Oh No! It's a journey of £38,000 - This time it's personal.... (Now with proper SOA)

Homershairdo

Hi all,

I think this is what's called the LBM........

Somehow (actually, not "somehow" at all), over the course of the past ten years, I've gathered a load of debt. Over £30,000 worth of debt. If there was a smiley for someone being sick, I'd have used that here.

It was manageable, until the day my partners income reduced by 75%. Although I am on a decent wage, I'm now at the point of having to stop the juggling.

Although I've no missed payments, it's now a case of when, not if.

So, the journey starts now. I've posted a SOA. All the fat has been trimmed from that. Even my beloved Sky Sports has been cancelled. Poor Sue the Cat has no insurance anymore.

Anyhow, I digress. I've used both CCCS and the DAF Personal Debt Analyser, and they recommend a DMP. Looking through this site, reading and learning, I've decided that I would like to self administer this.

So, I'm pulling together my various offers for a reduced payment. My creditors are:

ZOPA (£13k @ 16.9%)
Lloyds (£6k @ 0% - moving to 25% in Jan)
Virgin (£4k @ 19.9%)
Natwest (£3.5k @ 0%, moving to 18% in Jan)
Halifax (£3.5k @ 0%, moving to 18% in Jan)

To be honest, I've been sitting on my hands about this for quite a wihle. I guess there is an element of shame in this whole situation. However, the poster "SaltNVinegar" put up a cracking post, which, dare I say, was quite inspirational.

So, letters are going to be prepared. Offers are calculated. Just myself to get sorted now....

I'll keep on posting on here. Hopefully someone may read this, have an input, or even help them move forwards with their debt issues.

So - onwards and upwards.

H

saltnvinegar

Hi H

First of all well done on getting things started. Its a tough step that first step but once you get started you will feel so much better.

Thanks for your comment on my thread, I'm just pleased its helped you in some way too. I really understand that element of shame, its a tough shackle to get rid of, but shackle it is.

If you don't get rid of it, you will be chained to your debt for a very long time so facing up to that feeling of shame and dealing with it is part of the getting debt free process.

Its a real rollercoaster journey, thats for sure, but with the support you will get here on MSE you'll be fine.

Best wishes

SnV

Homershairdo

Letters ready. Seems to be an invisable barrier between me and the postbox.

saltnvinegar

Homershairdo wrote: »

Although I've no missed payments, it's now a case of when, not if.

If this really is the case then sooner or later you will need to post those letters. I know its not easy but in my experience better to do it sooner!

If you are going to default on your commitments, then better its on your terms and you're showing you recognise this and are doing something about it.

What will get you deep in the cow doo canyon without a paddle is adopting the emu stance.

Best of luck

SnV

jamesd

For the Zopa portion you might consider offering a token payment of £1 a month, lasting until your partner's income increases, raising it as you clear other more expensive debts. Given the interest rates you're facing, letting interest accumulate on the Zopa loan will be a better idea than on the other accounts. It'll mean more interest for the Zopa lenders so it's not a bad deal for them, even if it does mean a delay in getting money back. Zopa may resist but they do accept token payments when necessary, as it seems to be for you. That's far better for lenders than an IVA, say.

For the Virgin card it's worth seeing if a balance transfer offer at 0% is available. They have already started putting payments towards the most expensive part of the bill first, so with them it's safe to take a balance transfer while you have interest-bearing debt as well.

Declaration of interest: I'm both a borrower and lender via Zopa. I haven't checked to see whether you're one of those I lent money to.

Homershairdo

jamesd wrote: »

For the Zopa portion you might consider offering a token payment of £1 a month, lasting until your partner's income increases, raising it as you clear other more expensive debts. Given the interest rates you're facing, letting interest accumulate on the Zopa loan will be a better idea than on the other accounts. It'll mean more interest for the Zopa lenders so it's not a bad deal for them, even if it does mean a delay in getting money back. Zopa may resist but they do accept token payments when necessary, as it seems to be for you. That's far better for lenders than an IVA, say.

For the Virgin card it's worth seeing if a balance transfer offer at 0% is available. They have already started putting payments towards the most expensive part of the bill first, so with them it's safe to take a balance transfer while you have interest-bearing debt as well.

Declaration of interest: I'm both a borrower and lender via Zopa. I haven't checked to see whether you're one of those I lent money to.

Hi James,

Thanks for the post. The ZOPA loan is the one I am most concerned about, as it's people which I'm dealing with in this instance. So that is always in the back of my mind, and currently stopping me from going through with a dmp.

Oh - I checked my lenders, and you're safe - you're not one of them! But thanks for the concern, and the honesty!

jamesd

Don't worry too much about the people to the point that it stops you following the snowball method of clearing your debts as fast as possible. People are understanding and any of your lenders who saw you doing that should be happy that you're doing the right thing to get things under control again. Even if it does mean taking lower payments, but making more interest money, for a while.

Homershairdo

So......

I have my letters written.

I have my envelopes.

I have my stamps.

Just need some guts now.....

Just a quick question. I have a mortgage, but it's not with any of my creditors. That'll not be affected by the dmp? I'm on a variable at the moment, but fully up to date.

Thanks!!

jamesd

It won't affect your current mortgage but reports in your credit record about arrangements to pay the others will have some negative effect on your ability to remortgage. Less negative effect than lots of missed payments if you let it get out of control.

If your mortgage isn't interest only one possible option is to ask to switch to interest only for a fixed time to help you to more rapidly clear the other debts. Some lenders will be willing, some will be reluctant.

Homershairdo

Ok, final question. For the time being anyway:D

My partner and I are financially linked through our mortgage. And we have a joint bank account. However, my debts are in my name only, and not with our bank. Will her credit rating be ruining by me going on a dmp?

Cheers!

jamesd

It won't affect your partner's credit record directly. However, whenever a person with a financial association has a credit report provided to a lender, the lender will also get the report of their financial associates. So your linked credit report will harm your partner's ability to get credit.

The effect on them will be very similar to the effect on you and it's vital that they know about this in advance so they aren't unpleasantly surprised later.

A DMP is still better than lots of late or missed payments. The DMP shows that you're dealing with things responsibly, the missed and late payments will be taken as showing that you aren't. Looking as though you're in control is far better than looking out of control.