Thousands in debt-how can I clear it? Please help

MissLiz

It's not looking good is it?
Thank you for all your replies so far.

WASHER

MissLiz wrote: »

It's not looking good is it?

No, is the honest answer, BUT all is not lost, your SOA looks very good actually. I think you should consider a DMP with the CCCS or the likes, they will speak to your creditors and they will offer a lower payment each month.

You could of course, take a look at the CCCS website and take the debt remedy test, it will come up with ideas for you, whether it be a DMP, or for you to consider BR (its not very scary, honestly).


WASHER.x.

MissLiz

Thank you for that reply WASHER. My SOA looks good, really? What bits? I think it looks horrifying. Never done anything like that before.

What happens with BR? Doesn't it stay with you for the rest of your life? Also what happens with a DMP? I just look at the interest every month and the actual amounts never decreasing and it gets me so down.

In response to a previous post, all the essentials, ie council tax, gas, electric and my rent are all paid up to date. Its some of the credit cards that aren't.

Charco_2

Yes they're up to date so they're ongoing bills. They fall under your essential expenses which are allowed to be deducted from your income to calculate how much you can actually afford to pay your creditors (not what your creditors demand).

The SOA is rather healthy, you've a nice surplus there to offer to your creditors (I mean obviously you overall picture isn't so appealing but you've got something to work with - Although you are insovent!)

A DMP would take you at least 9 years to pay your debts IF your creditors agree to stop interest and charges. A Debt Management Company or Payplan or CCCS can discuss this further with you.

In an IVA you would be able to pay back about 40p in the £ over five years and have the rest of the debt written off. An IP, or one of the Debt "Charities" can discuss this with you. They will also discuss bankruptcy and any other options that may be available as they are legally required to do so.

PAY NOBODY ANYTHING!

ms_london

Hi MissLiz

Well done on posting your SOA - even that takes guts and often a shock seeing it in black & white. :T

Is it just yourself to feed on the grocery budget? If so, then I think you could spent half of what you have budgeted, if that. The 'Old Style' board is fantastic for tips on the grocery shop, and a whole lot more. Also, I think perhaps your budget could be cut in other areas too, for example, 'other travel' - whats this?, and your hairdresser costs, could this be reduced?

Also, you haven't listed your APR's... This will give you a better insight as to which debt you should be tackling first, as it is always best to throw more money at the debt with the highest APR to start with.

How are you fixed for the next month? When do you get paid? When do payments go out? As you can see from your SOA, you are minus £271 already in terms of paying your standard living expenses and your debt repayments. Standard living expenses must come first, so your creditors will have to accept that they will perhaps get less each month than their standard 'minimum payment'. This is easier to negotiate with credit cards, whereas your loan, usually isn't flexible. Also, I see you have no budget in there for the repayment of your overdraft - this needs to be factored in too, and I suggest you speak with your bank and ask for your OD to be reduced by a set amount each month, (whatever you can afford), so you are effectively paying some back, not just dipping into it all the time.

I would suggest calling your creditors, explain you are in financial difficulty and ask if they can freeze your interest, or reduce your interest. Worth a try and the good old saying, 'if you don't ask, you don't get'. When I did this, one creditor did infact freeze the interest for me, and another reduced it. Negotiate your agreed monthly repayment with them, making sure you agree what you can afford to pay - don't let them pressure you, there will be some negotiation involved from their end. It's better to be upfront with them and honest. Some may be harder to speak with than others, and some may be helpful, and some complete pains in the backsides, but be persistent. Some may also want to see copies of your SOA. Make notes of your phone call, what you have agreed to pay, and ask them to write to you confirming this.

If all payments are not now due to come out until November, I would suggest (and others may disagree) to cancel any Direct Debits, or Standing Orders you have with your creditors. Not because you aren't going to pay them, but this then gives you a bit of leeway in terms of negotiating a new lower payment, rather than them taking what they usually do and you having to struggle for another month.

Depending on your credit rating, you could always apply for a 0% credit card and shuffle your debt around to avoid paying interest where you can.

I am rambling, sorry!! Also, might be a good idea to get all payments to come out at the same time of the month, this helps to budget too. Create a spreadsheet (or use a notebook) and write down when payments come out of your account, or when you pay them.

If you need anything else, just ask

LeeSouthEast

Seeing as no one else has done the obligatory bit-by-bit breakdown, I will

Yes, your SOA is GOOD compared to some the regulars see here !

MissLiz wrote: »

Statement of Affairs and Personal Balance Sheet

Monthly Income Details
Monthly income after tax................ 950
Partners monthly income after tax....... 0
Benefits................................ 0
Other income............................ 0
Total monthly income.................... 950

Monthly Expense Details
Mortgage................................ 0
Secured/HP loan repayments.............. 0
Rent.................................... 281
Management charge (leasehold property).. 0
Council tax............................. 25 Pretty low. over 10 months or 12?
Electricity............................. 20
Gas..................................... 10
Oil..................................... 0
Water rates............................. 12
Telephone (land line)................... 0
Mobile phone............................ 20 Do you need this?
TV Licence.............................. 3 How so low?
Satellite/Cable TV...................... 0
Internet Services....................... 15
Groceries etc. ......................... 150 You could shave £50-100 off this with effort
Clothing................................ 20 Stop.
Petrol/diesel........................... 0
Road tax................................ 0
Car Insurance........................... 0
Car maintenance (including MOT)......... 0
Car parking............................. 0
Other travel............................ 50
Childcare/nursery....................... 0
Other child related expenses............ 0
Medical (prescriptions, dentist etc).... 0
Pet insurance/vet bills................. 0
Buildings insurance..................... 0
Contents insurance...................... 0
Life assurance ......................... 0
Other insurance......................... 0
Presents (birthday, christmas etc)...... 20 Stop.
Haircuts................................ 20 Halve?
Entertainment........................... 20 Stop.
Holiday................................. 0
Emergency fund.......................... 0
Total monthly expenses.................. 666


