need all the advice I can get!

getting_there_6

Hi all,

Your advice would be appreciated, first let me explain the situation, my wife has been dealing with the money side of things all our married life (22 years) and she has now got us into quite a major amount of debt, £38000, she doesn’t go out spending or anything, but is just not very good at managing the money, I wasn’t aware of this until it all came crashing down about 2 weeks ago when I found out about the debt, I knew about some of it but wasn’t aware of the extent of debt we were in, what she was doing was using the credit cards to pay the other credit cards etc.. which in turn built up and up until now the credit cards are maxed and she can no longer use them to pay the bills.

We have never missed a payment with anyone, (because she was using the cards to pay them all) and our credit scoring appears to be intact as yet.

Income -

My Wages - £971 / month take home
Wifes DLA - £321
Wifes Severe disability allowance £241

Total - £ 1533

Outgoings -

Budget made up by CCCS – £1180, including mortgage, house keeping etc…


Debts –

Barclaycard credit card - £1372 @ 15.9% credit limit £2100
Egg credit card - £9486 @ 14.9% credit limit £9500
Captial one credit card - £6455 @ 3.9% life of balance transfer, credit limit £6900
Tsb credit card - £410 @ ?% credit limit £1500

IF loan - £6571 @ ?% takes £43 interest of £100 payment every month
Northern rock loan - £8000 settlement £9975 @ ?%
Smile loan - £1500 @ ?%

Littlewoods home shopping £1116
Gus home shopping £694
These were large appliances which have been taken at the buy now pay later, which as my wife is disabled we couldn`t go without them, I knew about these, the actual balance at the moment is £376 for these items and the rest is staggered, think the last one gets added oct 2005.

Decision –

Northern Rock has agreed verbally over the phone, to give an advancement (secure loan)on our house of £25000 @ 5.91% over the length of our remaining mortgage term of 18years, payments being £180 / month, which would help clear most of the debt, we have received the illustration and application for it today.

DMP, would be around £400 / month for approx 8 years

Contacted egg to see if they would do a !!!!!!, they wouldn`t help at all, said we would have to pay full amount.

Can anyone advise which option to take either the advancement or the DMP, we are really scared of the DMP, don`t know why just, maybe just don`t know enough about it.
I am at my wits end, I don`t know what to do, my wife told me about this site she came across it trying to find ways to get out of her situation, but it was too late by then, the debt is out of hand now.
thanks in advance for any info.
D

Debt_Free_Chick

First off ... your current debt is unsecured, so if you fail to meet the repayments, your house is not at risk. In fact, there's very little to be afraid of in not paying off unsecured debt. There's actually very little the lenders can do to you

Now .. if you move it to secured debt, you could lose your home if you fail to make the payments. So why do it? Put simply, you would be putting your house on the line for a few loans & credit cards.

You are only looking at the repayments however. You are obviously attracted by the option to pay £180 rather than £400 each month.

However, the loan route means that you will have the debt hanging around for 18 years. The DMP route means it's gone in 8 years.

The loan route is largely inflexible. The DMP route has some flexibility in it.

The loan route has the risk that, unless you have a VERY FIRM GRIP on your finances, the cards will be run up again. So THIS must be your priority ... be ruthless in future with the household finances.

To see exactly what's involved in a DMP have a look here

http://www.nationaldebtline.co.uk/england_factsheets/debt_advice_england_wales.php3#3

Under Self-Help Pack (download the entire pack if you have Broadband) work through the whole thing. It's useful even for those who aren't in debt, but it will walk you through the process of dealing with your creditors.

There's lots of other useful information on that site too - it's a charity helping people in debt.

Re the loan ... think very hard about all the angles ... don't just look at the monthly repayment figure.

Good luck - post back if you have any problems

getting_there_6

Thanks for your reply,
As we are now working together with the finances, we can discuss the debts, and we have cut up the cards, we really want to get back on our feet, we have over the past few weeks changed our lifestyle completely, and because the whole family knows of the debts now including our two sons, 16 & 19, they have been great in not asking for money or not complaining when there are no biscuits or something... we are really trying.


We have been through the factsheets and we have done the bugets etc.. we were also thinking along the same line as yourself in going with the dmp, but we are afraid of what it entails.

Thanks
D

Jen_Jen_5

Have you checked out if your entitled to Working Tax credit?

Debt_Free_Chick

We have been through the factsheets and we have done the bugets etc.. we were also thinking along the same line as yourself in going with the dmp, but we are afraid of what it entails.

Thanks
D

CCCS will manage the DMP for you, if you want them to. A DMP is just an arrangement to pay off the debts you owe. Provided that the total monthly repayment (£400) is manageable and you stick to the arrangement, it's just a plan to pay off your debts.

CCCS may be able to negotiate lower payments with your creditors and/or get the interest frozen so more of your repayments go to paying off the debt and not more interest!

