Advice for a newbie on timing of switching bank accounts and movement into a DMP

[weejo]

Hi Guys

A bit of background first I guess.

I am 42, single and living on my own with mortgage and the usual bills. Dues to various circumstances over the years, house disasters, redundancies, car written off, more house disasters and finally no pay rise in 5 years, I have gradually relied on credit to make ends meet, pay for food, petrol to get to work etc. I have been trying, my expenditure has been pared way back. But, basically I have been borrowing from Peter to pay Paul.

About 2 years ago I considered a DMP but then I got a casual job which, just about, allowed me to make ends meet (but quality of life has been non existent). Over the last year my casual shifts have reduced from 4 days a month to 0-1 day a month, if I am lucky, and my safety net is now gone.

The final straw was Friday when my work emailed all staff to say that, even if you had opted out of your pension (which I have temporarily while I had to buy a new car after my old car, which was fully paid off (very old but reliable) was written of by an idiot driver) you would be put back in, effective this Wednesday. That meant that I would have roughly £90-£100 less income than I have now. So that means literally no spending money and my food money cut back. (Apparently I can opt out again afterwards, but in the meantime I wonder what do I live on in February?). My finance officer is trying to see if there is an alternate solution, but I may have to ask my parents (in their 70s and not well off) for help next month.

It was the kick up the backside that I needed. Much as I have tried to keep going, despite all my efforts, I am worse off that I was 2 years ago, and my debts are only slightly reduced. I can't keep worrying about how I will manage each month and I need to know that I have a future where this is not the major worry in my life. So I took the afternoon off and registered with step change. Following a lot of information and discussions, I am probably going to proceed with a DMP. I will be looking at the paperwork this next week (but not before I consider all options (thanks for that pointer guys).

I am a bit worried about it all but mostly about the bank account switch. Specifically:
a. actually managing to get a new bank account arranged.
b. when to transfer my accounts
c. when to tell my current bank
d. how to time leaving my current bank so that the overdraft is left behind.

I feel a bit more positive thinking that in 5 years time I will be out the other side and that in the next 5 years I will get to a point where I have a liveable budget and can afford to heat my house again. (Step change factor in heating costs, where I have been living in a cold house for the last few years (with damage done to the house because of it - it is a vicious cycle).

But I have to admit that it is a very fightening time and I dread the next few months whilst things are being swiched and put in place.

I would welcome any advice. Especially from anyone who needed to switch bank account and leave an outstanding overdraft behind.

Thanks,

Jo.

[fredbare]

Re: Advice for a newbie on timing of switching bank accounts and movement into a DMP

Hi Weejo

Welcome, please dont rush into a dmp until you have advice from the amazing members on here, I dont know anything about dmp's but have heard bad things about them. I switched bank accounts leaving an o/d behind. If I can help at all I will. Good luck and again a big welcome.

Best wishes


Fredbare

[MrsD]

Re: Advice for a newbie on timing of switching bank accounts and movement into a DMP

welcome to AAD

We did a DMP to begin with when the shit hit the fan and to be honest it's not something I would advise. What are your aims? If you are trying to protect your credit record, you are now probably too far gone for this, and if you enter a DMP every one of your creditors will default you, which will stay on your file for 6 years.

If you are trying to get your life back, the DMP is not ideal either as StepChange do very little other than pass the money on, no one will help you fend off phonecalls (and there will be tons) and no one will help stop your creditors adding further interest on, you could eventually be worse off at the end of 5 years because they could be adding interest all the time and you could be looking at another five years to pay that off. We had a big pile of creditors and very few stopped interest, despite me being extremely pro active on the phone trying to sort it out.

OK that's the bad news

If you can tell us how much we are talking here and who the creditors are, it would help. How old are the debts is also pretty important, when you took them out, not the last time you used them.

The one bit of sound advice that Stepchange have given you is the bank account, you need to change the bank account to a bank or building society where you have no debt. The favourite for most guys on here is the Co-op Cashminder, a basic account, just phone them up, if they ask if you're having financial trouble say yes. Then you just change everything over as fast as possible and get any monies out of your old bank, because they will try to take DDs and they will have the right of set off. Best avoided.

lastly you should have a read here http://forums.all-about-debt.co.uk/s...enforceability, I see you're already looking, then come back with the info we need and we'll talk some more about what is best for you and yours. You might want to stop worrying about banks by the way, you are the important thing here, you and your life, the banks gambled by giving you unsecured credit, guess what they lost!

