount to close the account which will be marked on my account as part paid which is I am happy with as they already have defaults against them.
My question is, Vanquist does not have a default against it, if and they have said once the account is paid in full it will be closed. If I offer them a part payment and they accept can they then put a default on the account against my credit file?
I only ask as they other account have has a default on since Feb 2019 so should drop off in Feb 2025 but I don’t want a fresh on on there meaning that won’t drop off for a further 6 years
Mike_p says
I’m setting up a DMP with Stepchange now and they have put me on the breathing space scheme which prevents creditors contacting you about making payments or from adding interest for 60 days. I was a bit sceptical about how quickly it would be applied but I had en email from Paypal credit confirming it before I’d even got off the phone to Stepchange, and my Barclaycard statement that was generated the next day had no interest on it.
Sara (Debt Camel) says
Good to hear!
Melanie says
If I have decided to set up a dMP is there a chance my creditors will send bailiffs round? I’m so scared as this is a situation I want to avoid my partner has no idea of what’s going on with my finances
Sara (Debt Camel) says
Bailiffs are a pretty unlikely way for your partner to find out – there are several other ways that are much more common.
Can you say something about your debts and this proposed DMP – how large are the debts? how much would you pay a month? Do you have any joint debts or accounts with your partner? What are his finances like? Is your job stable?
Mike_p says
I was in a similar situation with my partner not knowing and I’d strongly advise that you tell yours. It was very hard to do and things were difficult between us for a while, but it was the turning point when we started tackling things together instead of hiding them. I thought she would be angry but actually she was more disappointed and upset that I hadn’t asked her to help me. I know exactly what it’s like, you know you should tell them and you keep putting it off or convincing yourself you will be able to pay more off yourself next month, but really you need to admit you have a problem to them before you can get anywhere with it.
Adie says
HELP! I am looking a setting up a dmp with step change. After doing all the calculations it says it will take 24 years to pay off and I’m really worried that they won’t accept it. ( I’m just waiting for the paperwork to sign). What can I do because if I go for Iva I can lose my job. This is all making me sick to my stomach.
Sara (Debt Camel) says
Can you say some more about your situation?
Do you have a house with equity? A car – is it on finance?
How much do you owe? What will the monthly DMP payment be? Do you expect your situation to change much in the next years or two?
What is your job?
Adie says
No I live in rented accommodation. I owe about £10k. Would be so bad but I had to fight for my kids in court during Covid. Dmp will be £50. I’m training to be a store manager so once a store comes up yeah I’ll have more income. But until then I’m stuck.
Sara (Debt Camel) says
ok so you have no assets to protect? Normal household things don’t count. In that case there is NO reason to consider an IVA ever – a debt releief order would be more suitable. And in any case it’s very unlikely an IVA would be approved for £50 a month.
As you expect your income to increase, you have a good reason for choosing a DMP even though at the current rate it will take 24 years… because you will be able to increase your payments in future. so it won’t take that long.
I hope it is set up now and takes the pressure off you. If it isn’t, then you can just contact your creditors (loans, credit cards, catalogues, overdraft) and ask them to accpet a token £1 or £5 a month until you are back on your feet. See https://debtcamel.co.uk/token-payment-debt/.
I would say if the DMP is set up then review your situation after a year. Super-long DMPs aren’t a greta idea. But hopefully you will be an a better place by then.
Mike_p says
Barclaycard have been very quick to sell my debt to a debt collector. I started the DMP payments in August with the July, August and September payments being listed as missed, they defaulted it in October and have now sold it to PRA Group. It’s better this was as the default will drop off early, I’m just a bit surprised how swift they were in acting.
Sara (Debt Camel) says
As you say, this is better. The default is sooner so it goes sooner from your credit record. And a debt collector is more likely later to accept a settlement offer.
Will says
Hi
I have 3 outstanding bank loans. I was in the process of making complaints to the FO about the affordability of these loans last year – eventually I realised the FO was going to take a long time with this and so I entered into a DMP to lower my crazy payments that I couldn’t keep up with. When I did this, the debt management company I used said I had to accept the loans at this stage and I could no longer continue with my complaint to the FO. Is this correct?
Many Thanks
Sara (Debt Camel) says
huh? which debt management company was this? it is entirely wrong…
Will says
Thanks for the quick reply.
Wow… not sure I wanted to know the answer!! :-)
Would you suggest I speak to the DM company or go to the FO again and continue my complaint?
Thank You
Sara (Debt Camel) says
which DMP company is it?
did you tell FOS you wanted to drop the complaint?
Will says
GW Financial Solutions UK Ltd.
Yes I spoke to the FO saying I was no longer following up with the complaint as I’d entered a DMP – which I only did on the basis that I thought I had to after what the DM Co said.
Thanks
Sara (Debt Camel) says
Did they tell you in writing you could not carry on with these complaints in a DMP? or on the phone?
Did they explain to you that there are debt management firms that do not charge you any fees? How much are you paying them a month and how large are the debts in your DMP?
Will says
I was told this on the phone – there was no other correspondence with them re FO complaint I had ongoing. I remember they told me on the phone and that was that, I emailed the FO to end the complaint.
I don’t think they told me about DMCo with no fees – I’m paying them £40/month and the debts total ~£25k.
Sara (Debt Camel) says
If you switch to StepChange all your money is divided between your creditors. No fees.
I would be surprised if FOS will let you reopen these complaints. You can ask them.
