New to MSE, had my light bulb moment!!

Neo187 · 16 June 2013 at 11:49AM

Hi All, new to MSE to hello, I’m sure you will be seeing more of me on here from now on as I am about to begin my long journey to being debt free! Had my light bulb moment Friday evening after work, when I have actually now run out of credit/money and no chance of obtaining anymore! I know I have had a debt problem for a while, but have always buried my head in the sand by paying off some debt with new credit. The final straw was Friday when I had been contemplating borrowing £5000 from Everyday loans to pay off some of my payday loans and try and keep my head above water as such. Thankfully, they turned me down as it would have made the situation worse anyway as no doubt would have had to pay back double with them!

So After this rejection, it finally dawned on me that I have a big problem and borrowing to pay off debt is not the answer! I need to tackle this head on which is what I am about to do! Over the weekend, I have totalled up my living costs and debt, quite scary really. Have been living miles beyond my means for a number of years.. Have been relying on the CC or payday loans to get me by which is absolutely absurd. (Also I have been rolling payday loans for a while, so awful) Tired of getting paid on one day, and by dinner time there is nothing left in the account!! I would then re-apply for a payday loan which I had only just paid off that morning!

So, where to start? I will be ringing one of the charities tomorrow to start the ball rolling on getting a DMP set up, as there is no other alternative. Will have to bite the bullet and have a massive NO NO on my file for 6 years. The s**t hit the fan as such a few weeks back, and I actually told some of my payday lenders I just can’t pay them. They did actually freeze interest and set up a repayment plan, however, because of the number or lenders, I can’t afford to even pay them back with the plans I set up with them! (Eg, Wonga want £130 a month, this is what I would like my total DMP to all creditors to be a month!)

Have some questions for you guys to point me in the right direction.

1) What is the best DMP charity to help?
2) I have applied this morning for Lloyds TSB basic account so I can change my wages into this (thought it was instant decision but they said they would let me know within 7 days which is frustrating - need to let work know ASAP the account change. Anyone know of some online instant decision ones, or should I hang fire with Lloyds?
3) What’s the minimum amount I can pay on a DMP? Going through my finances, I would like to pay a DMP plan about £100-£150 a month on a £10k debt. However, I get paid 4 weekly so 13 times a year. Also get a £1K bonus every year, so can I start the DMP fairly low, and overpay considerably as and when I have extra cash?

Thanks guys. It actually feels liberating to be tackling this! I have always felt quite depressed about my debt but now actually feel quite positive even though this is just the start of a very long and painful road!

pozza_73 · 16 June 2013 at 11:57AM

Welcome to the board and well done for making the first step. I had a DMP with Pay plan who do not charge for administrating a DMP. I think that there is a couple of others too. We had to submit an income/expenditure form to them and there is a certain amount that they allow for certain things (e g food, clothing etc). They would then decide how much you can afford to pay. We started off on £180 a month and finished off on £300 a month and it took us 6 years. I had a basic bank account with Halifax and I think that it was pretty much an instant decision.
Good luck with your journey and keep us informed of your progress.

Neo187 · 16 June 2013 at 12:39PM

Thanks!

Also need some advice on my current HSBC account. If I added the overdraft of £1,200 to a dmp, would HSBC automatically close the account and make me a non customer? I'm not sure if to not declare the HSBC overdraft, and instead maybe pay in £40 a month to try and keep HSBC on board, as I would still prefer to bank with them in the future.

wannabee_in_credit · 16 June 2013 at 4:53PM

Hi
I'm on a dmp with Stepchange at the moment. Currently paying £435 a month - it started at about £330, dropped as low as £240 and has gone back up again.
They don't charge to administer your DMP, and I highly recommend them.
However, if you're wanting to go via a debt charity then you will need to declare all debts including your overdraft and they will have it as part of your terms that you treat all creditors equally. If you're wanting to do something different in terms of your overdraft then you may have to go down the route of a self managed dmp. I was initially reluctant to leave my bank but I have since realised that they are all about the same - just out for themselves and not bothered about their customers. You're just numbers on a screen.
The stepchange website is full of really useful information, even if you decide not to go with them.
It might also be worth you completing a soa - there's a link in the stickies. People will offer you honest advice of where you can make cutbacks. It can make for hard reading, but if it's a true lbm then you'll get on board with it.
Good luck

Neo187 · 16 June 2013 at 5:35PM

Thanks for your help. My SOA looks like this at the moment;

Income - £1900 per month
Bonus £1,000 per annum

Outgoings:

Rent - £850
Council Tax - £ 131
Electricity bill £130 (have emailed today to say this is ridiculous. It changes every three months - was paying £69) Need it at a constant amount probably £90
Water - £25
contents insurance £11
BT home phone & internet £50
Vodaphone mobile £70 (contract finishes friday!! So will get a new low one about £25, any phone I get as an upgrade will go straight on ebay to help me out!)
Car lease £180 (how does a DMP effect this? Need a car to commute to work 68 mile round trip
Petrol £300
Food £100
£40 misc haircuts / going out etc