Assets
Cash.................................... 0
House value (Gross)..................... 0
Shares and bonds........................ 0
Car(s).................................. 0
Other assets............................ 0
Total Assets............................ 0

No Secured nor Hire Purchase Debts

Unsecured Debts
Description....................Debt......Monthly...APR
Overdraft......................2300......0.........0
MBNA...........................4000......120.......0
HSBC Visa......................2500......70........0
M&S &More .....................2500......40........0
Amex...........................1700......40........0
RBS............................1300......30........0
Lloyds TSB.....................3000......60........0
Monument.......................3000......110.......0
Marbles........................3000......85........0
Total unsecured debts..........23300.....555.......-


Monthly Budget Summary
Total monthly income.................... 950
Expenses (including HP & secured debts). 666
Available for debt repayments........... 284
Monthly UNsecured debt repayments....... 555
Amount short for making debt repayments. -271

Personal Balance Sheet Summary
Total assets (things you own)........... 0
Total HP & Secured debt................. -0
Total Unsecured debt.................... -23,300
Net Assets.............................. -23,300

If you manage all my reductions, you end up with an extra £190 in your pocket each month that only leaves you £81 short to breaking even. Can you up your hours? Are you entitled to any benefits? Second job? Lodger? You need to Up Your Income somewhere, somehow to beat this.

The alternatives as others have said is a DMP or similar. Bankruptcy is also an option if you understand the consequences, but I'd avoid that option for now. You're not that insolvent but will be if you leave it too much longer.

tallyhoh

Has the money gone on purchasing "goods"? anything that can be sold on ebay or the like?
I sold stuff lying round the house a couple of years ago & managed to pay for four of us to go abroad for a week. Ornaments, clothes, cosmetics, old mobiles, anything you dont use will be welcomes by someone. Have a sort out.

tiny_courageous

Have you checked you're getting all of the benefits you're entitled to? On 950 a month you may be entitled to working tax credits. Try https://www.entitledto.co.uk to see if you're claiming everything you should

MissLiz

Thanks again for your helpful replies.
I don't have anything of any value at all that I could sell. The computer I'm using now is about 4 years old and when it packs up I guess I will be going to the library for my internet.

What actually happens with bankrupcy? Doesn't it stay with you forever? I don't know much about it to be honest.
LeeSouthEast - thanks for the bit by bit breakdown, I will reply to what you highlighted for me.
The council tax of £25 is what we each pay. There are 4 of us in the house. This is how much it works out as each until March which is when it will go up again I assume.
My mobile phone contract is £15 a month, I've only just taken out a new contract about 2 months ago, before it was £30 a month for a lesser tariff.
Tv license is £35 each for the year. I have actually paid this to my flatmate already.
The clothing £20 was a guess at what I buy over the whole year, I don't buy clothes every month, not into fashion, I buy things when I need them like I needed a new coat as my old one was falling apart. I need new shoes for work and I'm currently wearing a pair of boots that I got in a sale a year ago but they are not that great for work.
The presents was an estimate as well. The only times I buy things are for my mum for her birthday and Xmas and for friends if its a 21st, 30th, 40th etc. I don't buy for anyone else.
Entertainment - £20 again this is an estimate, I rarely go out as I just can't afford it. The last time I went out was for a workmates leaving do and I had one drink. This figure includes going to see my mum who is elderly and lives 200 miles away and I don't go nearly as often as I would like.
Haircuts - I have quite unmanageable hair and have had the same hairdresser for years as others in the past have really messed it up. I should go every month but leave it 6-7 weeks sometimes to spread it out a bit.
Groceries - £150, I know this is really high and I need to cut it down a lot. I've cut back on popping into the newsagents on the way home to get a bar of choc or some crisps as I was wasting about £5 a week just doing that.

My own bank phoned me today asking if I could make a payment as my card was overlimit, I was like I don't have anything spare. The lady on the phone said am I in financial difficulty and I said yes. She said why and I said because I have to much to pay out and not enough coming in so she helpfully suggested that I pay more off my cards so I have less interest to pay. I said I didn't have enough coming in otherwise I would!

WASHER

Do not under any circumstances take a consolidation loan from your bank if they offer you one, as Martin said tonight on Watchdog, banks are there for their shareholders and to make a profit, they are not there to help you out.

Do you have credit card debt with your current account bank, if so, immediately open a new bank account, one not associated with any of your creditors and get your salary paid in and change your DD and SO over. Banks can and do take your salary out without your permission to repay your debts, this is perfectly legal.

You need to speak to the CCCS or National debt line.

Please be aware, if you change banks and have an overdraft etc, the bank has every right to recall that overdraft, but do not be bullied into paying something which you cannot afford. Rent and food are your priorities and of course any secured debt, every one will have to take a token payment including your bank for the overdraft, you cannot give what you haven't got.