Credit Card repayments

Euskaltel

Hi,
I have got myselft into about £5000 of debt after losing my job late last year. I was hoping work would come but sadly it hasnt and I have just ended up putting more and more on credit. Anyway, it is coming to a head a bit as I am running out of places to find cash to make the repayments. I have heard that its possible to contact the company and make an offer to make reduced payments and/or without interest. To be honest its the interest that is crippling me. I spoke to the National debt helpline yesterday and they suggested contacting the companies. I just wondered if anyone had experience of going down this route and if so what is the right way to do it? I hold my hands up that the debt is mine and am committed to paying it off. I have used the balance calcultor to work out my expenditure against incomings and am £-259 a month so something needs to be done. I am hopeful of getting a job soon byut was saying that six months ago. Any advice would be gratefully appreciated.

Tixy

Hi and welcome

It sounds like you are only in a position to make token payments at the moment (is that rght? I assume you are on benefits). If so then as national debtline suggest you need to contact the companies individually - this is always best done in writing.
Did national debtline give you some template letters? if not I will give you a link to some.

If you go down this route then a couple of main things to be aware of
1) you will almost certainly be issued with defaults which wil go onyour credit files and affect your ability to get credit for possibly the next 6years.
2) if you bank with someone you owe money to they are allowed to take money direct from your current account towards their debts. So before you send your letters you need to set up a new bank account with a bank you don't owe any money to. Ask for a basic bank account as these are not credit checked.

I would say its not an option to be taken lightly but if you have a shortfall every month it may be your only sensible option.

Hannah_10

Can do a SOA (statement of affairs) and show us? The calculator is here>> http://www.makesenseofcards.com/soacalc.html

It's also really useful for sending to your creditors later too. But first off lets have a look see what we can do.

Euskaltel

Thanks for the replies....
I think this is correct:
Statement of Affairs and Personal Balance Sheet
Household Information
Number of adults in household........... 1
Number of children in household......... 0
Number of cars owned.................... 1
Monthly Income Details
Monthly income after tax................ 0
Partners monthly income after tax....... 0
Benefits................................ 610
Other income............................ 0
Total monthly income.................... 610
Monthly Expense Details
Mortgage................................ 0
Secured/HP loan repayments.............. 0
Rent.................................... 450
Management charge (leasehold property).. 0
Council tax............................. 0
Electricity............................. 60
Gas..................................... 0
Oil..................................... 0
Water rates............................. 12
Telephone (land line)................... 15
Mobile phone............................ 0
TV Licence.............................. 12
Satellite/Cable TV...................... 0
Internet Services....................... 0
Groceries etc. ......................... 40
Clothing................................ 0
Petrol/diesel........................... 20
Road tax................................ 0
Car Insurance........................... 30
Car maintenance (including MOT)......... 0
Car parking............................. 0
Other travel............................ 0
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)...... 0
Haircuts................................ 0
Entertainment........................... 0
Holiday................................. 0
Emergency fund.......................... 0
Total monthly expenses.................. 639

Assets
Cash.................................... 0
House value (Gross)..................... 0
Shares and bonds........................ 0
Car(s).................................. 1500
Other assets............................ 0
Total Assets............................ 1500

No Secured nor Hire Purchase Debts
Unsecured Debts
Description....................Debt......Monthly...APR
Credit card....................4000......111.......26
Credit Card....................1200......39........26
Total unsecured debts..........5200......150.......-

Monthly Budget Summary
Total monthly income.................... 610
Expenses (including HP & secured debts). 639
Available for debt repayments........... -29
Monthly UNsecured debt repayments....... 150
Amount short for making debt repayments. -179
Personal Balance Sheet Summary
Total assets (things you own)........... 1,500
Total HP & Secured debt................. -0
Total Unsecured debt.................... -5,200
Net Assets.............................. -3,700
Created using the SOA calculator at www.makesenseofcards.com.
Reproduced on Moneysavingexpert with permission, using IE browser.

Euskaltel

National debt are sending me some templates. I think I can find more than a token £1 payment or whatever and would hope to offer £20+ to both debts in, hopefully, getting a better chance of coming to an arrangement. I have been selling stuff on ebay and should be able to raise this ammount until I can find work.

