Feeling low and needing advice on reducing payments

d11wtq

Hi,

I'm a 22 year old man who finsihed university in June 2004. Whilst I was at university I spent a lot of money on the wrong things and accumulated a lot of debt. I took out several credit cards (and it was easy to do), managed to get two student overdrafts with two banks, and obtained a loan from Egg. I also had the usual debts most student have in the form of a student loan.

Whilst I was studying I ended up in a situation where I simply couldn't pay the bills on my loan/credit cards... I simply stopped paying them. Obviously this get me in a bit of a mess but every time my next student loan installment came in a paid some money off these which kept the creditors off my back for a while.

Since I've left university I've pretty much been working full time continuously. I did go through a phase of being on top of my bills for a short while but soon slipped back into bad habits.

Now I'm earning 22,000 per year which sounds great. I have store cards, a managed loan with HSBC (I didn't understand the implication of this when I got it), credit cards, and a loan. I've really got myself into a mess and I totally understand it's my own fault for not paying my bills in the past but I seriously need to get on top of this now to avoid being taken to court and improve my credit rating.

My take home pay is approx 1,300 GBP a month.

Of this:

420 GBP : Rent + Bills + Council Tax
100 GBP : Wescot Debt Collection services (on behalf of Style)
50 GBP : Fredrickson International Debt Collection (on behalf of Nat West)
35 GBP: HSBC Managed Loan
200 GBP: Paid to parents for a car they bought me
20 GBP : River Island Store Card (GE Captial)
30 GBP: Dell Fininacial Services
60 GBP: Car insurance

I also owe money to the Halifax for approx 1,000 and Egg for approx 1,500 but I'm worried to phone them because they are always so stubborn and not willing to accept a payment agreement that I can actually afford so at present I have no idea how much they will take.

I'd like to say that I cut my store cards and credit cards into pieces in August 2005 and thus, haven't used them... there will be missed payment charges on these though.

Here's the outcome I'd like to have in the very long run (several years): No credit cards, or perhaps just one in order to improve my credit rating quickly. I'd only want to spend what I currently can afford and not bother with credit... it's not right for me.

But in the short term right now in order to make me feel better I need to:

* Reduce my monthly payments dramatically and/or freeze the interest I'm paying. Wescot debt collection are collecting 1000 of debt from me and say they cannot take less than 100 a month... I cannot really afford to pay that much to one individual creditor.
* Liase with the halifax and Egg to arrange a repayment plan I can afford.

I tried another website called EuroCredit which was supposed to offer me advice. Instead they sent me a "Pre approved unsecured loan application" for Tenant Loans asking me to send them 50 GBP to proccess it... The damn agreement practially said they haven't even done credit checks as yet so I was more than likely just going to hand them 50 quid for nothing. Credit is not my solution in any case... that's exactly what I'm trying to rid myself of.

My main worry is that the halifax and egg will take the same stance Wescot have taken and say I have to pay them 100 GBP a month minimum.... that would crush me since at present I rarely finish a month without spending the 4 days leading up to pay day completely broke.

Could anyone recommend me an agency that really will help me by dealing with my creditors to reduce my payments and/or handle the payments for me without actually taking out a loan? Is there anything I can say to my creditors on the phone that puts them under obligation to allow me to pay a lot less than they say they need? On top of my rent and the payment to my parents I'd like to have approx 200GBP per month outgoing at the very most, and even that will be a struggle for me.

I'm currently trying to get freelance work in my spare time to help with this too since I'm a programmer by profession.

Kind regards,

Chris

southernscouser

Welcome to MSE Chris! :beer:

First things first, for someone on £22,000 your monthly gross wage should be more than £1,300! Does this include anything like pension deductions?

Secondly, after all your outgoings you have £385 a month left.

With the debt collection agencies you could try phoning them up to get a full and final settlement figure! This way you might only pay 75% of whats outstanding for example! Do they add any charges to the amount you owe?

You say you would like to reduce your monthly payments! Are you struggling to meet them each month? Coz obviously the less you pay now the longer it will take to clear them and the more you will pay in the long run!

You also want to target the debt with the highest APR first! Have a look at this calculator to see what you should be paying and in what order!

d11wtq

southernscouser wrote:

Welcome to MSE Chris! :beer:

First things first, for someone on £22,000 your monthly gross wage should be more than £1,300! Does this include anything like pension deductions?

