Rock Bottom - Near £30k of Debt - Now to Tackle it

TheLostSheep

Hi all.....

I have been a member of the excellent site for quite some time but never posted anything. As the title shows, I have eventually accepted that I have serious debt problems - but now I am determined to face up to it and most importantly try to tackle it.

It was on Thursday night that I eventually hit "rock bottom" and confessed the extent of everything to my girlfriend of 6 years. We live together but I have lied to her for years about the extent of my debt problems. I feel ashamed, guilty and embaressed about what I have done. I always kept my finances (or lack of them) to myself and hid this from her as obviously I was in denial.

The problems with my massive debt of near £30k have been caused by various things. It goes back to about the age of 17 (I am now 28). I went through University but both my parents become ill with cancer and were unable to work so the consequences of that saw me not even working part time as they were unable to work too. That was when I ended up taking out small loans and using overdraft facilities as I tried to live as normal a life as possible with friends.

It's probably worth mentioning that for about the past 8 years I've created problems through an ongoing use of ongoing gambling sites. The tip of the iceberg came between August 2008 and December 2010 when I reckon I wasted nearly £20,000 betting. This was an awful period in my life. My dad died in October 2008 from an inoperable brain tumour that he had battled with for almost 8 years. I used the gambling as an "escape". I've no idea how I was so stupid. The whole period was filled with frustration for me as we had to pay for his care and sold the house and a private nursing home made about £80,000 as being only in his mid 50s there was no where for him to go. Prior to that, my mum died, also from cancer in 2002. I can't seek to blame these things on why I have racked up so much debt, but I had thought I coped with them - obviously I have not. For the past 18 months, the gambling has been toned down - I have still been doing it (football betting) and in a strange way it has been something that I have relied on to keep me above water from winnings but I realise I can't rely on it to sort my problems. All it is doing is servicing the interest on cards via minimum payments.

I am aged 28 and live in Scotland. I have a Honours Degree behind me and have held down a full time job for the last 6 1/2 years which now pays me an annual salary of £26,520. After deductions this works out at £1600 per month. Given being such well educated, i can't believe I am so incapable of dealing with money.

I'll get to a statement of affairs in a moment. This is where I am at thus far:

Creditors (As at July 2010):
Creditor Amount APR PaymentEnds
Lloyds TSB Loan 1 £7,721 12.70% £271 Nov-12
Lloyds TSB Loan 2 £917 21% £92 Jun-11
Barclaycard £2,862 14.90% £80 Jun-13
Lloyds TSB Credit Card £15,478 18% £350 May-14

My current account is also with Lloyds TSB and is overdrawn to the tune of £2500 with a monthly interest charge of 1.5%.

= £29,478

SOA (Will add to):
In Item
£ 1,600 Salary

I have not mentioned by partner's salary as I believe this to be my problem. For information though, this is £1050 per month where she pays £400 to joint account.

Outgoings (SOA)
Out Item
£600 Joint Account (Shopping/Rent/Phone/Electric/Gas/C Tax)
£270 Loan 1
£94 Loan 2
£350 Lloyds TSB Credit Card 1
£80 Barclaycard Credit Card
£19 Orange Broadband
£30 O'Draft Interest
£20 O2 Mobile
=£1,463

I also have travel costs of £200 per month due to a 100 mile round trip commute to work which means that my outgoings are more than is coming in by around £60.

Possible Solutions:
I have already contacted National Debtline and spoken to a very helpful advisor. Being in Scotland it might be a solution that I go onto a DEBT ARRANGEMENT SCHEME. This is approved legally by the Scottish Government where they force creditors to accept a pro rata fixed monthly amount over a fixed period. My worry with this sort of Debt Management Plan is the impact it may have on my credit file in the future for if/when there is any light at the end of the tunnel and I look to create a new life without debt!

I have also set up a seperate Current Account with Cooperateive bank, should I get to a very difficult point with Lloyds TSB. I could start paying my money in there from my pay. It's worth saying that although I have 2-3 defaults on credit cards, I have never breached the agreement on current account.

I have cut up all my credit cards and handed my current account cards to my girlfriend as I can obviously not be trusted with money. I am not sure if my girlfriend will continue to stick with me through this. I hope she does as I love her so much and I am devestated by what I have done.