I suggest you send GW Financial Solutions UK Ltd a Subject Access Request by emailing consent@gw-fs.co.uk. Say you would like a copy of all of your personal information they hold, including phone recordings. It would be good to have some proof of what was said over the phone before you make a complaint to GW.
Will says
Thank you very much for your help, it’s truly appreciated.
Sara (Debt Camel) says
let me know what happens – you can take a complaint about a debt management firm to the ombudsman and if they gave you incorrect information then you should ask them to refund the money you could have got from your complaints. and the
VP says
Hi Sara. I just received a letter from one of the creditors saying, that if I will not pay current balance, they will send a representative to my home. Can they do it? They are aware that I am with Stepchange and I am in regular contact with them
Sara (Debt Camel) says
which creditor is this? When did your StepChange DMP start?
VP says
Savvy alias Valour Finance. I was on DMP with Stepchange already but at the time of taking a loan with Savvy it was almost paid off. I took out loans with multiple creditors and when I realised I cant cope with my debts anymore I contacted Stepchange and they added all debts to my existing plan. Savvy did not accept proposal from them, so they started to contact me, post, emails.. I did not avoid contact with them, tried to ring them but experienced very rude representative. I’ve complained via email and got a repsonse today, where they saying they are accepting proposal from Stepchange. The letter where they are saying they will send a representative to my home address is dated 22/4/2022. I also filed affordability complaint which is currently being investigated. Also DSAR, howerver they are requesting photo of my passport which I am not confident with..
Sara (Debt Camel) says
They aren’t likely to send anyone to your house as they now know you are in a DMP.
If they do, you do not have to open the door – a debt collector has no more right to come into your house than the postman does.
If you want the details of your loan i suggest you supply the identity details they want – yes they are trying to be difficult, but why let them win by giving up?
VP says
I just don’t feel very confident sending them photo of my passport or id but I guess I will have to do it if I want it processed. Thank you for your advice
1stTimeDMP says
I’ve entered into a DMP starting Feb.
One of the creditor’s is PayPal credit.
At present Ive not missed a payment, and balance is £3.00 over the credit limit.
Couple of things I am not sure of.
1) They have said they will not deal with the DMP and are having Moorcroft deal with this instead – is this allowed to send to a debt collection agency when there has been no missed payments?
2) They have now restricted the use of my PayPal account I cannot pay companies (my card details are stored) I’m also unable to remove any cards or linked bank accounts – surely this should not be allowed as they are holding my personal data and I should have the right to remove this?
Sara (Debt Camel) says
yes they can send something to a debt collector. Beside, you are just about to stop making the normal payments. And anyway Moorcroft are usually a lot nicer to deal with than Paypal – this isn’t something to worry about.
Are you going to be changing your bank account?
You won’t be able to carry on using the Paypal account. If you have given paypal the right to debit a card or bank account, you can cancel that right by telling your bank or the credit card.
Dean says
Hi there, im about to start a DMP with stepchange and am not quite sure what steps to take in preparation.
i have lloyds bank account that my salary is paid into and where my direct debits can get paid out (also have a lloyds loan and overdraft and scottish widow pension that is viewable on the lloyds website). my debts are about 60k in total across loans and credit cards and i know it needs to change. Before i start the DMP my question is i have a starling bank account that has been pretty much dormant for the last x amount of years, do i do a switch over from lloyds to the starling account and then cancel my non priority direct debit payments from the new bank account? or do i not bother with that and just inform my work to pay my salary into the new account, bit confused about what i need to do about banking..
Sara (Debt Camel) says
so you currently have direct debits set up that you won’t need in the DMP, eg payments to debts in the DMP or other things you have decided to cancel?
Dean says
Correct. I have a Lloyds Bank account, with direct debits etc , my salary also goes into it. What’s the process for opening a new bank account and putting my salary into it and making sure the direct debits that need to be paid are setup in my new bank account?
Sara (Debt Camel) says
So the first thing you should probably do is cancel the DDs with Lloyds that you won’t need in your DMP. it’s best to do this now, see https://debtcamel.co.uk/stop-debt-payments-before-dmp/
After that the Lloyds will only contain DDs you want. You can then delete them one at a time and set them up in your Starling or any other bank account.
This could be a good time to think about your banking going forward – many people find it easier to have an account for “the regular bills” and one for spending money, so when you are paid you move the amount you need for “the bills” to the bills account immediately and it’s then clear how much you have left to spend. The StepChange payment is one of the bills here.
Frank says
Hi also would like to know as in the process of entering a dmp
Sara (Debt Camel) says
probably best to start your own thread if the answers given to Dean still leave you with questions
Sara (Debt Camel) says
Also you are rightly concentrating on getting this set up for the DMP at the moment.
But then I suggest you should think about about whether any of your creditors lent you too much money… you may be able to win affordability complaints s for some of the debts in your DMP.
The arguments are a bit different for the different types of debts, see the articles here https://debtcamel.co.uk/tag/refunds/. If you think you have a case against Lloyds for the loan and the overdraft, then combine the two complaints into one because Lloyds should have taken account of everything it knew about you.
If you win a claim about a debt in the DMP, then the balance will be reduced or even cleared, speeding up the DMP. Making these complaints doesn’t harm the DMP at all.
Adie says
I have been on a DMP with step change for about a year… they are sooo good mate. Write all your questions down so you don’t forget then ring and ask away- they’re so helpful and relieve any stress or concerns you have. Tbf. Sara is good on here too she helped me when I was worried. Hope all goes well.
Dean says
Crapping myself about bailiffs or debt collectors knocking on the door and all other scenarios in my head.