Secondly, after all your outgoings you have £385 a month left.

With the debt collection agencies you could try phoning them up to get a full and final settlement figure! This way you might only pay 75% of whats outstanding for example! Do they add any charges to the amount you owe?

You say you would like to reduce your monthly payments! Are you struggling to meet them each month? Coz obviously the less you pay now the longer it will take to clear them and the more you will pay in the long run!

You also want to target the debt with the highest APR first! Have a look at this calculator to see what you should be paying and in what order!

Thanks... you're right that at 22,000 I shouldn't have issues paying the creditors but I do. That problems stems from the fact that the creditors aren't taking normal paymanets from me, they are taking large sums because I have spent months and months not making any payments at all to 4 creditors. Perhaps I've been a little too quick to agree to their demands rather than arguing my case.

The 1300 a month is correct. I have a pay slip here:

Before Tax: 1804.50
Tax: -286.23
NI: -153.78
Student Loan: -50.00

---

~1315

If I was paying the amounts that were in the credit agreements before I got into a mess and the debts were transferred to other agencies I'd be quite happy... at present I'm really struggling when I hit the back end of the month Obviously I have a social life too... I live in Manchester and would estimate that I spend approx 40GBP on social activities per week.

I've seen PayPlan mentioned a fair few times... will they help people with bad credit ratings? If I could focus on one creditor at a time it would be easy but having number of creditors on my back makes it hard. I've decided I'm going to call the halifax and Egg tomorrow to see how much they'll take but I just know it's going to depress me even more -- especially the halifax from what I've read.... they even called my parent's twice in ten mins today when I moved out of that house back in August and they were informed of this!!

Willsnarf1983

mY only thing is i would say

do your parents know and could they afford a break from you paying them back?

if yes take it and hit the debts as much as possible!

Will

roswell

can I ask where the other £400 of your salary goes?

really i think you need to list everything you have outgoing and APR rates on the debts, Id ask the parents for a break paying back the £200 and chuck this at the debts if getting a loan off them to cover all the debts isnt possible. (with interest of course)

bank_of_slate

Hi chris

Welcome to MSE!
You've already had some great advice from the above MSEers!
keep chipping away at it, highest APRs first.
Are there any monthly outgoings that you could reduce such as food, mobile phone, nights out that you could possibly reduce to help free up as much dosh as possible?
The full and final settlement is a great idea too, You can ask them for free, the worst they can say is no.
Keep at it and keep posting on here
...Linda xx

d11wtq

Willsnarf1983 wrote:

mY only thing is i would say

do your parents know and could they afford a break from you paying them back?

if yes take it and hit the debts as much as possible!

Will

My parent's earn less than I do They bought me a car (2,300 GBP) when I was between jobs but they used an MBNA credit card to do it.... the money I pay them each month goes directly to paying that off. I couldn't really stop paying them that money. I'm not overly concerned with having the debt provided I keep on top if it and don't have the arrears... the problem is getting back on top of it because I've been so stupid and stopped paying the bills for the past five months. At the end of January I decided to go through all my mail and figure out exactly how much I owe the companies and start to make repayments... I've realised that these debt collection companies will not take payments as small as the ones in the agreements I signed with the original creditors. Because of the attitude of wescot debt collection over a 1000 sum I've convinced myself that Egg and Halifax will be the same and I certainly cannot afford that much. That would be another 200 on top of what I'm paying now At present, those two companies are still phoning my mobile twice a day... I'm ignoring the calls because, put simply I'm "burying my head in the sand". Tomorrow I shall phone them myself if only to discuss how much they are expecting from me.

The Money I pay to Fredrickson International is only for £300 Arrears, which is the remaining amount on a student overdraft... they are not charging interest though which is good... they also have a website that I can track this on and make additional payments. That should end in December 2006.

d11wtq

OK guys I'll sit down and write out everything I spend in a month giving last month as an example of *real* expenditure.

I do go the pub on a weekend and spend around 40 quid but I'm certainly not a big spender on anything else.... This will probably be a good thing for me to do in any case, looking at where my money goes

southernscouser

I would have a word with your local tax office if I was you!

My monthly salary is £1,777.92

I then pay;
£268.39 tax
£127.94 NI
£56.89 pension
£7 sport & social club

That leaves me with £1,317.70!

