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£92k debt, time to face up to it!

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  • gonnawin
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    By the way, I've opened new bank accounts with Alliance & Leicester (currently with HSBC). Just a thought, I have a joint account with my partner with HSBC - should I move that also so they can't take money out of it. Are they able to do that with a joint account when the debt is in my name only?
  • Jacks_xxx
    Jacks_xxx Posts: 3,874 Forumite
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    :wave: Hiya sweetie,

    Two years and about two weeks ago I had just worked out that we owed £97,600 on cards overdrafts and loans so don't feel alone honeybun - you are by no means the only one to have got yourself into this much of a pickle! :o:D

    We talked to CCCS, and researched lots of options including a CCCS DMP or IVA and Bankruptcy, but we decided that if we got our spending under control we could handle this ourselves. (I'm a massive control freak so this was always going to be my preferred option! :p )

    Having looked at your SOA it looks to me as if that is an option for you too as from where I am standing you have plenty of wiggle room - particularly if some of those utilities are only a half share.

    The advantage of a DIY DMP is the flexibility and control it gives you - but the disadvantage is having to handle everything yourself, when (like us! :o ) you don't have the greatest track record in money management. :rolleyes: :D

    Getting your spending under control is vital, and if you think you may struggle with that, then a DMP might be a better option - particularly as you mustn't get any more credit whilst on a DMP.

    I would suggest that you go through every scrap of spending on your SOA and find ways to reduce it. (There's info on this site about switching, renegotiating a better deal on your mobile and cheaper contacts )Then keep a Spending Diary to track the rest of your expenditure.

    I use http://www.spendingdiary.com/

    If you default on your debts - which you will in setting up a DMP - your OH's credit score will be seriously affected as you have joint accounts and a joint mortgage.

    If you have any debts with the same company that you bank with it's possible that they will take the loan payment out of the account regardless :mad: so check here to see who's linked:

    http://www.payplan.com/debt-library/linked-banks-and-creditors.php

    The one tool that helped us above all others was the Snowball calculator:

    http://www.whatsthecost.com/snowball.aspx

    You punch in all your debt details and that you want to pay off the highest interest ones fastest and it tells you how much to pay everybody and how long it's going to take to get clear.

    If that doesn't kick your bottom into gear then nothing will my lovely! :D

    Love Jacks xxx :D

    PS: I've typed and deleted this about six times but I've decided it needs to be said.

    The last thing you guys need is any more debt - no matter whose name it's in.

    You can't borrow your way out of this mess sweetie. It seems like that's what you've been doing up to now and how's that working out for you so far?

    I think you've reached the final stages in which you can get a grip on the situation without anything bad happening. Deal with it now - or deal with all the negative consequences later.

    (Apologies for being bossy but take it from one who knows.)
    Not everything that can be counted counts, and not everything that counts can be counted. Einstein
  • pandapaws
    pandapaws Posts: 2,119 Forumite
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    Hi Gonnawin, I was in a bit of a hurry when I posted earlier about looking for an alternative to the DMP, I've just had time to look more thoroughly at your SOA. I get the sense from your posts that you've already decided in your head to go for the CCCS option, and I really hope it goes well for you if you do - they're supposed to be excellent and it should certainly sort the debt out.

    But I honestly, honestly think you could do it the other way though, and if you could then you'd end up in a much better position at the end of it. Right now you might think that you don't care about your credit record as you don't want more debt, but with a trashed credit file you miss out on simple things like getting a new mobile, or moving your debts around (not consolidating/increasing) to take advantage of 0% or LOB deals, or having a credit card to make hotel bookings, or being able to buy a car on finance after you're sorted out - these are all things that you'll no longer be able to take for granted and would have a real struggle to get for many many years after you're debt free. Not to mention the fact that your partner (who it seems is rightfully very angry, but perhaps not as supportive as he could be) is also going to have his credit record trashed because of the financial association, so he'll struggle to get any borrowing himself. The DMP is such a tempting option for a quick-fix but it really should be the very last resort. It's right for some but not for everyone.

    I'm in a slightly different position because me & OH are in it all together, but just over a year ago I contacted CCCS because things were out of control at about 85k. I was so close to signing up for a DMP until I re-discovered this site (it really was a true lightbulb moment which I think was brought on by the discovery that I was pregnant), and instead of just floating around reading people's diaries and thinking about how different everyone else's circumstances were from my own, I looked for all the similarities and saw how other people were working things out. Because, like you, we'd kept borrowing Peter to pay Paul, we'd never missed a payment and had an impeccable credit record so were able to re-finance some of our debts to be more manageable (not increasing the amounts, and NOT securing unsecured debt, just moving things to life-of-balance deals, and extending the term by a couple of years on a couple of things so that the monthly budget added up). We went through the outgoings and got rid of everything that we could, and I started a debt diary here.

    I used to have the attitude 'a fiver is nothing when you earn 40k and owe £80k' and I used to be really skeptical (even after my LBM) when I'd read on this site about people doing mystery shopping for £10 or online surveys for £1 and the likes, but now I make every penny count and the difference it makes is unbelievable.

