Ok so i need help now.

the_seraphim

Right im now starting to seriously consider bankruptcy as a viable solution, which means it must be bad right.

ill try to be concise to make it easy to understand and im going to lay out all my debt amounts and who or what they are for and my income as best i can.

Ok my name is david and i am 24 years old, married with a 3 year old and my wife is due to give birth in mid july.

i work full time as a chef and earn £1100 per month before deductions (should be £944 after deductions)
i qualify for tax credits and as they are using last years figures still i currently recieve £130 per week benefit. (this could go down at any point as my new job will pay more this year than last year. twice as much as total earned last year)

My wages are paid by cheque every month, no i cant get that moved to a bacs payment as our investor at work is in the process of selling and couldn't give a rats !!!! about our access to the bank account.

my bank takes a week to clear the cheque (yes 7 days) and as i unfortunately cant wait this long as i have debts that are on set days with hefty charges for late payments, its cheaper to cash the cheque at 5.99% leaving me with around £880

I made the mistake of getting into debt with 2 payday loan companies and also have a walking possesion order on my stuff for council tax. I have a possession order on my council flat suspended as long as i make repayments as laid out below.

i Currently owe £400 to the bailiff for council tax, £1000 on rent arrears and £200 court fees. I have 2 payday loans with one owing £680 and the other owing £632.

the interest on the one owing £632 is £132 per month and the other is around the £220 mark per month.

I also owe £660 on a £250 limit credit card at 59%APR with minimum payments now at £39 per month.

My outgoings are £50 to virgin media (cannot reduce without cancelling completely due to wierd package offers) £50 to vodafone (contract too new to reduce, also includes insurance) i require £40 on my gas and electricity each month and require £50 per month travel expenses, i also need around £200 per month in terms of food for myself and the wife and child.

So total income

£1500 per month

recurring outgoings are £1057 (this includes rent, arrears payment in line with possesion order, bailiff payment including attendance fees and debt, this has 3 months left until clear) plus an extra £100 for the council tax each month

leaves disposable of £463 each month with which to pay off the interest on the payday loans at £352

leaves a total loan amount of £970 and £111 to pay it off in the 3 or 4 months before i can no longer extend the loans.

i also have a child coming in 3 months for whom i need some new equipment and clothing which will probably take up most of the £111 per month.

so as you can see while im not in a debt crisis yet, i will be im sure.

now if i could get the payday loan companies to let me pay off the loans over 3 months with no interest im laughing (but that isnt going to happen is it) my credit rating is too poor for a consolidation loan even though i would happily take one at 60% over 12 months and make someone a lot of money, no one is interested.

my bank said no, although they have been great with regards to charges for things. i just need a way to survive a few more months and reduce the amounts owed to these payday loan companies.

i have the following ideas myself:

i will call the companies tomorrow morning and explain my situation to them and see what they will do, if they would just stop the interest for one month that would be fantastic, the extra money would allow me to almost clear one of them in one month and then over 2 months the others cleared.

is there a way to get my cheques written out to cash or something, so that i can get them faster than having to pay that 6%, that alone would give me an extra £60 per month.

if i could get a loan, even from an individual at even a hundred percent over a year, i would be better off, the interest on my debts alone costs me £400 per month, which would pay for a loan at 100% of £2400 which clears the majority of my debts and leaves money each month to pay off some debts faster... (i still havent had the balls to ask the one or two family members who could afford to loan me the money, my nan being one of them. im not sure i could stand to ask her everyone else in the family is not in a position to help.)


what caused this massive downward direction in debt was taking the last £500 from the payday loan, the bailiff was at the door, ready to take my goods, i had no other way to pay him off.

stupid i know, but whats done is done and now i need to move onto finding a solution. my plan is to be debt free by christmas so i dont need or even want a loan for christmas (what caused the problem in the first place, silly wife... i said "we cant afford christmas" i gave in too easily.

i know this post is long, but its about time i wrote it all down and i feel better for doing so... one thing is that its allowed me to look at the actual figures and they do just about balance, just about, if i drag those debts along a few more months, while costing me more in the long run, its not impossible.

so... bankruptcy no longer looking so good, which is good, but i still need help. any help will be very much appreciated, and if anyone wants to loan me a grand, i can pay it back over 3 months, or 5 months if you want some interest :kisses3:

suelizab

Hopefully some1 will be along soon to help you . Keep yer chin up and it WILL work out.

jamesd

No need for bankruptcy for you. Not bad enough for that. You have three main approaches you could take, up to you which you want to use.

