Confussed about it all!

how-much_3

Hi everyone I've been a secret lurker here for a while now, but it's now time to air my dirty secret.... my Debt and what to do with it!

I Currently owe around 16k + (i'm going to take a deep breath and get an exact figure soon)

Now I meet the payments every month without fail and actually have a really good credit score. But A large portion of the debt is credit cards so massive interest rates and even though I try my best to make more than the minimum payment I'm never really making a dent in it all.

Would a DMP be best for me? do they literally take all your spare cash a month and leave you with just enough to "live on" ?
Or can you set the amount etc?
Also what's my credit score going to be like afterwards as I really want a mortgage and my own home once "debt free"

Thanks a lot

Tixy

Hi

If you can meet your minimum payments without having to re-use credit then you will probably find you are not eligible for a DMP.
One a DMP you don't set the amount as such, you and the third party DMP provider work out what you need to live on and pay 'reasonable' living costs and then from that work out how much you can afford to pay to your creditors each month, you can't choose to pay less so you can have more for lots of luxuries etc.

If you did qualify for a DMP then as you would be making less than minimum payments its likely that most or all of your creditors will issue default notices. A default stays on your credit file for 6years from when it is issued. Everyone's DMP is different but you can expect your credit rating to be trashed for at least 6years, some people will have their files affected for much longer (eg if a creditors decides to issue court proceedings etc).

Before you consider a DMP it would be sensile to complete a statement of affairs to see how much you have after mininimum payments etc. http://www.makesenseofcards.com/soacalc.html
Have you tried applying for any new cards to see if you can lower your interest rates at all? If not this might be an option, although as well as your credit rating they will consider your level of debt compared to your income etc.

If you post your Statement of affairs on here people might be able to suggest other ways you can rearrange things/save money etc to get out of debt quicker.

Hovel_lady

Hello and welcome!
I'd second what Tixy says. Post that SoA and we'll be able to help more.
Good luck!

Bored

As you can afford to make your monthly repayments, the best strategy for tackling your debt will probably be to work out a budget and start making overpayments on the card with the highest APR. If you post your SOA then people can make suggestions on how best to free up this extra money. If you don't know where your money is going each month it would be best to start a spending diary and track every penny as things like coffees and lunches at work really add up long term!

how-much_3

Hi Thanks for the in depth response.

I have tried applying for new credit cards and a loan to clear the credit cards, but I'm guessing I have been refused due to the amount of unsecured debt I already have, little frustrating as technically my debt wouldn't be getting any bigger!

I shall post an SoA and see what you guy's think.
I did think I might not be eligible for a DMP simply because I can afford the payments.

allybee101

You might also find this snowball calculator helpful

www.whatsthecost.com/snowball.aspx

You in put all your debts, interest rates, how much you can afford to pay on debts (so Statement of Affairs will help here) and it works out what you should through at each debt per month.
Very helpful bit of computer wizzardry!

how-much_3

That site is brilliant thanks a lot for that. Kick up the !!!! I needed.
If i get paying the minimum payment for one of my cards i'd be nearly 40 before it was paid off!! I'm 26 now!
that is truly frightening!

RAS

Hi

if you post up your SOA, we may be able to help you shift the debt around to reduce your interest and pay it off quicker.

millionaire_in_training

hi and welcome. I love the snowball site. It motivates me no end and it will you too. Put in as much as you can afford to pay each month and you will see what a difference it makes to when you can be debt free. Good luck

how-much_3

Statement of Affairs and Personal Balance Sheet

Monthly Income Details
Monthly income after tax................ 1270
Partners monthly income after tax....... 0
Benefits................................ 0
Other income............................ 0
Total monthly income.................... 1270

Monthly Expense Details
Mortgage................................ 0
Secured/HP loan repayments.............. 106
Rent.................................... 200
Management charge (leasehold property).. 0
Council tax............................. 0
Electricity............................. 0
Gas..................................... 0
Oil..................................... 0
Water rates............................. 0
Telephone (land line)................... 0
Mobile phone............................ 36
TV Licence.............................. 0
Satellite/Cable TV...................... 0
Internet Services....................... 0
Groceries etc. ......................... 0
Clothing................................ 15
Petrol/diesel........................... 100
Road tax................................ 16
Car Insurance........................... 30
Car maintenance (including MOT)......... 20
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........................... 50
Holiday................................. 0
Emergency fund.......................... 0
GYM..................................... 20
Total monthly expenses.................. 593


Assets
Cash.................................... 0
House value (Gross)..................... 0
Shares and bonds........................ 0
Car(s).................................. 3500
Other assets............................ 0
Total Assets............................ 3500


Secured & HP Debts
Description....................Debt......Monthly...APR
Mortgage...................... 0........(0)........0
Hire Purchase (HP) debt ...... 4000.....(106)......11
Total secured & HP debts...... 4000......-.........-

Unsecured Debts
Description....................Debt......Monthly...APR
Barclay CC.....................6990......125.......18.9
Egg CC.........................1990......60........19.9
Halifax CC.....................1490......35........26.4
Northern Rock Loan.............1400......69........9
Egg Loan ......................2200......109.......7.7
Total unsecured debts..........14070.....398.......-


Monthly Budget Summary
Total monthly income.................... 1,270
Expenses (including HP & secured debts). 593
Available for debt repayments........... 677
Monthly UNsecured debt repayments....... 398
Amount left after debt repayments....... 279

Personal Balance Sheet Summary
Total assets (things you own)........... 3,500
Total HP & Secured debt................. -4,000
Total Unsecured debt.................... -14,070
Net Assets.............................. -14,570

Tixy

Do you really have the £279 shows as surplus each month? If not do you know where you have been spending it? If you don't then a spending diary can be a good idea where you write down everything you spend for a couple of months (even little things like a newspaper or lottery ticker or can of pop etc)

Is the £200 rent all inclusive of utilities etc? Do you buy your own groceries/food etc on top of that? only you have nothing budgeted for groceries? You might also want to budget for things like presents & haircuts so that you don't need to put them on credit etc or so that you don't pay off all the surplus on your debts but then not have enough for these types of things.

If you've looked at the snowball site then you'll probably know to target your halifax cc at 26.4% first and pay as much as you possibly can towards that. Another possibly option to consider is whether you could shift some of this to one of the cheaper cards. What are the limits on the barclaycard and egg card? are you able to still spend on them both (or have you closed them to stop your rate being increased at some point).