£40.5k in debt, no job, need some advice

WLITC

Okay, I have the following debt :-

£15,000 AA Loans - £456
£3,500 Student Loan (on hold at the mo, but normally approx £100 a month)
£13,000 on Virgin/MBNA credit card, only £25 a month now, but will be about £320 a month in Jan once the 0% balance transfer period expires.
£4,000 on Cahoot - approx £100
£5,000 on Barclaycard - £110? a month
.. so in total about £40,500 of debt.

Now here comes the big problem, I don't have a job. I haven't worked since my last job ended in May. However I have continued to pay everything on time by basically pulling money out of my Cahoot flexi loan (it was zero balance back in May) and basically living by throwing everything else on the credit cards. I was hoping to get sorted financially months ago as I was supposed to do a course in Sept that would have meant a new career as a personal trainer, but since July/Aug I've had a bit of a bad run health wise. I had a health scare with my liver which drag on for about 6 weeks and then when I was all set to do the course in Oct I injured my back and had to postpone. I've been recovering from the back injury since then. I finally manged to find work, which I started today (office/admin job), but its only for 6 weeks. Office admin is what I normally do, but I struggled to find other admin/office work these past several months which is why I'm keen to do the course. Plus I've already paid to do the course so if I don't do it at this stage, I've thrown away a lot of money. I am hoping I'll be fit enough to do my course in Feb/once the temp job finishes. Once I've done that (its a two month course) I will then hopefully start earning some good money (although it may take a few weeks to build up customers/clients).


While I've manged to pay everything on time these past several years, the proverbial s**t is going to hit the fan come Jan/Feb. This is mainly due to the fact that the Virgin card payment jumps from £25 a month to £325 and I’m also getting to the point where I’ll so be out of credit to draw upon.

So what options do I have?? I really don't want to resort to something like bankruptcy. That would kill any chance of any credit for several years and also limit me owning my own company (which is part of my long-term plan as a trainer). I did think possibly of an IVA, but I understand you have to be working or that to be agreed and of course I only have 6 wks temping guaranteed at the mo. I was thinking of just approaching what will be my two biggest payments. Thats AA loans at £456 a month and Virgin/MBNA credit card at £325 a month (from next month) and seeing whether I could agree to a lower fixed payment of say £100 a month on each. If they agree to that, I would be in a massively better position, with only £500 a month to find to cover my debt. What are the odds of the AA and Virgin agreeing to a big reduction in payments? Also, if they did, what effect would the put on my credit file as a result?

CreditMonkey

Need more info, i.e do you own a home, is all debt just yours what income do you have, i.e benefits and any outgoings, bills shopping etc

WLITC

CreditMonkey wrote: »

Need more info, i.e do you own a home, is all debt just yours what income do you have, i.e benefits and any outgoings, bills shopping etc

Sorry, was worried nobody would read it if my original post was any longer.

Okay..

All debt is mine, no partner/joint account or anything. I don't own any property or shares, etc. I'm renting in a houseshare at a cost of £400 a month and this includes all basic bills inc (rent is high-ish as I live in central London). Only other bills I have are my mobile contract which is £35 a month, food apprx £80-100 a month and transport/travelcard when working of approx £100 a month.

Only income since May has been £60.50 a week/£121 a fortnight from JSA (ESA the past several weeks while I've been off ill with my back) and £85.50 a week/£171 a fortnight housing benefit. Will be earn pretty good for the next six weeks, £100 a day, which is the equivilant of being on £26k per annum. From what I've caculated I will work 29 days, so I should get £2900 before any tax or insurance deductions. I'm guess about £2000-£2200 after tax and NI.

CreditMonkey

Two things to try:

1 - Go through the debt remedy on www.cccs.co.uk put in everything as it stands at minute and see what it says. You need to do this because while you have plans (good for you by the way) your situation will need sorting before those plans take effect and you don't want things getting worse.

or

2 - Try moving the credit card again to another deal and then after that speaking to the other compaines to explain your situation. Say that your going on a course to start a new career and improve your income but that you'll be hard pressed to pay much while you do.

I did the cccs remedy and started a debt management plan with them. It has properly screwed my credit rating but i already have a mortgage and really really don't want to get credit ever again.
I'm sure that others will give advice but if not try ringing one of the cccs counsellors for some advice. It will be hard to avoid damaging your credit file but better to stop the cycle of credit now before you wake up to whats happening and your £60k in debt....... it happens just look at this site.
I'm no expert and my advice might not be the best for your situation so see what others say and best of luck and keep smiling, that is free.

paybacktime2008

Can you not try claiming backdated housing benefit/council tax benefit?

Fire_Fox

I can't comment on the debt situation, but I can on becoming a personal trainer as fitness is my field. I am really sorry to rain on your parade but ... please please please don't rely on this to get you out of a hole. Get your interest frozen on your debts or whatever the experts on the forum or elsewhere advise you to do.

I have known a good number of personal trainers over the years, and very few that made the kind of living you need to get you out of the situation you are presently in. Do you have any experience of working in the fitness sector? I am considered to be very good at my job, most of my clients are referrals. Yet it took four years of reading textbooks and research papers and a solid year of instructing to get my negotiating and teaching skills to the level that prospective clients started to sit up and take notice.

Your PT qualification is the start of a long process of learning - successful instructors have a raft of higher qualifications that cost both time and money. They have also gained experience instructing in a salaried position (minimum wage+); otherwise you make your mistakes on paying customers, who tell their friends you aren't much cop ... If you are hoping to rent time in a gym be aware that less than 10% of gym members actually attend, so your potential market is far less than will be sold to you. The other 10% will already have been approached by previous PTs or be saving their pennies in the credit crunch.