1. Visit Lenders Compared and see whether you can borrow money from one or more lenders there over a year or so to clear the payday loans. This is the site set up by the Office of Fair Trading after its investigation into the doorstep lending market, to help people find better rates. In my area I see one at 127% APR, cheaper than the payday loans. For a £1320 loan over 70 weeks the weekly payment is £33 and the APR is 149%. About £143 a month in combined interest and capital repayments. Or a couple of places offer it for 106 weeks at £26.40 a week with 137% APR, about £114.40 a month. But you might get different options or none.

That sort of deal would greatly reduce the monthly cost and also clear the amount owed, not just pay off interest.

2. Your debts are currently unaffordable, so you could approach CCCS or another debt help charity. They will make arrangements with your creditors to repay them at a rate that is affordable to you. This would be cheaper than option 1 but you might prefer doing it without outside help.

3. Negotiate your own debt management plan, via your calls to the lenders. No harm in seeing what rates they offer for converting the short term loans to long term. Just don't accept immediately, see what rates you can get elsewhere - preferably before you call them!

If for some reason none of those worked then there are a couple of measures short of bankruptcy that would get rid of the debts, both alternative forms of insolvency. But you don't need to go there, I think, so no need to go into detail. CCCS would suggest one if it seemed appropriate.

mandi

Hi _seraphim

Before you do anything .You should get advice from


http://www.nationaldebtline.co.uk/ They are free & confidential

mandi

jamesd wrote: »

No need for bankruptcy for you. Not bad enough for that. You have three main approaches you could take, up to you which you want to use.

1. Visit Lenders Compared and see whether you can borrow money from one or more lenders there over a year or so to clear the payday loans. This is the site set up by the Office of Fair Trading after its investigation into the doorstep lending market, to help people find better rates. In my area I see one at 127% APR, cheaper than the payday loans. For a £1320 loan over 70 weeks the weekly payment is £33 and the APR is 149%. About £143 a month in combined interest and capital repayments. Or a couple of places offer it for 106 weeks at £26.40 a week with 137% APR, about £114.40 a month. But you might get different options or none.

That sort of deal would greatly reduce the monthly cost and also clear the amount owed, not just pay off interest.

2. Your debts are currently unaffordable, so you could approach CCCS or another debt help charity. They will make arrangements with your creditors to repay them at a rate that is affordable to you. This would be cheaper than option 1 but you might prefer doing it without outside help.

3. Negotiate your own debt management plan, via your calls to the lenders. No harm in seeing what rates they offer for converting the short term loans to long term. Just don't accept immediately, see what rates you can get elsewhere - preferably before you call them!

If for some reason none of those worked then there are a couple of measures short of bankruptcy that would get rid of the debts, both alternative forms of insolvency. But you don't need to go there, I think, so no need to go into detail. CCCS would suggest one if it seemed appropriate.

And dont ever borrow more to pay off a loan

jamesd

There's nothing wrong with borrowing to pay off a loan provided it improves your position. A change to a loan at a lower interest rate does that.

What is a problem is borrowing to pay off a loan then reborrowing the original amount again, so you end up with twice the debt. That just makes things worse.

The debt help charity route will be cheapest - will clear the debts faster - but not everyone wants to take that route.

Triggles

First of all, you said your benefits are based on last year's figures? Does that mean your circumstances have changed a bit for the better but that you haven't reported it yet? If so, that's not a good idea. You could end up owing them money.

If you could put together a SOA, it would be much easier to follow and give a better idea of where everything is going. Also you need to remember that rent and priority living expenses come first... then council tax/court fees.... then the unsecured debt (payday loans, etc)... then luxuries....

