21 years old and 25K in debt help!

bombay121

Good evening all,

I've spent the last two years on these forums just reading about peoples experiences and how they have coped with debt and after helping my parents it is now time to help myself.

I'm 21 years old and currently owe £25,092.89 to unsecured credit lenders. Its pretty much entirely my fault i've lived beyond my means since I turned 18 and have also helped my parents a lot with their financial troubles which total over half a million pounds of secured/unsecured debt.

We had a family business that went bankrupt in July last year after which I spent 10 months looking for a job. At the time I was living in a rented house which I couldn't afford to pay due to me loosing my job, this was also compounded by utility bills and council tax. There is a silver lining to this almightly cloud and that is I now have a steady job and love every minute of being at work.

In the last two months I have failed to make payments on the majority of credit cards and have also had my Amex cards referred to an agency. In my experience this is just the start as I saw my parents finances collapse like a pack of cards. My parents are with payplan at the moment and I'm thinking of going down a similar route I am just looking for some advice as to what to do. Below is my SOA


Income Amount(£)
Monthly income after tax 1050
Partners monthly income 0
Benefits 0
Other income 0
Total monthly income 1050

Expenses Amount(£)
Mortgage 0
Secured/HP loan payments 166.9
Rent 100
Management charge (leasehold property) 0
Council tax 0
Electricity 0
Gas 0
Oil 0
Water Rates 0
Telephone (land line) 0
Mobile phone 40
TV Licence 0
Satellite/Cable TV 0
Internet services 0
Groceries etc. 100
Clothing 25
Petrol/diesel 250
Road tax 15
Car Insurance 90
Car maintenance (including MOT) 25
Car Parking 0
Other travel 0
Childcare/nursery 0
Other child related expenses 0
Medical (prescriptions, dentists, opticians etc.) 5
Pet Insurance/Vet bills 20
Buildings Insurance 0
Contents Insurance 0
Life Assurance 0
Other Insurance 0
Presents (birthday, christmas etc.) 0
Haircuts 10
Entertainment 30
Holiday 0
Emergency Fund 0
Total monthly expenses 876.9

Secured & HP Debt Description Debt(£) Monthly(£) APR(%)
Mortgage 0 (0) 0
Hire Purchase (HP) Debt 4000 (166.9) 12
Secured & HP Debt totals 4000 - -

Unsecured Debt Description Debt(£) Monthly(£) APR(%)
Overdraft 5852.82 0 17.3
Lloyds credit card 3615.33 68.22 22.94
Lloyds Personal Loan 8268.52 366.9 19
MBNA 3796.39 72.06 24.95
Amex Credit Card 2130 0 0
Amex Charge Card 1429.83 0 0
Unsecured Debt totals 25092.89 507.18 -

I am back now living with my parents how due to their financial troubles I have to contribute for us to live. I also owe money to my best friend however he has said that there is now rush in paying him however I wasn't sure whether to include it in the SOA or not. I'm really just putting my arms out for help and would appriciate any advice at all.

Thanks for reading
Dan

Tixy

Hi Dan and welcome

Good news that you have found a job (especially one you like) and it sounds sensible to be living back at home as it will be relatively cheap for you and presumably is helping them.

Okay looking through your costs
Mobile -not ridiculously high but worth looking if you can get the same mins/texts for less with other providers or on a PAYG tariff. If in contract then ask if you can drop to a lower tariff.
Petrol - high figure. Is it all essential? Is it mostly commuting? Any way to use public transport to travel cheaper? Do you drive efficently (read boringly here) its suprising the difference you can make to your fuel costs by dropping 10mph or so - read this article for tips - http://www.moneysavingexpert.com/travel/cheaper-fuel (some are extreme, some you can easily do)

Car ins- really high (presumably cos of your age) have you looked at whether you could put another person as a named driver and whether this would bring the cost down, maybe your Mom or Dad or an older sister? I used to save about 20% by having my Mom on my insurance and I think the savings can be even better for guys. (If you switch insurance then see if you can also earn bonus cash back via quidco or topcashback= free money)

Assume the £4k HP is your car? Is £4k the original or current balance? How much is your car worth?

Did you pay off all the old utility costs, rent etc from your previous house? I notice you haven't included any arrears for these.

It does look like a debt mangement plan would suit you, so I would speak to Payplan about this (or you could use CCCS but if you have been happy with Payplan for your parents then may as well stick with them).

Other tips
If you haven't already it may be worth getting copies of your credit reports.
If you overspend on adhoc spends in the month try a spending diary to track al you spend (every penny)
I would include the money you owe to your friend in your SoA - Payplan will advise what you can do with this but you may as well have correct figures to start.
Any chance you could do extra paid hours at work? Are you expecting a payrise/promotion any time soon? Any chance you could get a second job in the evenings? Have you considered doing online surveys/reviews to earn a small amount of cash or vouchers (the vouchers can help towards christmas presents etc which I notice you haven't included in your SoA).