Kids and everyone being disappointed in me….etc etc .
My own fault I suppose, just need to fix it now I know it’s an issue I can’t fix by myself.
Sara (Debt Camel) says
Setting up a DMP means it is incredibly unlikely you will ever see a bailiff or debt collector.
How much will you be paying StepChange a month?
Dean says
About £1200
Sara (Debt Camel) says
So that is over £14,000 a year. It will clear the debts in four or five years. Your creditors are probably going to be fine with that – they are getting paid a decent amount a month. Why would they want to go to court when they are being paid?
Kate says
Hi,
We have just set up a DMP but with a private company. Very good ratings and everyone has been very supportive. Main concerns are being able to remortgage in 2.5 years time. We owe around 40K across 4 credit cards. We haven’t ever missed a payment but we had barely anything to live on with the interest payments.
Main questions – will we be able to remortgage?
– what happens if the creditors don’t agree to the repayments and continue to add interest?
We will be paying 500 PCM split across 4 creditors and planning to make additional payments when we start having something behind us again.
I feel sick to my stomach and wonder if I made the right choice. I’m not sleeping and my anxiety is through the roof. All situational as I’m sure most people’s situations are. We have no other debts or arrears and have never missed any payments both to our creditors or all our priority bills.
Thank you so much for reading :)
Sara (Debt Camel) says
who is your mortgage lender?
will you just want a new fix – same term, same loan – or will you want a remortgage?
Kate says
Mortgage lender is NatWest, fixed for 5 years. Would like to remortgage as we brought a new build in covid and had to get help to buy. This was because pulled 90% mortgages, so ideally would like to pay that back
Sara (Debt Camel) says
You would be able to get a new fix for the same mortgage with NatWest without them check affordability or looking at your credit score. All the major mortgage lenders have agreed to this, see https://www.gov.uk/government/news/mortgage-lenders-commitments-to-borrowers
However for the remortgage that you want, NatWest will do a full affordability check. And it sounds quite likely from what you have said that you would fail that.
To be clear it isn’t the effect of the DMP on your credit score that is the only problem – you would be very likely to fail an affordability check with that much credit card debt anyway. You were obviously in a tight financial situation and you want to have a large mortgage and will have to pay a higher rate.
You have another 2.5 years to go before the fix ends. I suggest you need to look at clearing as much as possible of the credit card debt before then. You will still find getting a remortgage hard but lower debts will help.
Two things that may be able to help,
1) switch to having your DMP through StepChange or another DMP provider that does not charge any fees. The DMPs are exactly the same except you won’t be having £40 a month or £65 a month or whatever deducted each month.
2) look at making affordability complaints to the credit card lenders. See https://debtcamel.co.uk/refunds-catalogue-credit-card/ which explains what these are and has a template to use. Making these complaints doesn’t affect your credit score and if you win one any negative marks have to be removed (good!) and the balance would be reduced by the interest refund (good!)
Kate says
Hi Sara,
This is really reassuring thank you. So we really if we got a new fix at the same amount there isn’t an issue. It’s then an issue of paying back the help to buy loan.
It’s still a long way off and we have a lot of time to clear some debts. Would it be simpler as to remortgage at the same amount and then work out how to pay back the help to buy loan?
Also as we have just entered the DMP do most creditors freeze the interest? I’m not sure how it works if they don’t as we won’t be any better off paying the amounts through DMP?
I am so glad I found you! You have really reassured me x
Sara (Debt Camel) says
“So we really if we got a new fix at the same amount there isn’t an issue. It’s then an issue of paying back the help to buy loan.”
yes. And the HTB part is much cheaper at the moment than mortgage rates are, so although to you want to “buyt the whole house”, this is isnt urgent and clearing 40k of credit card debt is!
“Would it be simpler as to remortgage at the same amount and then work out how to pay back the help to buy loan?”
I’m not sure what you are suggesting here. It should be easy to get a new fix from NatWest despite the DMP. i twon’t be easy to get a remortgage for a larger amount with NatWest or anyone else.
Are you thinking of remortgaging to repay the DMP debts? Then you are switching unsecured debts at 0% interest to secured debts – not a good idea.
“do most creditors freeze the interest?”
yes. check they all have in a couple of months, a DMP takes a bit of time to settle in
“I’m not sure how it works if they don’t as we won’t be any better off paying the amounts through DMP?”
you can complain if they don’t.
Kate says
Thank you for this.
Our original plan before DMP was to remortgage to clear the HTB. If we can get a fix without an affordability check we will do that then pay the monthly HTB as that is a lower interest rate than a mortgage.
We will have cleared around half our debt in the next 2.5 years and intend to pay extra too. We will also have less childcare costs at that point. We have a long time to think about the remortgage.
Our main concern at present is if the creditors don’t agree to the DMP and freeze interest
Thank you again for your advice. I can’t tell you what a godsend you have been! X
Dean says
Actually this is a good point that he raises, i also have a fixed mortgage till October 2024. Im concerned if i take out the DMP i will struggle to get another rate thats decent come renewal.
My credit cards at the moment (most of them) are on 0% interest fee and i keep moving them everytime they run out but concerned that at some point i may not get a 0% and then get stung on interest fee’s, hence me contemplating taking our a DMP. My loans are not obvioulsy 0% so there is that to take into consideration. Is it worth waiting till i have remortgaged?
Sara (Debt Camel) says
who is your mortgage lender?
do you only need a new fix or a remortgage (change in amount, term, anything else?)