I am now looking for solutions to this situation to prove to her and myself I want to deal with it. Some of these solutions are mentioned below.

I don't think my credit rating is at rock bottom just yet - would it worth trying to transfer some of these debts to lower rates? It's the Lloyds TSB one that is the real problem - the £15,000. I have closed the account and entered into negotiations via written letter to query if they would accept a pro rata'd full and final settlement via monthly payments to 70% of the amount being claimed.

My only other possible way out is to explore a possible early voluntary release scheme (effectively redundancy) from my current employer where I would get a year's salary tax free of £26,500. This would almost deal with all my debts but there would be quite a bit RISK in that I would have to get another job within a month or too.
So that's about it thus far.

There is probbaly a lot I have forgotten but I feel a bit better just by getting this recorded here and as you can see I have problems on so many levels!

Thanks for reading

BigCraigJohn

Hi.
Well done for facing up.
Not much to advise myself but personally i'd put your wages straight in the COOP straightaway.
You have so much with LTSB that they can and will help themselves to your money if you get in trouble, they can shut your overdraft with 30 days notice etc.
Treat your overdraft as a debt and pay it off as such. It'll feel very liberating seeing your account in the green.

Hang about anyway and you'll get tonnes of advice, where theres a will theres a way.

Might also be worth reading this regarding pre 2007 credit agreements

https://forums.moneysavingexpert.com/discussion/2532927

littleclover

Hiya...
I have read your post a just wanted to answer...I am like you...I have been a member of this site for ages but just lately started to face up to my mess....
I know what you mean by the embarrassment as I try soo hard to keep all my mess from my new husband as I don't want MY mess to affect him!!!

Mine stems back, probably to 2002-2003 when my Mam was diagnosed with cancer and died within 5 months.....looking back now I thought I was dealing with it very well but now I can see I didn't!!!!
I spent alot of money @ the time on mostly anything as it made me feel good and my ex husband and I both had quite good pay and credit was being thrown at us....

Anyway, I'm not gunna go on about my mess on your thread but seeing your post rang home to me and I just wanted to say we can do it!!!

I wanna be free of this feeling of uselessness and dread and be happy again....its effecting the way I am as a mother and a wife!!!

good luck {{hug}}

TheLostSheep

Cheers Craig... I'm aware that I maybe need to update a more detailed SOA but I'm at a loss to really see where huge savings could be made.

The £200 on travel is a right killer for travelling to work but we both work in different places and that's the cheapest I can get it. It's that which has got me thinking that taking the offer of a lump sum and leaving work with £26k and making a HUGE effort to look for something else workwise would be the right idea. Massively risky thing to do, but on a personal level I could see a future that way.

Some other facts. We have an ongoing private rental - I don't own a house.

My only assets ara car worth £1500 max and £400 in what was at one point a healthy ISA.

What a total mess I've made of things!

My only other point is that I had read/hoped that it was meant to feel better facing up and dealing with things..thus far it doesn't really as I feel I have destroyed my girlfriend's dreams of owning a home some day, getting married and having kids. Obviously no other people know about this!

Happiness6500

Hi

Just sending my support , Also im sure a clever person will be a long soonly with lots of advise but would suggest you find the SOA for this site and really spend some time putting down the figures . The smart guys on here Im sure will look at it in that format and give you a few tips. Re joint things , I know its your debt , but you would need to strip out what you need to pay fully i would think as its a bit misty .

I have current account with LLoyds and they put me onto what they call a Control account to help through the Customer Support Unit. Would suggest you look into it . Its about max charges for going over the OD. They may also be able to suggest other ways if you are having difficulty and maybe even review what you have to consolidate and get down the monthly cost.


For info I was in debt to the tune of £22000 , and started my dmp in December , I have found the CCCS to be helpful and professional , and most companies I think are happy to deal with them . When i decided to deal with my debts was the best day in a long time. Its been empowering .. so good luck

Happiness6500

BigCraigJohn wrote: »

Hi.
Well done for facing up.
Not much to advise myself but personally i'd put your wages straight in the COOP straightaway.
You have so much with LTSB that they can and will help themselves to your money if you get in trouble, they can shut your overdraft with 30 days notice etc.
Treat your overdraft as a debt and pay it off as such. It'll feel very liberating seeing your account in the green.

