Advice needed from 34k in debt Scot in NY

james_10 · 30 March 2007 at 4:19AM

Hello there
I just found this forum today and already I have learned a lot. I already feel better reading everyone’s positivity and generous advice. I have looked around a lot and couldn’t find the specific answers I was looking for, so hopefully someone can suggest some answers to me.

How I got in debt
OK. First of all, I lived in Scotland all my life until about 5 years ago when I moved to Texas with my American wife. We then got divorced, leaving me with all our uk debts. A change in career, some knee surgeries and a relocation to the most expensive city in America (NY) means that I now have a total of £34000 unsecured uk debt.The exchange rate, and the increased cost of living is now killing me.

My current situation
I still have never missed a minimum payment in 8 years, but I am now "borrowing" from my girlfriend here and my parents in Scotland just to pay the debt. Neither have any idea how much my debt is of course.

So my new years resolution was to sort out the debt. I spoke to some of the debt counselling people but as a non uk resident, most were unhelpful. I have an appointment with Payplan next week and I am hopeful about them. Before I contacted them I tried to do it myself and called my creditors to explain my situation to each of them and ask them to freeze interest etc, but I havnt got anywhere.

My future, I hope
I think that in 5 years or so I would like to move back to the uk and start a family, but a house etc. Right now I have great credit, having never missed a payment, so I don’t know if I want to ruin my credit now. But I havnt handled it well I admit. My debt is going nowhere and breaking point is very very close. I cant rely on my parents and girlfriend any more either. Time to get head out of sand, and finger out of bottom.

Ok, enough background, here are my questions:

1. As everyone seems to say, the best way to pay stuff off is to tart around. But my cards are all full, and from reading other posts, I wont be able to get new credit cards as I have not lived in the uk since 2002. Is there any 0% option open to me? Or low interest loans?

2. If I were to somehow repay all my debts in 5 years and then move back to the uk debt free with no defaults on my record, would I still have to start again with my credit report because I have not been resident there?

3. If the answer is #2 is yes, and my credit will be messed up anyway, then I should just start defaulting and get into a repayment plan with Payplan right?

4. If I get into a debt repayment plan with interest frozen, and I make reduced payments, then say in 5 years I repay everything, will the defaults be gone after 6 years from now, or 6 years from the date of the final repayment?

5. Oh Egg froze my account when I told them I was living in the US, all the other creditors already knew. They also refused to talk to me about reduced payments unless I gave them a uk address, and as I don’t want my parents to know my situation, I got nowhere with them.

6. I don’t want to go this route, but if I just stopped paying, does anyone know what they can actually do to me over here? At least I can maybe use that as a bargaining chip?

Thank you for listening. I know everyone says post a SOA so here is mine : (note the income is converted from dollars, hopefully it wont get worse. My debt has increased by about $15000 in past 2 years just because of exchange rate)

Monthly Incomings:

My salary - £1755
Recent monthly donations from girlfriend and parents £500 (I am supposed to be saving for a wedding, instead it is going to interest-land)

Monthly Outgoings:

Mortgage/Rent - £850
Council Tax - 0
Gas - £30
Electric - £70
TV License - £0
Sky £0
Phone - £30
Food - £380
Subway pass - £50
Social/Clothes - £60

Total: £1470

Available for debt repayment £285 (not including contributions from parents / girlfriend)

Debts

Egg CC – Balance £7898 (limit £7900) APR 16.9 %
MBNA CC – Balance £7637 (limit £7800) APR 22.48%
Lloyds CC – Balance £4400 (limit £4600) APR 19.58%
Cahoot Loan – Balance £3871 (limit £4000) APR 14.9%
Student Loan – Balance £4000 (currently deferred) APR low
Clydesdale Loan – Balance £6400 (Originally £15000)
Length of term 60 months, 20 months to go.

Minimum Payments each month
Egg £140
MBNA £145
Lloyds £90
Cahoot £75
Student Loan (not paying yet) £70
Clydesdale £310

Total £760

Open to all suggestions. Thank you so much. Going to bed here soon, but I am hopeful I will sleep better thanks to this what I have already learned on this website. All the best to everyone.

seven-day-weekend · 30 March 2007 at 7:55AM

Hi, welcome to the forum. I think you may have problems with getting help from the UK, or any more loans and credit cards, due to being non-resident. I am also non-resident (in Spain) and am not even allowed to use my ISA.

It might be a good idea to start at the British Embassy where you are. They will surely have knowledgeable advice about this.

If anyone else has more information for you, I'm sure they will be along shortly.

I really wish you well!

angelavdavis · 30 March 2007 at 8:55AM

Hi and welcome.

I suggest you also look on payplan's web site - there is information there about moving abroad, etc.

Looking at the SOA, a few things strike me immediately.

1) Food - how many are you feeding for £380? This is way over the top. I only spend £200 per month max and there are lots of other people on here that spend a lot less - we include beer and wine in that amount as we cut back on going out.

There are ideas on the Old style board that should help. I know some of the contributors on the OS Board also look at US sites so you might want to post a query about cheaper shopping ideas for the US. I have always found food cheaper in the US than UK so am amazed you are spending so much. I suggest you and your OH look at meal planning, storecupboard challenges, make a note of the food you are throwing away for a couple of weeks to really keep check on what is going on.

2) Social/Clothes. You are currently spending £780 per month on debt repayments - and you only have £285 to spare - I think you need to really cut back here.

3) Phone. Is this your landline or mobile? I always found landline to be really cheap in the US - local calls are free usually, so am surprised by how high this is. If you are spending this on calling the UK, you need to look at the cheaper providers. I am not up to date with providers in the US, but I am sure you can shop around to see what is available.

4) Rent. Obviously your largest outgoing so the main method of decreasing would be to move elsewhere, even with increased travel costs it might still be beneficial to move. Do you live with your girlfriend? Are these bills 50% of the overall cost or do you live alone? Do you have room for a lodger?

Income - you need to look at increasing your income some way - some suggestions: can you ask for a payrise or look for a better paid job, or get a second job? ebay anything that isn't fixed down and ensure the funds go straight on the cards. This will enable you to look at clearing one cc - I suggest MBNA because it is the higher rate. Have you cut up the cards? I suggest you do this but keep one for an emergency and put in water in the freezer so you have to wait overnight for it to defrost.

I know you have phoned the credit card companies about freezing interest, but have you asked them to reduce their interest rates? Pretend you are looking to transfer the debt to another company who is offering a lower rate. This has worked for me in the past.

I suggest you also grab a small notebook and make a note of all your spending for a couple of months to see where your money is really going every month. Reality is that even with cutbacks, I can only see you increasing your debt payments to £555, which simply isn't enough and the kindness of your parents/girlfriend isn't going to last forever without them knowing the full scale of the problem.

With ref to your comments no 2 and 3, whilst you are probably correct about your assumption about living out of the UK (without being on an electoral register or being registered in the UK, your credit rating will be affected), defaulting will stay on your debt record for 6 years, whereas it only takes 3 months to get registered with a Local Authority's electoral role, and this can have a huge impact on your credit record.

Hopefully some of that will be useful. Good luck with payplan

Advice needed from 34k in debt Scot in NY

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