Which choice

abby1234519 · 17 November 2014 at 10:07PM

Just something I've been thinking about.

If you had £500 a month spare after bare minimum expenses (ie living really frugally) and your debt repayments came to say £490 would you....

Maintain all minimum payments trying to pay off debts without defaulting, but literally living on the breadline (not getting behind with bills etc but only having money for essentials)

Default intentionally in order to go on a DMP and have an easier life, ie paying debts off slower, ruining your credit rating but over the 6 years being able to afford Christmas and Birthdays.

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Flutterby83 · 17 November 2014 at 10:21PM

If it was me, I would default....if I was only able to make the bare minimum repayments it would mean the debts would either never or very slowly decrease, meaning I would be in the situation of having nothing to live on for an extremely long time due to interest charges etc. Another reason would be that if debt got me to the point where I could afford nothing, not having access to credit (with a credit report being shot and all) would force me into living within my means, which would result in me not needing credit again anyway. Obviously that's just my opinion

enthusiasticsaver · 17 November 2014 at 10:51PM

Can you not restructure your debt? What interest rate are you paying and which term and maybe some of your creditors will extend term or reduce rate? Is consolidation an option? Personally I would not default and believe it leaves you in a very vulnerable position to go on a DMP but that is just me. Can you earn more by taking on extra hours, second job etc etc?

abby1234519 · 17 November 2014 at 10:57PM

I have sort of reached that impasse, we've got close to 16k, I earn 19k, he earns 8k (at college)

If I was able to pay even 3k off then it would make it a lot easier to pay off as we'd have an extra £100 to snowball.

However I don't think I have 3k worth of stuff in the house to sell!

And I keep paying money off the cards and then ending up using it

abby1234519 · 17 November 2014 at 11:00PM

enthusiasticsaver wrote: »

Can you not restructure your debt? What interest rate are you paying and which term and maybe some of your creditors will extend term or reduce rate? Is consolidation an option? Personally I would not default and believe it leaves you in a very vulnerable position to go on a DMP but that is just me. Can you earn more by taking on extra hours, second job etc etc?

Don't have the ability to take on 2nd jobs. Partner is at college 9 till 3, works 6 till 11 and then on a Saturday. Equates to 24 hours a week, works at The Co Op and they are on major cost saving measures so no overtime. Won't go elsewhere as pension contributions are good so is making the most out of it (he pays 4% and then pay 8%)

I work 8.30 to 5.30 and then look after our son whilst he works in the evening.

vanquis 59.99%
£0.00

CAPITAL ONE 30.34%
£1,441.82

Simply Be 39.99%
£170.99

Capital One Liam 34.90%
£973.06

Cash Plus 30.00%
£500.00

VERY 29.99%
£621.61

Lloyds Card 21.94%
£4,768.34

Lloyds Loan 19.90%
£1,497.73

Tesco 17.90%
£3,976.89

Halifax 0% 6months
0.00%
£677.38

DFS 0% term
0.00%
£594.73

Natwest Overdraft
17.81%
£1,600.00

Welcome Finance 0.00%
£0.00

Tixy · 17 November 2014 at 11:42PM

If I felt there was a realistic chance that finances would improve in say the next year then I would probably stick to making the minimum payments until things improved.
Especially if I owned a property with a mortgage.

If realistically things are unlikely to improve, and could get worse then I would probably choose the DMP route.

From what you have posted - how long is OH at college for? if he is likely to be working full time/earning more by say next Summer then I would probably struggle on.
Or if say childcare costs for son may reduce in the near future then again it may be worth carrying on as you are.

If not then there is a definite argument that it is better to take the plunge sooner and enter a DMP (or whatever is approprate) as the sooner you default, the sooner your credit files will eventually be clear.

Bobarella · 17 November 2014 at 11:49PM

Is there any other option for income such as taking in a lodger?

getmore4less · 18 November 2014 at 1:02AM

Any purchase headroom on any of the lower rate cards.