Dean says
I’m with NatWest and need a new fix. Don’t need a change in amount etc.
Sara (Debt Camel) says
With NatWest – or any other major lender – you should not have a problem as you only want a new fix not a remortgage. NatWest should not do an affordability check on this so your credit record should not matter. All major mortgage lenders covering 97% of the market have agreed to this, see https://www.gov.uk/government/news/mortgage-lenders-commitments-to-borrowers.
But what if NatWest do do an affordability check? Well from your previous comments you have c 60k in unsecured debt. If you don’t start a DMP, you would be likely to fail any affordability test because of this! So the DMP isn’t your real problem here, it’s the amount of debt you have.
And the idea of trying to get through for over 18 months without a DMP sounds like a very bad idea. Get going now and in 18 months time you will have cleared a lot more of the debt as interest and charges should be frozen.
Frankie says
I have set up a debt management plan with PayPlan and gave all evidence. They are asking me to send bank statement and payslips 3 months worth. I have sent my payslips but I don’t want to send bank statements for personal reasons. Will PayPlan be okay with just payslips or do I have to send bank statements? Is this part of the contract? As I don’t want to send them and dont want payplan stopping the plan because of this. If could get back to me regarding this. Many thanks.
Sara (Debt Camel) says
Can I ask why you don’t want them to see the bank statements?
Dean says
so i have submitted the application to step change, moved over the priority odirect debits to a new bank account , i have also cancelled all my non priority direct debits too or was this not correct?
do i need to tell my existing creditors that payment wont be made or let step change deal with them?
Sara (Debt Camel) says
This article looks at this period when a DMP is being set up https://debtcamel.co.uk/stop-debt-payments-before-dmp/
Ross says
I am seriously considering a dmp my problem is the one debt is with the bank which I also have a child’s junior isa with for my child. Will the bank start looking at getting what’s owed to them from that isa? I’m really worried about it
Sara (Debt Camel) says
No a bank can’t do that. A junior ISA is not in your name.
Ross says
Will that junior isa still be kept open for other family members to put money into if they wish. Its very rarely used but I’d like it to still be available for them if they wish to do so
Sara (Debt Camel) says
I have never heard of anyone having a problem with this. But if you are really worried then you could move the Junior ISA to another provider, see https://www.moneysavingexpert.com/savings/junior-isa/#needtoknow
Ross says
Please can you help me I have misread the situation on the dmp I have included the loans credit cards and my overdraft which is 1390pound. Im always in it as soon as I’ve got paid due to dds etc. I thought by including it in my plan I would be able to transfer the remainder of it to my new bank.. What do you suggest cuz obviously now not being able to do it I’m going to be in a worse situation than what I originally started in having no money for the month
Sara (Debt Camel) says
So has your DMP started? When is the first payment due?
You have a new bank account and you have moved your salary and bills payment to that?
Ross says
Its about to start first payment on the 9th I’ve cancelled the direct debits for the loans and won’t make the minimum payments for the cards. I’m waiting on new bank account to come through the post, I just don’t see the point now tho knowing that I have nothing to move over whilst I’ll be further in my overdraft with this bank because of priority dds
Sara (Debt Camel) says
when do you next get paid?
the overdraft at you old bank will be included in your DMP, I assume? has the account been closed?
Ross says
I’ve only been paid today lol. I next get paid end of the month, the overdraft is included in the dmp. My thinking was I would have that money to put into barclays and never have an overdraft again
Ross says
I’m so sorry I’ve just over thought everything, I’ve just worked it all out I was stressing about nothing.. Thank you so much
Sara (Debt Camel) says
Ok! If things are too complicated tell SC you need to start the month after so you have a full month of not making any debt payments and can get everything switched to new account that will continue.
(Don’t give up because this seems like a hassle – it’s the easy forward to being in control of your money with the debts dropping. Life without living in your overdraft….)
And in a month it two, when it’s all underway, look at affordability complaints about the debts in your DMP including that overdraft. See https://debtcamel.co.uk/tag/refunds/. Winning any can really speed up your DMP.
Tom says
Hoping you can give some advice please!
I applied for a dmp, and I thought it would take a week or two to get everything sorted, but my bank have just taken all the money I had left in the bank with no warning as I had an overdraft and I have no money now until august. Can I get it back from them?
Sara (Debt Camel) says
What do you mean “taken it” – do you mean they have closed your account?
Tom says
They’ve removed my overdraft of £500 and all I had in the account was 200 which was in the overdraft
Sara (Debt Camel) says
It is a shame you didn’t switch to a different bank (as I hope your DMP firm told you to do) earlier.
Have you got a new account opened? Start the process now of getting your wages and any benefits paid into the new one.
Have your bills been paid this month and is it just cash you are short of?
Tom says
It’s only been a week since I applied so I thought I’d have time to sort it all as breathing space was applied. My wages went into there, direct debits are all paid, bills etc paid, the money left was for food for the month. I have opened another account now, but not sure how to get by as I can’t take out another loan for food.
Sara (Debt Camel) says
Ok Its rare for a bank to withdraw an overdraft so suddenly.
Which bank was it?
I guess it was StepChange?
I suggest you phone up your bank and complain that they did this without any warning and it has left you in hardship with no access to money to buy food. If you can get to a branch this afternoon that may be best.
Could anyone in your family lend you some money for food?
There are some emergency budgeting ideas here https://debtcamel.co.uk/snapshot/not-enough-to-live-on/emergency-budgeting/
Tom says
Its Barclays Bank, and yes with step change
I’ll get onto that this afternoon! Thanks for your help!