Tixy

Euskaltel wrote: »

Thanks for the replies....
I think this is correct:
Statement of Affairs and Personal Balance Sheet
Household Information
Number of adults in household........... 1
Number of children in household......... 0
Number of cars owned.................... 1
Monthly Income Details
Monthly income after tax................ 0
Partners monthly income after tax....... 0
Benefits................................ 610 are you getting all that you can?
Other income............................ 0
Total monthly income.................... 610
Monthly Expense Details
Mortgage................................ 0
Secured/HP loan repayments.............. 0
Rent.................................... 450 is there any chance of you finding anywhere cheaper to rent? how much of this is covered by housing benefit? if any?
Management charge (leasehold property).. 0
Council tax............................. 0 do you get full council tax benefit?
Electricity............................. 60 have you tried to reduce your usage? and looked to see if another supplier/tariff would be cheaper?
Gas..................................... 0
Oil..................................... 0
Water rates............................. 12
Telephone (land line)................... 15
Mobile phone............................ 0
TV Licence.............................. 12
Satellite/Cable TV...................... 0
Internet Services....................... 0
Groceries etc. ......................... 40 this hardly seems enough.
Clothing................................ 0
Petrol/diesel........................... 20
Road tax................................ 0 when you send to your creditors you need to include 1/12 of the annual cost in here
Car Insurance........................... 30
Car maintenance (including MOT)......... 0 budget 1/12 of your estimated spend on servicing & MOT
Car parking............................. 0
Other travel............................ 0
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)...... 0
Haircuts................................ 0
Entertainment........................... 0
Holiday................................. 0
Emergency fund.......................... 0
Total monthly expenses.................. 639

Assets
Cash.................................... 0
House value (Gross)..................... 0
Shares and bonds........................ 0
Car(s).................................. 1500
Other assets............................ 0
Total Assets............................ 1500

No Secured nor Hire Purchase Debts
Unsecured Debts
Description....................Debt......Monthly...APR
Credit card....................4000......111.......26
Credit Card....................1200......39........26
Total unsecured debts..........5200......150.......-

Monthly Budget Summary
Total monthly income.................... 610
Expenses (including HP & secured debts). 639
Available for debt repayments........... -29
Monthly UNsecured debt repayments....... 150
Amount short for making debt repayments. -179
Personal Balance Sheet Summary
Total assets (things you own)........... 1,500
Total HP & Secured debt................. -0
Total Unsecured debt.................... -5,200
Net Assets.............................. -3,700
Created using the SOA calculator at www.makesenseofcards.com.
Reproduced on Moneysavingexpert with permission, using IE browser.

Did national debtline discuss the possibility of a DRO with you?

Euskaltel

Not sure what a DRO is?

Tixy

Sorry its a debt relief order. Its like bankruptcy but much more simple process and cheaper, its for people who owe less than £15k. I wonder if they had discussed it with you at all as an option.

Euskaltel

No, they never mentioned it. Im a bit reluctant to go down the bankrupcy type road as Im pretty sure if I can find a job I can get back on track. That may sound naive but I can live pretty frugally. Have just googled DRO and am still not sure how it works with regards my future. I am hopefully in years to come going to be applying for a mortgage etc. and fear all this is going to have a bad ending. Im terrified about getting into something that leaves me out of my depth and to be honest am really scared about even contacting the credit card companies in case they put a county court judgement on me or even just turn me down flat. I dont fancy racking up extra debt with missed payments and even more interest. Help!! I was hoping I could contact my card companies and hopefully arrange a hiatus on interest for six months. Is this being terribly naive?

Tixy

They might well freeze interest -especially with you being out of work and on benefits - once they have the letters you might find most are ok about it, certainly in the short term (I would actually put in that you ar seeking work and would increase your payments when you find employment)
It will affect your credit rating to go down the reduce payment route -but doesn't mean you can never get a mortgage in the future.

Numpty_Monkey

As you are living on benefits (I know what its like) you can't afford to repay them much pay them £1 a month yes you will get defaulted and it will affect your credit score for 6 years
Them getting a CCJ is along way off they have to go to court first to apply for one and that is such a slight possiblity I wouldn't worry about it

Send your creditors this letter #52 (edit to suit)

They may get a bit stroopy but thats what we are for:A