Hang about anyway and you'll get tonnes of advice, where theres a will theres a way.

Might also be worth reading this regarding pre 2007 credit agreements

https://forums.moneysavingexpert.com/discussion/2532927

spot on about the current account BigCraigJOhn, I took an account with Airdrie Savings Bank and moved all my payments over, so nothing was coming out of LTSB its too risky to have your salary in there are the moment . They can and they will take the money !!! and there charges always come first !!

littleclover

Hi
Yeah I agree with leaving LLOYDS..I have a current, savings, CC, Loans x 2 (1 joint with my ex) and my mortgage through C&G and my charges along with payday loans are crippling us now!!! My husband hopefully has a job starting soon and my youngest starts school in Sept so not so much childcare to worry about!!!
I have started looking at a new current account for us.....any suggestions?

TheLostSheep

Littleclover - Coop bank seemed good from my experiences. They will even offer the most basic of accounts.

I will contact payroll on Monday to make sure I get my salary moved to new account.

NorthernLas

There will be lots of solutions to your current problem. You've already identified a DAS and getting redundancy.

Others options are
- to up your income (job at the weekend, selling stuff on ebay/carboot, doing on-line surveys/mystery shops);
- reduce your outgoings (by checking your bills, switching to cheaper deals and cutting out things you don't need)
- or finally identifying whether your credit agreements are enforceable (if they are not then you cannot be forced by a court to pay).

Although some of these suggestions seem minor, they do all count.

A DAS and unenforcebility will give you defaults on your credit file which will mean that for 6 years you will have more difficulty getting credit.

Redundancy, although it seems the easy option, depends on you getting another job. Can you look round where you are (closer than 50 miles) to see what the market is like first? Can you move closer to your present work?

Should you wish to talk about the gambling see this thread https://forums.moneysavingexpert.com/discussion/1090463

Mrs_Jojo

Please don't risk your job - this isn't the time to be out of work! If you can get a 0% card, then do so, shifting things around and giving yourself some breathing space to start clearing your debts would help. That £400 in the ISA would go a long way towards clearing a card that is on 21% interest - you certainly aren't making 21% on it!

Also. Whilst it is your debt, and I applaud your intent to deal with it yourself, you do need to find some slack in your budget to do so. Is there any chance you could reduce your contribution to the joint account for a while, or could your girlfriend increase hers? Short term pain (for both of you) enabling you to clear your debts will make the dream of your own home more realistic more quickly.

At least you understand why you got into debt, and have made the decision to get out of it - well done!

Post a complete SOA and you'll get lots of help :-)

TUS

cg81 wrote: »

Cheers Craig... I'm aware that I maybe need to update a more detailed SOA but I'm at a loss to really see where huge savings could be made.

The £200 on travel is a right killer for travelling to work but we both work in different places and that's the cheapest I can get it. It's that which has got me thinking that taking the offer of a lump sum and leaving work with £26k and making a HUGE effort to look for something else workwise would be the right idea. Massively risky thing to do, but on a personal level I could see a future that way.

Some other facts. We have an ongoing private rental - I don't own a house.

My only assets ara car worth £1500 max and £400 in what was at one point a healthy ISA.

What a total mess I've made of things!

My only other point is that I had read/hoped that it was meant to feel better facing up and dealing with things..thus far it doesn't really as I feel I have destroyed my girlfriend's dreams of owning a home some day, getting married and having kids. Obviously no other people know about this!

I wouldn't dismiss redundancy just because of a difficult labour market at the moment. It depends what field you work in, and what fields you are willing to work in. If it means being debt free, with your credit score in tact it could be a sensible thing to do. Especially as it has the potential to reduce your travel by a large amount.

Research what jobs are available. Be prepared to accept a job with a lower salary. Do a projected SOA to work out how much you would need to earn if you were debt free with lower travel.

I'd be looking into this option in a lot of detail as it is a lot more appealing than spending MANY years struggling to clear what you owe.

Definitely pull that £400 savings out of the ISA now and use it.