I also don't think it's a good idea to get another loan. And definitely NO MORE PAYDAY LOANS!!! I do think that contacting National Debtline is a good idea. But be prepared to be possibly be told that you need to go on a DMP or plan of some sort to repay your debts that may take some time - you didn't get into this situation overnight, and it's likely to take some time to sort out. The key here is to not incur more debt whilst taking care of this debt.

Anyway, please go through with the SOA and post it. It allows people to give more accurate suggestions as it shows ALL expenditure, which gives you a much more realistic picture of where you are at.

ETA: Oh... and *slap* for this:

what caused the problem in the first place, silly wife... i said "we cant afford christmas" i gave in too easily

You are not blameless in this. "I gave in too easily" is a cheap shot and honestly if my DH said this, he'd not get too friendly a reaction from me. You are in this mess because you aren't planning ahead (as I'm willing to bet your boss didn't start issuing your pay by cheque just this month, so you could have planned accordingly), making poor decisions (payday loans), and overspending (over limit credit card). You both as a couple have obviously made some mistakes - we all have. But this type of comment is petty and unnecessary. I hope this is not something you're saying to your wife - couples are meant to support each other in times of crisis, not tear each other apart.

fatbelly

jamesd wrote: »

No need for bankruptcy for you. Not bad enough for that.

But a Debt Relief Order may be an option, particularly if your new awrd of Tax Credits is reduced, as you suspect it might be.

National Debtline can run through your figures and do this for you if that's the option you choose

Factsheet Debt Relief Orders

If you end up with a Tax Credit overpayment, that can go in too

dancingfairy

Hi - I think I would do the following:
1) get a new bank account - not linked to anyone you owe money to and get your wages and benefits put in there. This will allow you control over your money and who gets paid when. The payday loan people are highly unlikely to want to negotiate with you and even if they did they still have been known to take the money anyway. It is therefore vital in my opinion you get your wages and benefits in a new aco!!!! so they are not immeadiately swallowed up.
The payday loan people will then likely rinse your old bank account - this is not great but at least when they have finished you can then try and set up a repayment plan from your new bank account to your old bank account without worrying that rent won't get paid etc.
2) Your main prioirities are to pay the rent arrears and the council tax arrears - stuff any unsecured debts for now. Unsecured debts may have to take 1 pound per month token payments whilst the priorities are dealt with - they will not like it but tough (this will include your old bank account) . DO NOT put your house/goods at any more risk.
3) Do a thorough budget - see the SOA calculator at makesenseof cards as a good starting point.
4) Get in touch with National Debtline or CCCS and start getting some help before you loose everything.
Best of Luck
df

jamesd

fatbelly wrote: »

But a Debt Relief Order may be an option

Yes, a DRO seems like the form of insolvency that would apply here if any form was needed. But that would take lots of screwing up by his creditors, since a debt management plan or individual voluntary agreement would do the job and recover more money for them. No telling what daft things creditors might do but sensible ones would get on board with a DMP as soon as a debt relief charity got involved, even if they weren't willing to earlier.

tesuhoha

With regard to being paid by cheque it may be cheaper to get a small overdraft of about £1,000 to cover you on the days when your cheque is clearing and then you could withdraw money without losing that amount. What does everyone else think? Even with a new bank account you will still have the problem of the uncleared cheques so it may be an idea to do this. My husband used to be paid by cheque but it was always accessible immediately because we had the overdraft facility (that should only be used for this purpose). I certainly can't remember paying such huge amounts on the overdraft, about £4 a month I think. We have a Barclays account, just a standard non fee paying account but they do one that is £10 per month.

http://www.barclays.co.uk/PremierBanking/PremierLifeAccount/P1242558033380

This Premier account has a free £1,000 overdraft which although you pay £10 a month it is still a whole lot less than what you are paying which is absolutely extortionate.

There are probably better deals around, i.e. free current accounts with free overdrafts and I sure one of these lovely people will tell you about them. That should help with the cheque payments anyway.