[weejo]

Re: Advice for a newbie on timing of switching bank accounts and movement into a DMP

Thanks guys.
I have quite a bit of debt built up over a long time. Details are as follows:

A £5000 Santander personal loan (this was a Cahoot rolling loan from around 2002 which I dipped into to make ends meet, then they changed to Santander and made it a repayment (rather than rolling) loan facility about 5 years ago. It was £7000 originally and is now £5000.
B £8000 MBNA Visa Credit Card (from a card I originally had about 2000 again have dipped into to make end meet and most recently to finance repairs to my house).
C £2000 Debenhams Store Card (from a card I had since around 1995)
D £1450 Argos Card (taken out in 2011)
E £2500 Halifax overdraft (gradually extended over the years since around 2000)

I have read quite a bit and am going to take a week to mull it all over before I do anything rash, but I do prefer the idea of the DMP as it allows me to budget in for things like heating, proper food budget etc. It is a bit frightening how, even though I earn a decent wage, I am living in practical poverty.

Regardless of the route I take, I will need to move bank accounts and I am puzzled on the best way to do this while not letting Halifax know, in case they keep my pay to offset some of the OD.

Any recommendations for bank accounts would be great. Also guidance on what, if anything, to tell them about my situation. (Thanks for the info on co-op MrsD)

[MrsD]

Re: Advice for a newbie on timing of switching bank accounts and movement into a DMP

hhmm methinks UE might free up some more money...................

[weejo]

Re: Advice for a newbie on timing of switching bank accounts and movement into a DMP

UE??

[fredbare]

Re: Advice for a newbie on timing of switching bank accounts and movement into a DMP

Hi Weejo

I opened a basic account online and then went into the bank to sign the application, I never told them anything about my situation but I did it before I stopped paying anything, I had wages transferred first and then transferred all d/d over leaving behind the o/d.

The advice you will get from the forum is excellent, I'm so glad I found them, I'm sure you will be too.

Best wishes

Fredbare

[MrsD]

Re: Advice for a newbie on timing of switching bank accounts and movement into a DMP

UE??

sorry UE = unenforceability, we do a lot of that here

[IF]

Re: Advice for a newbie on timing of switching bank accounts and movement into a DMP

UE??

Click on these two threads weejo for full explanation


-- >UPDATED - A Full Guide to Unenforceability


-- > Unenforceability Diaries

[Enforcer]

Re: Advice for a newbie on timing of switching bank accounts and movement into a DMP

Think very carefully before doing a DMP. You may well be worse off in 5 years time than you are now. I would get your new bank account opened then stop paying ALL of your creditors. Yes you are going to be defaulted by them, and credit trashed for 6 years, but you may well find that the only debt you have that is "Enforceable" will be the Argos card as this was taken out after 2007. All the rest, I would fight as "UE" that is, "Unenforceable".

Don't even consider Stepchange, this is run and financed for the benefit of the banks.

[weejo]

Re: Advice for a newbie on timing of switching bank accounts and movement into a DMP

MrsD thanks for the co-op pointer - that's seems like just the ticket, especially as I can open it with £1.00.
I think I will try to switch on my next pay day that way the bank wont have any money to take. )

[weejo]

Re: Advice for a newbie on timing of switching bank accounts and movement into a DMP

Enforcer, I will take your advice on board, but I don't mind the idea of paying off the debts I owe over the 5 years, if the interest can be stopped, and I am given a budget. The UE option is quite confusing to me at the moment, but I will read more into it before writing it off.

[MrsD]

Re: Advice for a newbie on timing of switching bank accounts and movement into a DMP

MrsD thanks for the co-op pointer - that's seems like just the ticket, especially as I can open it with £1.00.
I think I will try to switch on my next pay day that way the bank wont have any money to take. )

ok Weejo I would phone now and get it sorted there is no instant account number so best to get it sorted with your pound, get your salary switched into it and your DDs passed over. I would cancel any to your debt now, whether or not you're doing a DMP, if you are definitely going ahead with the DMP you need to try to build an emergency fund, the DMP will not allow budget for this, so you need to get it from elsewhere or your back to scrimping on food and heat for emergencies and that is not how you should be living, your priority debts must be paid before any unsecured, they are just that, unsecured. If you don't stop paying the DMP could just take you into long years of APs (arrangement to pay) which do nothing other than prolong the agony and will show 6 years after end of your DMP. If money is that short, then look seriously at UE, we have hundreds of guys living a life and getting by without paying unenforceable debts

[PlanB]

Re: Advice for a newbie on timing of switching bank accounts and movement into a DMP

I am 42, single and living on my own with mortgage .

Hello Jo,
It's a good feeling when you take control of your debts. You're in charge now not them

I think you should make your mortgage your priority so whatever happens next you will always have a roof over your head. Is everything ok in that department? No arrears or anything like that?

[Never-In-Doubt]

Re: Advice for a newbie on timing of switching bank accounts and movement into a DMP

-- >UPDATED - A Full Guide to Unenforceability

I've actually updated that thread this morning!! Removed the old example agreements and replaced with prescribed terms.