Good luck, hope things work out for you and your parents.

bombay121

Hey everyone,

Well I phoned the CCCS on Monday and they took all my details etc, they were really helpful and didnt judge which was good. I feel so much better for getting the ball rolling. Got an appointment for the 26th of October.

Tixy thanks for your tips, cant really do a lot with the mobile phone since I took out a plan with a premium phone so they aren't willing to change my plan. My insurance is up for renewal in a months time and indications are that it'll drop by about £400 which is good.

I've really got into saving money now and silly things like bog roll and buying slightly cheaper cat food are saving my around £30 a month. Also the pet shop where I live does 3 for 2 offers which is good. Also changed the supermarket I shop at which helps and i've been buying own brand stuff which has helped as well.

With regards to my hire purchase the original credit amount was £6200, I just received a statement from them and I have £3600 outstanding. This isn't good because the car is now worth less than this due to me doing a lot of miles which has decreased the value of the car.

Anyway we shall see what happens next

B

CCCS_Sarah

bombay121 wrote: »

Hey everyone,

Well I phoned the CCCS on Monday and they took all my details etc, they were really helpful and didnt judge which was good. I feel so much better for getting the ball rolling. Got an appointment for the 26th of October.

Tixy thanks for your tips, cant really do a lot with the mobile phone since I took out a plan with a premium phone so they aren't willing to change my plan. My insurance is up for renewal in a months time and indications are that it'll drop by about £400 which is good.

I've really got into saving money now and silly things like bog roll and buying slightly cheaper cat food are saving my around £30 a month. Also the pet shop where I live does 3 for 2 offers which is good. Also changed the supermarket I shop at which helps and i've been buying own brand stuff which has helped as well.

With regards to my hire purchase the original credit amount was £6200, I just received a statement from them and I have £3600 outstanding. This isn't good because the car is now worth less than this due to me doing a lot of miles which has decreased the value of the car.

Anyway we shall see what happens next

B

Good Luck with your appointment, if you have any questions please feel free to give me a shout.

Sarah

bombay121

Ok so the development thus far. Last week I spoke to a great guy called Hue at the CCCS, he was extremely helpful and talked through all the options with me. Based on my SOA he said that bankruptcy was the best option as I do not have enough disposable income for a long term DMP.

However because I owe money to a friend he said that I was best off going for a temp DMP until I had paid my friend off. Hes sent through all the docs I need to fill in to start the DMP so i'll be getting these off straight away.

Now having read up on bankruptcy and its implications I fully understand whats going to happen. Hue said that I was probably going to loose my car but I need one for work so i'm unsure as to how this will work out. I also would like to know if I can keep my current bank account. Its a basic HSBC current account with a debit card, no overdraft etc can I keep this?

Now amex initially instructed RMA to try and collect the debt for them however I have managed to fend them off on my own. Yesterday a letter dropped through the letterbox from Newmans who, from what I have read are like a nasty pack of wolves. How should I handle them? Hue sent me through a letter template to send to creditors to inform them of my DMP with the CCCS do I send this off? Or do I inform them that I intend to go bankrupt? Also can I request that they petition for my bankruptcy as the fees are £510 and i'm worried that I can afford them?

Many thanks for reading

B

bombay121

Ok so sip rep is as follows. DMP is all set up now, first payment is due in jan, paying £106 a month. Lloyds have already refused payment however MBNA suprisingly have accepted it and have placed me on a 'servere hardship plan' any ideas what this is? IN the letter it says that they will suspend all charges interest etc which is good I guess. Not heard from Amex or Newmans DCA yet so I will keep posted. Feeling better already and that i'm starting to turn things around.

All the best
D

RAS

Hi

if the car is HP, you MAY be allowed to keep it. If it has to go and you cannot get to work otherwise, you will be allowed a small sum (say £1000) to buy a replacement. Go over to the BR forum and they can help you out.

Also check with them about preferential payments re your friend. How much do you owe?

misslauren

What are the hours on your current job like? I know it may not be ideal, but getting something part time working one night and a weekend day or something in addition would give you some much needed extra money...

I'm 21 too and have a little over $7,000 worth of debt, so not as high as yours, but I know the feeling of it being in the back of your head. Every little bit helps... and when its gone then you can look on to bigger and better things.. like a mortgage! (god, the irony... oh well, thats life!)

Good luck

broadpaws

hi bombay,

just a thought? how much do you owe your friend? I would have thought that BR was the best option, but your post mentioned that you have been advised to do a TDMP until friend has been paid off, obviously I do not know all the details, BUT normally as soon as you have decided/advised that BR is the best option, it is to make this happen as quickly as possible (save for fees etc) as by paying off your buddy (how long will it take) could be seen as treating a creditor preferentially!

Now based on the info - I would think that I would have gone BR now, I am aware that offically your best friend debt would fall into the bankruptcy, However once done, you could then have arranged to pay your friend bank, safe in teh knowledge that all the other debt had gone - was there any reason (perhaps I have missed an obvious one?) why you would not do this,

New year new start - great news on the job x