Sara (Debt Camel) says
Good luck…
Ben P says
Hi,
Firstly a thank you to this site, using things I found here I managed to reduce my debts down to the point that my DMP will be paid off by December with only two accounts remaining. Lending Stream who the FOS didn’t uphold my claim on and Natwest and while the ombudsman seemed to side with me, but said they couldn’t investigate due to the 6 year rule which Natwest would not budge on. And Natwest default is the only bad thing left on my credit file. For info the DMP started in Sept 2017 but I didn’t add Natwest to it until Jan 2020 as I was afraid of loosing my bank account completely. I realise now that was a very stupid thing to do.
As it’s an overdraft I can’t go down the CCA route and I have today received my SAR which has a lot of detail but nothing I think I can use in the 200+ pages they provided. The only thing I can’t find in all of the detail is any reference to the default or a copy of it, even though they provided copies of other letters.
I accept a did wrong in 2017, and have paid the price for the last 6 years. It just hurts that after all my hard work getting straight I will still have the lat Natwest Default follow me for another 3
Sara (Debt Camel) says
this is why I really try to talk people out of keeping their overdraft in a DMP.
Defaults do matter less as they get older. Especially when they have been settled – that doesn’t affect the score you see but does affect how much other lenders are prepared to lend to you.
CC says
Sorry to jump on this but I have a Nationwide overdraft of 2.5k in a DMP. Nationwide have now completely cancelled the overdraft and are demanding repayment. Should I remove it from DMP or try to focus on clearing this balance asap? I am now worried that I shouldn’t have included my overdraft in my DMP.
Sara (Debt Camel) says
are you in the process of setting up the DMP?
CC says
Yes, it has been set up recently, 2 months ago. with PayPlan and all my creditors have been advised.
Sara (Debt Camel) says
ok this sounds like a standard letter a bank sends when they close an account – the wording is unhelpful and defined in legislation. This does NOT mean that Nationwide intends to reject your DMP, carry on adding interest or take you to court… it just means the account is being closed (which Payplan should have told you will happen.) It is nothing to worry about for your DMP and you should not make extra payments to them. If you talk to Payplan they will confirm this.
CC says
Great, thank you for putting my mind at rest.
Sara (Debt Camel) says
let me know what happens
CC says
Hi Sara,
A little update on this situation. Yesterday I received a default notice from Nationwide. I am so disappointed. I recently entered DMP with PayPlan and my £3,000 overdraft was included in my plan. I also raised an affordability complaint which Nationwide partially upheld – I received a refund for the last two years so this has now been submitted to the Ombudsman but it hasn’t been picked up yet. I am aware that if my claim is successful with the Ombudsman my default will be removed but I am worried that if my complaint is not successful I now have a default on my file.
As part of my affordability complaint Nationwide recognised I was in a difficult financial situation. My overdraft was reduced to £2200 due to the payment received. Then a few weeks ago it was cancelled all together.
Could I update my complaint saying that I want the default removing? At the very least if my complaint is not not upheld I would like to do everything I can to get this default removed. Do you have any advice?
Sara (Debt Camel) says
Bank accounts with overdrafts are always closed in a DMP.
How large are the debts that have gone into your DMP and what monthly payments are you making?
CC says
Total debt in DMP is £27K. I am just paying £50 a month at the moment as I am in a terrible situation and need the breathing space to pay my essential debts. I am starting a jew job soon so I will be increasing my monthly payment when I am financially able to do so.
Sara (Debt Camel) says
So after you have cleared the essential debts, it’s probably going to take a few years to clear the DMP? In this case, defaults are your friend. Because they will drop off your credit record after 6 years. If the DMP is recorded as a payment arrangement on a record, that debt stays on your credit record for 6 years after the debt is settled – which could be a 9+ years.
Kay says
About to start a DMP (self managed), do i need to change bank account if there are no debts linked to my current one?
I’m including an overdraft in my DMP but not with my main bank account (different bank)
Sara (Debt Camel) says
No.
Are you using the overdraft with your current bank though? If you are it is honestly better to get it included and switch bank accounts.
Starting a DMP is a good time to consider affordability complaints against the debts going into the DMP. See https://debtcamel.co.uk/tag/refunds/ for articles about the different types of debt which explain the main reasons to make these complaints and have template letters. These complaints don’t harm a DMP and winning any will speed up the DMP.
Kay says
Thank you, I don’t have an overdraft with my main account. I did open a new bank account in case, also with no overdraft but wasn’t sure if I should switch or not.
I’ll check out the link, thank you so much
Sara (Debt Camel) says
no need if you don’t have an overdraft.
Sorry, I just get tired of seeing people regret a few years later that they didn’t include an overdraft in their DMP
AC says
Hi I’ve been struggling a while with my debts and have finally realised I need to take action in the way of a dmp based on the details I’ve entered into StepChange. One thing I have considered is making a complaint to a particular lender who allowed me to take out different loans with them all via online quickly and easily when it seemed nowhere else would offer. Has anyone else ever encountered this and could I make that complaint whilst already on a dmp?
Sara (Debt Camel) says
Good move to start a DMP with StepChange.
Who is the lender?
Being in a DMP is an excellent time to make affordability complaints. Win any and you can really speed up the DMP. These loans may be the worst in your mind, but could you also make complaints about other one? Credit cards? Overdrafts? See https://debtcamel.co.uk/tag/refunds/
AC says
The loans make up the bulk of all the debt, almost 20k. The lender is Sainsbury’s bank. It almost seemed too easy for a long time to turn to them for another loan when I was in need of cash quickly.