If you have paid for a two month intensive I am guessing you have opted for Premier, or maybe NASM. With your back problems I hope it's the latter as they will walk you through the basics of postural assessment and re-education. This may mean you can create a niche market for yourself in the industry. As 80% of the public have lower back pain at some point in their lives, it's a pretty big niche!! I have also found it a very valuable way to quickly gain the trust and interest of prospective clientele.

Sorry, bit of a long post, so I will sign off by saying good luck.

Sol00

Hi Welshlad. There is a number of things you can do:

Firstly I would write to each lender and advise of your situation, offering a token payment of £1 per month while you review your financial situation.

The big problem with this solution is that they will likely 'default' you and if you have a good credit report, this will affect it drastically. However, you need to weigh the pros and cons.

Another solution is to send a Consumer Credit Agreement request. This will basically confirm whether or not the agreement is actually enforceable, in other words whether or not you need to continue paying.

Payplan and National Debtline are quite helpful as well.

WLITC

Fire Fox, thanks for the advice on becoming a Personal training. I do appreciate that becoming a trainer isn't a fast track to making lots of money and that it will take time to build up clients, etc. But its something I've been working towards over the past 18 months and as discussed I have already paid for the course so I don't want to change gears now and abandon it. Unfortunately its with Premier and not NASM, but saying that, Premier also go a new course on 'Exercise for the Management of Low Back' at a cost of £525 (more money I know) and I'd already thought about saving to do that later in the year as it would be a good client group to target. BTW, can I ask where abouts you are based?

paybacktime2008, there isn't any housing benefit to claim back. I was working until May, then have been claiming JSA and housing since then.

SolOO - Don't know the ins and outs of a Consumer Credit Agreement, but is that a way of trying to wriggle out of paying it period?

I was thinking of contacting the CCCS/doing a DMP, but my concern there is that it'll be problematic trying to establish what income I have to repay when I only have 6 weeks temping until end of Jan) and then it'll be benefits or a possible income stream after my course in March.

edinburgher

I think Sol00 has muddied the waters a little - I assume (sorry if I'm wrong mate) that he wants you to request copies of your CCAs from these companies to see whether they've been completed properly/whether they've stored them. I think you have some leverage in cases where they've completed them wrong/take a while to send them out, but I'm not too sure that many people get out of paying them altogether. Please wait for someone more experienced to advise on this.

There is no magic bullet to kill off all your debts, sorry.

Also be aware that an IVA will have a severely negative effect on your credit history, but it sounds as if you're going that way anyway. In the current economic climate, the credit card companies etc. are probably less likely to be patient with people, so most accounts where you try and reduce your payments will go into default.

Once you have a default it will stay on your credit report for six years unless you can get it removed (and again, there aren't so many circumstances where this will happen). This is because default notices/warnings are designed to show that you've let down your end of a contract and it's right (if crappy for us debtors) that they should be visible to other lenders.

One thing to note is that you are allowed to append small notes to your credit history to try and explain your 'side of things'. For example, there's nothing to stop you adding {brief} details of extenuating circumstances - injuries etc. to this.

Glad to see you have a career direction you want to take - but please take heed of what Fire Fox has said and have a backup plan, too. Even if you do end up with defaults etc., 6 years isn't so long to have to wait before starting your own business etc. - a valuable time in which to increase your skills and knowledge.

urg123

Hi Welshlad

Well done for posting. Coming on here is one of the best things you can do.

There's a lot going on in your life. You have a career goal that is going to take you some time to achieve. You have also been affected by ill health and have been using credit to pay off credit to get by. You really need to address this. I don't know much about IVAs and DMPs.

I wonder if you need to think about making Personal Training part-time at the moment. Fire Fox gives you a lot to think about in terms of establishing yourself. Until you have the relevant qualifications and the client list, you need to ensure that you have enough money coming in to a) pay your living costs and b) work on paying off the debt. It might be that you need to stay in an admin job to keep the steady money coming in for a while and using your evenings and weekends to establish your PT work. There are some really interesting diaries from people who offer therapies and treatments alongside their 'day' jobs. This has helped them to focus on their debt and also develop themselves and their client group at the same time. The one person I can think of is andan who posts on the daily DFW thread.

One other thing to think about is whether you can afford to be paying £400 pm in rent at this moment.

Also look at other ways to up your income, mystery shops, selling on amazon and ebay, daily clicks.

Just some things to think about

URG x x

WLITC

urg123 wrote: »

I wonder if you need to think about making Personal Training part-time at the moment.

One other thing to think about is whether you can afford to be paying £400 pm in rent at this moment.

Thanks for reply Urg123. The problem with the course is that I have paid for it in full already (no refunds at this stage either) and as I've paid they are basically just waiting on me to come back to confirm which course date I wish to join.

I guess I could do it part-time, the prob with that now (having just looked at the available course dates) is the next start date for the part time course isn't until April 2009. That would be fine if I had a permanent job until then (and beyond) but I don't and my temp job finishes at the end of Jan. My worry is if I put off doing the course and I once again can't find a job, I'll be back on benefits and still not any closer to improving my situation. Its so frustrating, especially as originally I planned to do my course be qualified and working as a trainer by Oct/Nov.

As for rent, £400 with bills included isn't that high for central London. I could possible move and get a single room, but that would be about £300 still.

A question for anyone. If I were to ring up Virgin and AA Loans and tell them I can't make next months payments, what would they most likely say? Or if I were to cancel the direct debits for both and just pay each a £100 a month, would they be able to penalise me with late charges and huge fees each month because I didn't make the payment in full?