Even small amount would clear the £170.

what are the min payments %/min on each card and the purchase rates.

abby1234519 · 18 November 2014 at 1:05AM

Tixy wrote: »

If I felt there was a realistic chance that finances would improve in say the next year then I would probably stick to making the minimum payments until things improved.
Especially if I owned a property with a mortgage.

If realistically things are unlikely to improve, and could get worse then I would probably choose the DMP route.

From what you have posted - how long is OH at college for? if he is likely to be working full time/earning more by say next Summer then I would probably struggle on.
Or if say childcare costs for son may reduce in the near future then again it may be worth carrying on as you are.

If not then there is a definite argument that it is better to take the plunge sooner and enter a DMP (or whatever is approprate) as the sooner you default, the sooner your credit files will eventually be clear.

Finishes college in June, may not be able to go back to full time hours however Joshibobs goes to school on September so £545 childcare pcm will go, lose £381 tax credits in the process but £163 better off. Also, may pull Josh out of nursery in the summer, not fully but maybe keep attendance to 2 days a week. Some of that will be eaten up by afterschool club, max £65 a week but probably less due to partners hours. The year after husband hopes to start university, so we will hopefully have more income as I believe his student loans etc will equate to more that what he is earning now.

So potentially a bit more flexible financially from next summer

Bobarella wrote: »

Is there any other option for income such as taking in a lodger?

Not really, rent this house and we have an awful kitchen and no upstairs heating. We pay a low rent for our house (£600) when the average is £750 purely because we have an ancient kitchen that is falling apart, and only have central heating downstairs. Not really the sort of house a lodger would want to stay in. Also, spare room has partners computer in, nowhere to put it if we move it. He needs it for studying, we also have kept all of our baby clothes etc which takes up space in the cupboards in the spare room. Losing that room would mean losing all of the stuff I have kept if that makes sense!

abby1234519 · 18 November 2014 at 1:11AM

getmore4less wrote: »

Any purchase headroom on any of the lower rate cards.

Even small amount would clear the £170.

what are the min payments %/min on each card and the purchase rates.

Do you mean is there any available credit? Not really, the vanquis one which is cleared has £750 but an atrocious rate so looking to close it

All the rates listed are the purchase rates.

CAPITAL ONE 30.34% payment is usually around £60
£1,441.82 limit of £1500

Simply Be 39.99% £15ish payment
£170.99

Capital One Liam 34.90% £10 until 0% over
£973.06 limit of £1000 currently is 0% till April I think, balance transfered from two other cards.

Cash Plus 30.00% £40ish
£500.00 just needs clearing

VERY 29.99% none at the moment
£621.61 0% till June

Lloyds Card 21.94% £120 a month (£80 is interest!!)
£4,768.34 this is the card that worries me the most as its with his bank

Lloyds Loan 19.90% paying off around £65 capital, rest is interest
£1,497.73 payment of £89 a month

Tesco 17.90%
£3,976.89 £90ish a month

Halifax 0% 6months then 22% credit limit of £750 but can't balance transfer anything else. payment is around £20
0.00%
£677.38

DFS 0% term I treat this as a bill to be honest £31.31 a month
0.00%
£594.73

Natwest Overdraft haven't even started clearing this yet its at 0% until Jan, then 17.81 is charged on the £600, year after on the whole lot
17.81%
£1,600.00

James_B. · 18 November 2014 at 9:54AM

abby1234519 wrote: »

Just something I've been thinking about.

If you had £500 a month spare after bare minimum expenses (ie living really frugally) and your debt repayments came to say £490 would you....

Maintain all minimum payments trying to pay off debts without defaulting, but literally living on the breadline.

Yes, without question. If I owed money, I'd go cold, hungry, and unentertained to ensure that I meet my obligations.

I've known people who'll still smoke, still have a drink, and still go out while claiming that they can't pay back what they are supposed to, and genuinely can't understand how someone can think that that is acceptable.

Which choice

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