Sara (Debt Camel) says
ok so you can use this template: https://debtcamel.co.uk/refunds-large-high-cost-loans/ for the Sainsburs complaint. Send it to the ombudsman if Sainsburys reject it.
AC says
Thank you, this is very helpful.
Ben M says
Hi – I’ve been struggling with high debt and unaffordable payments for a couple of years, since my marriage broke down and my ex-husband, who earned substantially more than me, left without contributing to them. Throughout the period and since, I’ve been in regular contact with a hdebt advice charity and been considering a DMP. When I was in touch with them last year, their advisors and online calculators would typically only recommend a DMP up to 10 years and they were generally happy to discuss a full range of solutions, including affordability claims and settlements. Now they’re fixated on DMPs, and continue to advise me to have one, despite the current figures pointing to a 17 year DMP. I receive monthly lump sums from my ex for a limited period and one adviser insisted on setting up a plan (calculated as a DMP that would be paid off on 6 years), despite the fact I repeatedly told her that I only had 12 more of those monthly payments coming in. f you go to suggest bankruptcy as an option they effectively wash their hands with you (I appreciate that a bankruptcy is something you have to sort out yourself, but there is little in the way of support or advice provided).
Sara (Debt Camel) says
I suggest you talk to National Debtline on 0808 808 4000 about the pros and cons of bankruptcy.
Ross says
Hi there, I was just hoping if you could help me with an issue regarding what will happen when my fixed term ends on my mortgage, i started a dmp about 6 months ago and even tho my fixed rate doesn’t end until the start of 2027 I was wondering what would happen, would my mortgage provider still be offering me a new one when that time comes? One of my creditors is nationwide credit card, my mortgage is also with nationwide..I have never missed a payment on my mortgage but because of the dmp Im starting to worry if they won’t be so willing to help when the time comes to offer a new fixed rate…sorry for waffling, many thanks in advance
Sara (Debt Camel) says
You have a mortgage for many more years with Nationwide. It would not be fair for them to refuse to give you a new fix in 2027 and charge you more because you are in financial difficulty in a DMP.
i hope the DMP is going smoothly. You may be interested in my suggestions for how to speed up a DMP: https://debtcamel.co.uk/7-ways-to-speed-up-a-dmp-so-it-finishes-sooner/
Ross says
🙄🙄🙄I’ve worked myself up over this without even thinking I have a 25 year mortgage with them. How silly do I feel now lol. Thanks again for your response
LW says
Hi, just hoping you can put my mind at rest about something please. I am very close to agreeing to a DMP and have tried to research as much as possible..one thing that really worries me is my spouse been affected in anyway at all as I absolutely could not deal with that, it’s just not an option..they are not and cannot become aware of the situation!
My name was added to a bank account of his years ago, it’s not something I use at all and we don’t have anything joint coming out if it..the only thing we have in joint names is my name is also on the council tax but nothing else all and he pays all utilities, bills, etc all in his name only.. We do not have a mortgage and the house is in his name. Could me taking out a DMP affect him or his credit rating at all as his rating is 100%?
Thanks so much for your time.
Sara (Debt Camel) says
Have you had a look at your credit records with all three credit reference agencies? Look at the statutory report, see https://debtcamel.co.uk/best-way-to-check-credit-score/, you are looking to see if there is a link between the two of you.
Are you able to make all the minimum payments on your debts going forward if you do not have a DMP?
LW says
Hi, I’ve just checked on Clearscore and Experian under financial connections and it just says “You have no financial connections on your credit report” on both. I’m currently up to date with payments but it’s crippling me and at a stage where I only have £55 a month left after paying monthly debt payments (over £20k’s worth, bereavement, various issues have led to this) so seriously considering the DMP (not accepted for balance transfers or consolidation of any type. Like I said I just need to check it won’t affect spouse if I go ahead.
Sara (Debt Camel) says
That is nice, but honestly I would check the three statutory credit reports to be sure there are no links.
Sooty says
Hi, sorry to jump on this. I’m at the point of going for a dmp. My problem is I owe Halifax 8k on a credit card but have a personal account with them. I will use a separate bank for my banking but will they close down my current account if I switch all my direct debits to another account?
Sara (Debt Camel) says
Do you mind if they shut down your current account if you have moved off the debits and credit to a different account?
Benji says
I recently entered a DMP with StepChange, due to pay off 24k of debts in 5 years, from 13 different loan/credit card companies. I am just concerned about bailiffs/debt collectors coming to my door. What are the chances of this? My family are unaware of my debts and I don’t want them finding out. Finally feel like I have more financial freedom, and now have the anxiety of bailiffs.
Sara (Debt Camel) says
By your family, do you mean your partner? or parents?
Its very unusual for a lender to bother to send round a debt collector or take you to court when you are paying them through DMP.
This is a very good time to look at whether you can make any affordability complaints against the lenders in your DMP. It is a great way to speed up a DMP as winning any will get your balance reduced so the DMP ends sooner. See https://debtcamel.co.uk/tag/refunds/ for articles about different sorts of debts with a template letter.