    You work hard by the sound of it, and earn an excellent salary: you just need to muddle the numbers up a bit so that they add up and then stick to it. Get your partner on side - whether he likes it or not, you're in this together so he might as well get used to it. How much is your car worth? Is the finance secured on the vehicle? If so, will they take it back? Cars are dirt cheap at the moment, you could get something good for a couple of grand and lose the £380, making your budget work instantly before you even start to look at the other stuff. But that only works if you really want it to, it depends whether you're willing to sacrifice the car/lifestyle or not.

    Sorry for waffling on but if anything I've said helps at all then it was worth it. If not, tell me to shut up, eff off and mind my own business :D . Good luck whatever you decide to do. Please keep posting and let us know how you get on. Nobody here can fix it for you but we can all give you the info you need so you can fix it for yourself.

    P.S. The debt-free date CCCS have given you is just as manageable if you pay if all yourself, sooner if you can get stuck into it.
  • gonnawin
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    Thank you SO SO much for all your advice, i'm really touched and can really tell you're trying to help me. I'm really confused now!! I've given it some thought and looked into it all including the Snowball Jacks. It says it will take me 9.5 years to pay it all which includes £39,700 in interest alone!!!! And in that time - 9.5 years - I can just see myself giving in and getting more debt. i just feel this is the best course of action for me to bring a stop to it once and for all because I just can't stop spending, I think it's a real problem.

    But at the same time I know that I am on the brink. The thing is when I look at my finances I cannot, abslutely cannot shave off the £300+ per month, it's impossible. I've sat down with my partner and he can't see it either. He's quite keen for me to do the DMP to put a stop to it and get debt free within 5 years (and avoid all that interest).

    I am very concerned about the potential impact on his credit record but the advise I (and he) have been given is that his personal credit score should not be affected by mine (i.e. when he makes single credit applications) but if we were to go joint, say on the mortgage when fixed rate comes to an end in 2 years, that would a massive no-no and it would affect him. Some people on here have said that and I also asked CCCS about it and they told me that too - any experience of it still being the case for his single applications???? We know that joint applications won't be possible now for a very long time.

    The way I'm kind of seeing it is that the only thing I need a good credit score is for more credit (even if just for a mobile phone etc). I need to learn to live without it and since reading your posts Jacks and pandapaws (thanks so much both!!) I've gone backwards and forwards trying to think of ways round it and panicking about being defaulted when my record is so good currently. It's driving me half crazy!!! But I keep looking at my current financial situation where I'll be £800 in the red in two months time and don't know where to get that money from without further debt - and you're right Jacks, I absolutely CANNOT get into any more debt.

    It feels inevitable as horrible as it is. Is there anyone on here who has positive experiences of being on a DMP???

    Any advice would help. I've decided to wait before signing up for two weeks to make sure I'm right (and in case I win the lottery in that time!!!).

    Thanks again, I was fighting the tears when i was reading that.

    ThanksXXX
  • delboypass
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    Try Payplan and probably go DMP route

    They will stop interest and allow you to pay back at a rate you can afford without getting further into debt...
  • sarriep
    sarriep Posts: 321 Forumite
    First Anniversary Combo Breaker
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    The way I'm kind of seeing it is that the only thing I need a good credit score is for more credit


    I so agree! For years I've shivered at the prospect of debt collection agencies, defaulting on loans etc but as I start my DMP journey - bring it on! I actually never want credit again. If we can pay off our DMP at £500 each month, that, in theory is what we will be able to save!
    :eek: LBM August 2008:eek:
    Total debt £51914.74 Paid off so far £47,611 DMP started November 08 Current debt £4,303.73
    Proud to be dealing with OUR debt ! :T
  • pandapaws
    pandapaws Posts: 2,119 Forumite
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    Poor you! I know how you feel, it's not an easy decision to make. If your partner is being a bit more realistic about the situation now, would there be no chance of him helping you out a bit? The fact that it will affect his credit score might make him more inclined to want to help a bit. Are some of the APRs high? I suppose you mentioned Welcome, so I guess they might be. You don't have payment protection on anything that you could cancel to reduce the payments, do you? Was the car idea not a possibility?

    A DMP doesn't come with any guarantee that your creditors will freeze the interest - I hope they do, but don't get too much of a nasty shock if you find that it's not quite as smooth as you'd hoped, especially as you've said yourself, when you've only just taken out a couple of these loans. Because I've never done one I haven't a clue how it all works in practice but loads of others on here could advise how likely you are to get some co-operation from them.
  • caveatvenditor
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    How on earth someone with your income spends 92k and has nothing to show for it is beyond me.

    I would advise bankruptcy.
  • How on earth someone with your income spends 92k and has nothing to show for it is beyond me.

    I would advise bankruptcy.

    Would you mind assuming just for a moment that you are infinitely more knowledgeable in these matters than the rest of us here, and explain why you advise bankruptcy as a solution with no futher elucidation necessary? If you could manage it without being as judgemental as you came across in the above quoted then so much the better.
  • gonnawin
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    How on earth someone with your income spends 92k and has nothing to show for it is beyond me.

    I would advise bankruptcy.

    There are lots of reasons, and I'm not proud of it at all, I suppose a combination of actually having a problem with money anyway + the industry I work within + economic circumstances + other financial/family pressures - but thanks for the helpful input! Bankruptcy is not an option.
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