So roughly left with £100 for a DMP but will make some changes to improve this figure further

Debt:
Barclaycard £4500
Capitalone £580
Overdraft £1200
Santander DFS account £450
QuickQuid £1300
Wonga £687
Paydayexpress £580
QQ £400
Textloan £198

Total £9830

Pretty horrendous I know....

theoretica · 16 June 2013 at 5:59PM

Have a look at PAYG mobile deals and keeping your current phone - I am sure you can beat £25 a month!

Caladan · 16 June 2013 at 9:23PM

nomoneyrich wrote: »

Thanks!

Also need some advice on my current HSBC account. If I added the overdraft of £1,200 to a dmp, would HSBC automatically close the account and make me a non customer? I'm not sure if to not declare the HSBC overdraft, and instead maybe pay in £40 a month to try and keep HSBC on board, as I would still prefer to bank with them in the future.

If you include the HSBC overdraft they will probably consider it a termination of the bank/client relationship and close your account on completion of the plan.

Not always the case though.

Neo187 · 17 June 2013 at 9:41AM

Just went to Barclays to try and set up a basic bank account, they wanted three months previous statements which is annoying! Anyone know of any other basic bank accounts without the need to delve into my horrendous past? It didn't mention this on the Barclays website. All it mentioned was bring Id and proof of address

*Foolish* · 17 June 2013 at 10:42AM

I opened a basic account with NatWest online and it was instant, able to add funds to the same day, obviously I couldn't access it until I had my debit card etc, but it was good for quickly arranging for my salary to go into. There are some restrictions on where you can withdraw money and the card can't be used at 'pay at pump' petrol stations, although it is a visa debit card, not an electron.

claret_mike · 17 June 2013 at 12:19PM

I have commented below if this helps you at all?

As you have lower assets, not sure if a debt relief order may be more beneficial for you if you accept your credit file will be trashed for 6 years. Is your work affected at all by this - I know some professions/industries for example require you to have a good credit file etc.

nomoneyrich wrote: »

Thanks for your help. My SOA looks like this at the moment;

Income - £1900 per month
Bonus £1,000 per annum Is this guaranteed?

Outgoings:

Rent - £850How long have you left on your contract - could you consider moving closer to work to reduce commuting costs?
Council Tax - £ 131 Do you live alone - does this include single person discount - if you pay over 10 months, can you speak to council to extend to 12 months to reduce monthly cost?
Electricity bill £130 (have emailed today to say this is ridiculous. It changes every three months - was paying £69) Need it at a constant amount probably £90 Are these estimated bills or do you provide accurate readings? Are you with cheapest provider?
Water - £25 If there are less people in the property than bedrooms, it may be worth having a water meter if not already on one. I would imagine you would need your landlords permission to do this if not already on a meter.
contents insurance £11
BT home phone & internet £50What do you need a home phone for? You do not mention sky or anything so is there a need for this? If its purely for internet, have you considered wifi? If you need a landline, then can you switch to a cheaper provider, look at paying your line rental up front?
Vodaphone mobile £70 (contract finishes friday!! So will get a new low one about £25, any phone I get as an upgrade will go straight on ebay to help me out!)Can see the logic in this, a new handset could fetch a few hundred ££ but I would probably look to get a cheaper contract than £25. Speak with your operator what your useage is like and ensure new contract is a good fit. Im not a fan of PAYG as I tried and ended up forever having to top it up so I went on to 3 and got a good all you can eat data package.
Car lease £180 (how does a DMP effect this? Need a car to commute to work 68 mile round tripAgain, if you could live closer then you may be able to reduce this. I cant see why a lease company would allow you to keep but Im not sure on this. 1400 miles a month on commuting is a lot - have you sufficient mileage on your lease plan? I would consider seeking getting rid of this car and getting a small diesel car which should knock money off your fuel bill too
Petrol £300
Food £100 -
£40 misc haircuts / going out etc

So roughly left with £100 for a DMP but will make some changes to improve this figure further

Debt:
Barclaycard £4500
Capitalone £580
Overdraft £1200
Santander DFS account £450
QuickQuid £1300
Wonga £687
Paydayexpress £580
QQ £400
Textloan £198

Total £9830

Pretty horrendous I know....

patchwork_cat · 17 June 2013 at 2:53PM

As Claret Mike says there is a lot you could do to reduce your outgoings. If you are a single person you are on a good salary, but your expenses are hefty. Definitely agree have you looked at moving closer to work with cheaper accommodation, saving on fuel, car and accommodation.

New to MSE, had my light bulb moment!!

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