ANDREW says
I am just over half way to completing my DMP with Step Change. I started the process with a legally allowed 60 day breathing space, also arranged by Step Change, which immediately stopped all calls and letters. This gave Step Change the time to write to all my creditors and their proposal was accepted by every one. I pay no charges, fees or interest, and apart from the inevitable defaults by some of the creditors, I have had no other issues. Every year I complete an online review with Step Change which takes 10 minutes with the result of a small increase in my monthly payments. All being well I will be debt free within 19 months. £24k repaid and which, without their help, I would have had no alternative but to go bankrupt.
Graeme says
Hi currently looking into a DMP with stepchange, I have a joint bank account with my wife which is in an overdraft, my wife doesn’t use this account but does have 2 other accounts with the same bank, the overdraft is going into my DMP, my worry is will the bank take money from my wife’s accounts after I move to another bank??
Sara (Debt Camel) says
How large is the overdraft? How much money is in her other accounts?
It is your only joint account? You dont have a mortgage together?
Graeme says
The overdraft is £1500, not much one’s a savings account with around £300, and the other is a current account for wages?
We have a joint mortgage and a secured loan in both names
Sara (Debt Camel) says
This overdraft is your wide’s debt even if she doesn’t use the account. I suggest should should move to a different bank. the bank may not touch her other accounts but legally they do have the right to do this and it simply isn’t worth the risk.
if she had a lot of savings she could choose to clear the overdraft – but it doesn’t sound as though she does.
You may be interested in the following articles as you are looking at a DMP:
– when should you stop payments to debts while a DMp is being set up https://debtcamel.co.uk/stop-debt-payments-before-dmp/
– 7 ways to speed up a DMP (you are already doing the first by going through StepacHange who don’t charge you any fees) https://debtcamel.co.uk/7-ways-to-speed-up-a-dmp-so-it-finishes-sooner/
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Andrew McDermott says
Hi I have requested from Wescot for Santander debt credit card over 10 years old a CCA , they have sent me a one page document CCA this has my current address on it , not my address at time of taking out the card , no other documents have been sent eg statements etc . Is this correct … they advised statements have been requested from Santander , my account is on hold during this time .
Any advice would be appreciated.
Sara (Debt Camel) says
This https://debtcamel.co.uk/ask-cca-agreement-for-debt/ says what to do if you don’t think you have been sent a proper CCA.
Robert says
Hi Sara, I have just filled in all the required details/information with Stepchange to go onto a DMP. I am in considerable debt with unsecured loans (£34k) as I stupidly kept talking out loans to pay off other loans/debt & it has snowballed out of control. Right now, I have basically £10 to my name.
My question is, the vast majority of my loan payments come out on the day that I get paid my wages (26th of the month) so after reading the above article, do I now stop these payments? Or continue to make them until the DMP is in force?
I have never missed any payments prior to setting this up today, but going forward, I don’t know what to do now, as I am scared to stop paying them & yet I can’t afford them after all my other living expenses (bills, travel to work, car insurance & road tax etc)
Please if you can advise me on what to do as I am frightened to default on the payments for the loans.
P.s non of the loans are payday loans, the are
all personal loans.
Thank you.
Sara (Debt Camel) says
yes you should probably stop them, see https://debtcamel.co.uk/stop-debt-payments-before-dmp/. You can’t afford them, that’s why you need the DMP! All these debts will default in the DMP anyway, that is a good thing not a bad thing, you want this to happen as soon as possible as defaults drop off your credit record after 6 years.
If you are contacted by your creditors, just say you can’t afford to pay them and you are taking debt advice on your options.
Don’t try to offer them a smaller amount, it’s a real hassle and very stressful when you have more than a few creditors. StepChange will contact them. You aren’t going to get bailiffs turning up at your door.
If you have any money spare next month, put that aside as the start of your emergency fund.
As soon as the DMP is underway, look at affordability complaints against all the debts in the DMP, and possibly against any debts you had cleared with more loans in the last few years. See https://debtcamel.co.uk/tag/refunds/ for article on different types of debts with templates you can use for each. This is the best way to speed up your DMP.
Robert says
Hi Sara, thank you so much for taking the time to reply back to me, I very much appreciate it.
The DMP with Stepchange says that it will take up to 10 days to set up, but I have 3 of the loan payments coming up this week (these are unfortunately not set up for the day that I get paid) so is it wise to stop the direct debit for these now, as I genuinely am frightened of what will happen if I don’t pay them.
I have always paid & not missed any payments on these loans, but now it’s far too much for me & has basically broke me financially.
I am not concerned too much about my credit rating, as it’s not the best anymore due to the amount of personal loans I have taken out. It’s just the consequences if I cancel the direct debits for the upcoming loan payments this week.
Also, do I cancel the rest that come out on the 26th of this month? I appreciate that you have already said to cancel them, I am just scared to that is all.
Kind Regards to you Sara, I appreciate your time & advice & website.
Sara (Debt Camel) says
how much do all the minimum payments come to, not just these next three but all of them?
And how much do StepChange say you will pay a month to the DMP?
Robert says
Stepchange have calculated that it will be £58- to pay (it will take 55 years to pay off at that rate)
I put down all my other costs, rent, bills, car, car insurance, travel expenses etc, I am basically left with nothing after I pay my living expenses & then pay my unsecured personal loans.
I am currently basically working for pretty much nothing & I work full time.
I didn’t mean to get into this mess, it just snowballed out of control.
ANDREW says
I am really surprised that Step-change would even recommend a DMP that would take 55 years to pay off. Unless you own your home then surely the best option would be bankruptcy, you would have a completely fresh start and have all that pressure taken from your shoulders. This is not advice from me but you could discuss that with Step-change.