CCCS will also get the lenders off your back. Once you're in the DMP don't deal with any lenders by telephone. If they contact you, simply write and tell them that CCCS are managing a DMP for you and they should contact CCCS.

Your credit record might get damaged but, hey, you don't want to borrow any money anyway, do you? And any damage disappears after 6 years anyway.

You might want to visit this discussion board too. It's full of people either managing their own DMP or using CCCS, Payplan or National Debtline. You'll find a lot of people in the same situation, but they will all be helpful & supportive.

http://boards.fool.co.uk/Messages.asp?mid=8999185&bid=50079

The change in your lifestyle sounds great It's an important first step. Although I'm now Debt Free (I haven't always been - did have £30k on credit cards!), I'm sticking to my "frugal" ways and all the money I used to spend on repaying debts is being squirelled away into savings account. If you go the DMP route, you will be saving £400 a month in 9 years time. Think about it ... that's £5k a year! ;D

Regards

getting_there_6

Sorry just going over everything you said, you mentioned that "there's very little to be afraid of in not paying off unsecured debt. There's actually very little the lenders can do to you"

When I was on the phone to Egg, they mentioned something about an attachment on our home, what did they mean by that, sorry for not being to clued up as yet, I will get there I am learning all the time.

Just been in at your link again, in the DMP it doesn`t really go into detail about what exactly happens, eg... do we hold a normal bank account and pay the cccs a monthly DD then they pay off the creditors, or do they take control of everything, like mortgage, gas electric..etc... just would like to know exactly how it works, what we would be allowed to do what we wouldn`t be allowed etc.. what happens to our credit score?

I must apologize again for my ignorance.

Thanks
D

getting_there_6

Thanks for all your replies, I will go through all the advice given with my wife and discuss how we are going to do this, think its looking like the DMP.

Have you checked out if your entitled to Working Tax credit?

We already get the tax credits, its included in my wages, i think its around £1 / day. Thanks anyway!

D

Debt_Free_Chick

Sorry just going over everything you said, you mentioned that "there's very little to be afraid of in not paying off unsecured debt. There's actually very little the lenders can do to you"

When I was on the phone to Egg, they mentioned something about an attachment on our home, what did they mean by that, sorry for not being to clued up as yet, I will get there I am learning all the time.

The best thing you can do is to get clued up on this Egg are trying to frighten you. This is, in theory, possible but very unlikely in practice. Firstly, they have to get a CCJ against you i.e. take you to the County Court. If they do this, you can ask the Court to consider repaying the debt by instalments, just as you are now, and the Court is likely to agree.

If you miss an instalment, Egg would then have to return to the Court and apply for a Charging Order.

CCJs explained here

http://www.nationaldebtline.co.uk/england_factsheets/factsheet_20.php3

Charging Orders explained here

http://www.nationaldebtline.co.uk/england_factsheets/factsheet_15.php3

The lenders will try all sorts of tactics to frighten you into making commitments that you can't afford. So leave all that to CCCS, unless you do the research and learn about your rights. Reading everything on the National Debtline site is a good place to start

Just been in at your link again, in the DMP it doesn`t really go into detail about what exactly happens, eg... do we hold a normal bank account and pay the cccs a monthly DD then they pay off the creditors, or do they take control of everything, like mortgage, gas electric..etc... just would like to know exactly how it works, what we would be allowed to do what we wouldn`t be allowed etc.. what happens to our credit score?

I must apologize again for my ignorance.

Thanks
D

Normally, you would make a single payment to CCCS just to cover your debts. You continue to have a bank account and continue to pay all your normal household bills etc. They only manage the debt. It's an informal arrangement - are you confusing it with bankruptcy? Back to the National Debtline site with you

Here's another factsheet

http://www.nationaldebtline.co.uk/england_factsheets/factsheet_29.php3

Your credit record may be affected ... but it all gets cleared after 6 years. Any adverse ratings - even bankruptcy - is cleared from your credit file after 6 years, so there's nothing extra being recorded on your file simply due to the DMP.

Hope this helps

getting_there_6

Thank you so much... I have alot of homework to do

I will keep you up to date as to how we go.

Thanks
D

Debt_Free_Chick

Thank you so much... I have alot of homework to do    :)

I will keep you up to date as to how we go.

Thanks
D

You'll be fine ... I'm sure of it

The lenders assume you don't know your rights and will try it on so, yes, do the research.

And CCCS will get them off your back if you go the DMP route.

Good luck - yes please, do let us know how you get on.

Jen_Jen_5

Agreement with the above, egg are trying to scare you and pressurise you into making payments at a level you are unable to afford. Stick to the offers and come here for support. The other tactic the lenders try is the "just pay us a little bit more and we wont have to take you to court".

It may seem really confusing and a lot to do now but its not as hard or complicated as the creditors make out.

Good luck