So with you earning £318.96 a year more than me I take home £32.40 a year more than you plus my other other payments (pension and sports and social) is more than yours!

scottishspendaholic

Hi d11,

The companies who will help you are CCCS and Payplan and the CAB (links at the top of this thread) - all of these can offer advice and support and negotiate payments with your creditors and perhaps negotiate freezing interest etc. They will work out a debt management plan with you (if that's the best option for you) and you will pay them a set amount a month. The most important thing about these organisations is that their advice, help and support is FREE unlike the debt consolodation adverts you see on daytime tv. If I were you, I'd call one of the above, rather than Halifax or Egg tomorrow as they will be able to help you with everything overall.

Sorry to sound harsh, but if you are really committed to being debt free and paying off your debts, I just don't think you can justify spending £40 a week going out. I'm not saying don't go out at all - but you could drastically cut this back. Could you have people round to your house for a cheap dinner or not drink alcohol/get the night bus?

I really don't mean to sound cruel, but we all really have to cut back and stop doing things we really enjoy to start making a dent in our debt. I earn £20k per year and also am paying back a student loan through my salary. I am trying to throw over £300 a month towards my debts and I am trying to sell on eBay etc. in order to make up the shortfall (I have just bought a house and have a big mortgage (before lightbulb moment!). My treats tend to be £10 a month towards something for the house (a huge improvement on previously!) or £10 on takeout coffees etc. You really have to think about what YOU will miss the most (check out another recent thread on this board to show the things people are giving up and what they miss the most).

I really hope this helps

scottishspendaholic x

d11wtq

Yeah you're right I could cut back on going out on weekend I guess. Even spending just 20 quid would leave me an extra 80 quid a month.

Here's the bank statement for my month so far. That £150 on 16th Feb is a deposit for a place in salford with cheaper rent.

17 FEB  	ATM  	 CASH RB SCOT FEB17
WEST DIDSBUR@20:25
		30.00   		   		295.34 	 <---- weekend social
17 FEB 	SOL 	FREDPAY.COM
INTERNET
		30.00   		   		325.34 	<---- Fredrickson Inernetional initial payment 
16 FEB 	ATM 	CASH CO-OP FEB16
COOP IRLAM &#64;23:11
		150.00   		   		355.34 	 <--- House deposit
16 FEB 	SOL 	SHELL DIDSBURY 567
MANCHESTER
		15.00   		   		505.34 	 <--- Petrol
16 FEB 	SOL 	TESCO STORE 2440
MANCHESTER
		5.30   		   		520.34 	 <--- Lunch/domestics
16 FEB 	SO 	XXXXXXX E
MUM LOAN
		200.00   		   		525.64 	 <--- Parents
16 FEB 	DD 	CHURCHILL INSURANC
FIRST PAYMENT
		63.72   		   		725.64 	 <--- Car insurance
15 FEB 	ATM 	CASH RB SCOT FEB15
WEST DIDSBUR&#64;18:56
		20.00   		   		789.36 	 <--- Pocket money for lunch etc
15 FEB 	ATM 	CASH RB SCOT FEB15
TESCO E DIDS&#64;16:45
		40.00   		   		809.36 	 <--- ????
15 FEB 	BP 	ANDREW ROSE
RENT
		400.00   		   		849.36 	 <--- Rent/Bills/Council Tax
15 FEB 	SO 	XXXXX C A
91408216
		35.00   		   		1249.36    <---- Managed Loan 
15 FEB 	CR 	CITY OF MANCHESTER
		   		1315.50   		1284.36 	 
08 FEB 	DR 	CHARGE
RECALL S/0-D/D
		10.00   		   		31.14 	  D  <--- Ouch
05 FEB 	CR 	GROSS INTEREST
TO 04FEB2006
		   		0.03   		21.14 	  D
30 JAN 	DD 	DELL FINANCIAL SER
		29.40   		   		21.17 	  D <---- Credit for a laptop in 2004

I get paid every 15th of the month so as you can see I'm already getting low There are things on there that I can see I shouldn't have spent such as the unaccounted for £40 and the £30 for the pub.

Imagine taking another 200 out of that tomorrow though in order to pay Egg and Halifax? I'd have over three weeks to run with hardly any money, needing petrol and food.

Granted, last month was a tough one, which was mostly motoring expenses.