Sara (Debt Camel) says
But it won’t take 58 years … come April next year the amount he can pay will jump from about 50 to about 300 a month…
That brings the time down to about 12 years. And it could be a lot less after affordability complaints.
Robert says
Hi Andrew, when StepChange worked out my best options, Bankruptcy was not recommended, neither was a DMO-
However, going forward, once I start to get back on my feet financially, I will increase the DMP payment, but for now, I am not keeping my head above the water & it’s stressful (this is said in no bad way to yourself Andrew) but yes, bankruptcy was not recommended.
Sara (Debt Camel) says
Do you own the car or is it on finance? How much is it worth?
Robert says
My car is on finance, but it’s almost paid off, & is probably worth about £2k now (I’ve had it for 4 & a half years now, took it out over 5 years at the time) I need it to get to my work, as my workplace isn’t somewhere that I can get to using public transport unfortunately.
Sara (Debt Camel) says
how much are you paying a month to the finance? when does it end?
Robert says
The finance is £260 per month, my final payment on the car will be in April 2025-
It’s not worth much now looking at others, so I plan to continue to pay the remaining finance & then once that is done, keep it until it dies basically.
With regards to StepChange, their recommendation was the DMP, & not a DRO.
Sara (Debt Camel) says
ok the no-DRO recommendation will be because after April next year, you will have another £260 a month spare and so at that point you would not be eligible for a DRO.
This also means that from then you can increase your DMP payments so it will take more like 11-12 years to end the DMP not 58 years. This DMP can be further speeded up by you making affordability complaints.
Your worry about stopping paying now:
All these debts are going to default in your DMP. You want this to happen. Hundreds of thousands of debts are not paid each month in the UK, to you your are very important, to the lenders you are just another person who will get automatic messages saying you have missed a payments and get in touch with them.. It take many months of you doing a complete ostrich act before there is any chance of a debt going to court, and you aren’t being an ostrich, because StepChange will be getting in touch and showing the lenders your full situation and offering a payment.
Stopping paying them all now is the sensible thing to do – you cant possibly pay them all and there is no benefit to trying to pay one or two and not the others, it’s better to treat them all the same.
ANDREW says
I wish you all the best Robert in becoming debt free in the future. I am currently with Step-Change on a DMP and I have 12 months left (fingers crossed} to clear what was a total of 26k of debt. By November next year I will have been on the plan 4 years. Not a hugely long time but long enough. My last default drops of my file in 2028 but not all the creditors defaulted me at the time but have been content to file missed payments. From November next year these missed payments will sit on my file for a further 6 years as they will then be classed as a closed account, not active as they are now. This in my view is punitive and not in the spirit of the 1974 consumer credit act, and the subsequent updates.
Sara (Debt Camel) says
So there are two ways you can attempt to improve your credit record sooner, Andrew.
The first is to complain to the original lenders (not and debt collectors they sold it to) that they should have added a default, see https://debtcamel.co.uk/debt-default-date/
The second is to make an affordability complaint about the debts with AP markers – if the complaint is one, interest is removed, so that debt should be cleared earlier, but also when the debt is cleared all negative markers should be removed. See https://debtcamel.co.uk/tag/refunds/ for articles with different templates to use for different types of debt. The sooner you make these complaints the better.
Anonymous says
Hi.
Just looking for some advice please.
I’m looking at starting a DMP – I’m not working due to ill health and various problems. I’ve never missed a payment up until now. Owe a total of 33k. Stepchange says I can afford a total of £40 a month and is recommending doing a DMP as my name is on a house that’s paid off. Owned jointly with parents, and I own a car (only worth around £2000) at £40 a month with circumstances not expected to change, I don’t think I’ll be alive by the time it says it’ll take to pay the amount off. I haven’t paid for the last 2 months, so missed the payments, is it best that I don’t pay and wait until accounts default? Stressed with it all and not sure what is the best thing to do. Thank you
Sara (Debt Camel) says
Are you living in this house that you partly own? Claiming benefits?
Have you health problems happened fairly suddenly? Or had your debt situation been getting worse for a while?
Can you list the debts?
Anonymous says
I am living in the house and I get esa and pip. Had health problems for a while but they’ve gradually got worse. It’s all credit card debt that’s been building for a while – for a while was juggling doing balance transfers etc but at a minus every month it’s just all gradually got worse and couldn’t afford the minimum
Payments in the end
Sara (Debt Camel) says
do your parents live in the house? are the bills split between you?
Anonymous says
Parents in the house and bills are split, they pay a bit more as I cant afford it but I try and help out with what I can
Sara (Debt Camel) says
ok so a low payment DMP (sometimes called token payments) is all that you can manage.
The advice in some parts of the internet to let debts default before starting a DMP is to try to get your credit score “clean” as soon as possible. But this is largely irrelevant for you as it only matters if you want to apply for more credit in future, which you cannot afford. Also it comes at a cost that if you are simply not talking to the lenders and not paying them, they will be continuing to add interest and this is very stressful for you. In your case as you will be paying such a lot amount I suggest you tell StepChange you would like to go ahead with the DMP now.
Once that is underway, you can look at making affordability complaints about all the debts in your DMP and any other cards you have closed in the last few years who were addinging interest. See https://debtcamel.co.uk/refunds-catalogue-credit-card/ which talks about these complaints and has a template you can use.
It is best to make these complaints sooner rather than delay, but waiting a couple of months to get the DMp all underway first will be less confusing. Winning any complaints may get any interest previously charged removed from the balance, or refunded to you if the card is closed.