Where do I start?

Buttercups_and_Poison

I want to be debtfree! I am 21k in debt! But where do I start?

Here are my debts:
Debt One: £400
Debt Two: £1200
Debt Three: £3,400
Debt Four: £9,000
Debt Five: £1600
Debt Six: £1100
Debt Seven: £1300
Debt Eight: £1600
Debt Nine: £80
Debt Ten: £575
Debt Eleven: £1,500

I don't want to do a DMP with a company. I am wondering how I could go about sorting this myself.

My last default date was January 2009, my first default date December 2007.

Debt Eight have told me that there is NO room for manuover, I must pay the whole amount.

HELP!

Tixy

Hi and welcome

First step is to work out an income & expenditure to see how much you can afford to debt repayments each month - we use this calculator - http://www.makesenseofcards.com/soacalc.html

If you can post the results on here then people can understand your financial situation better and be able to advise you on your options. People might also be able to suggest ways you can save money/get things cheaper so that you can afford a bit more to your debts each month.

Is there a particular reason you don't want to do a managed DMP? You certainly can do a self-managed DMP but if you do the best way to get creditors to accept it is to make sure you treat all creditors equally in terms of the pro-rata share of the balance they receive each month and to provide them with an income & expenditure so they can see you are offering all you can afford.

Buttercups_and_Poison

I didn't want to do a DMP because it will take years to pay off and it will be on my CR for six years from the start date.
I will do a SoA now.

Tixy

A DMP does not appear on your credit file at all.

On a DMP the thing that appears on your credit file is defaults. And each debt can only have 1 default. Defaults stay for 6years from the date of default. So if all your debts have defaulted already this won't be an issue. If some haven't defaulted then it could be. Though if you can't get your debts up to date then it sounds like you might be issued with defaults anyway.

A DMP might take years to pay off (depending on how much you can afford each month)- but if you cannot afford minimum repayments then it might still be the best option. If you can afford minimum repayments then a DMP wouldn't be suitable but it could take you a long time to pay off your debts and you will be more likely to be paying interest/charges on them.

have you spoken to one of the debt advice charities at all?

Buttercups_and_Poison

Statement of Affairs and Personal Balance Sheet
Household Information
Number of adults in household........... 2
Number of children in household......... 4
Number of cars owned.................... 2
Monthly Income Details
Monthly income after tax................ 1965
Partners monthly income after tax....... 1400.55
Benefits................................ 241
Other income............................ 1020
Total monthly income.................... 4626.55
Monthly Expense Details
Mortgage................................ 0
Secured/HP loan repayments.............. 0
Rent.................................... 800
Management charge (leasehold property).. 0
Council tax............................. 120
Electricity............................. 150
Gas..................................... 0
Oil..................................... 200
Water rates............................. 0
Telephone (land line)................... 28
Mobile phone............................ 0
TV Licence.............................. 0
Satellite/Cable TV...................... 96
Internet Services....................... 0
Groceries etc. ......................... 400
Clothing................................ 100
Petrol/diesel........................... 200
Road tax................................ 0
Car Insurance........................... 100
Car maintenance (including MOT)......... 0
Car parking............................. 0
Other travel............................ 0
Childcare/nursery....................... 1200
Other child related expenses............ 0
Medical (prescriptions, dentist etc).... 0
Pet insurance/vet bills................. 30
Buildings insurance..................... 0
Contents insurance...................... 30
Life assurance ......................... 0
Other insurance......................... 0
Presents (birthday, christmas etc)...... 0
Haircuts................................ 0
Entertainment........................... 200
Holiday................................. 0
Emergency fund.......................... 300
Total monthly expenses.................. 3954

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

No Secured nor Hire Purchase Debts
Unsecured Debts
Description....................Debt......Monthly...APR
One............................400.......0.........0
Two............................1200......0.........0
Three..........................3400......0.........0
Eleven.........................1500......150.......0
Ten............................575.......100.......0
Nine...........................80........0.........0
Eight..........................1600......0.........0
Seven..........................1300......0.........0
Six............................1100......0.........0
Five...........................1600......0.........0
Four...........................9000......0.........0
Total unsecured debts..........21751.....250.......-

Monthly Budget Summary
Total monthly income.................... 4,626.55
Expenses (including HP & secured debts). 3,954
Available for debt repayments........... 672.55
Monthly UNsecured debt repayments....... 250
Amount left after debt repayments....... 422.55
Personal Balance Sheet Summary
Total assets (things you own)........... 0
Total HP & Secured debt................. -0
Total Unsecured debt.................... -21,751
Net Assets.............................. -21,751


I would also add that my OH is just about to start university. She will maintain her income, but she has been offered a student loan, which she has not as of yet accepted, but I have thought about accepting and paying off some debts.

Now I have done the SoA, whats next?

Tixy

Are all your debts with debt collection companies? are you currently paying anything towards the other 9 that don't have minimum payments listed?

If partner starts Uni will she lose all of her income - if so presumably you will need the student loan to pay priority costs rather than debt repayments?

Looking at your SoA

Buttercups_and_Poison wrote: »

Statement of Affairs and Personal Balance Sheet
Household Information
Number of adults in household........... 2
Number of children in household......... 4
Number of cars owned.................... 2
Monthly Income Details
Monthly income after tax................ 1965
Partners monthly income after tax....... 1400.55 will this all stop when she goes to Uni?
Benefits................................ 241
Other income............................ 1020 what is this from?
Total monthly income.................... 4626.55
Monthly Expense Details
Mortgage................................ 0
Secured/HP loan repayments.............. 0
Rent.................................... 800
Management charge (leasehold property).. 0
Council tax............................. 120
Electricity............................. 150 this looks very high, do you have arrears? have you looked to see if you can save by switching? can you try to reduce your usage?
Gas..................................... 0
Oil..................................... 200 this looks really expensive to heat a house - is this every month (or an averaged amount). Have you tried reducing your usage?
Water rates............................. 0 don't you pay this?
Telephone (land line)................... 28
Mobile phone............................ 0 do you not have one at all?
TV Licence.............................. 0 don't you have this?
Satellite/Cable TV...................... 96 can you reduce this to a much cheaper package? (you can get sky, landline & internet combined for less than £50)
Internet Services....................... 0
Groceries etc. ......................... 400 can you try to reduce a bit? I see you have a large family but should be able to save a bit off here - maybe aim for £350 a month?
Clothing................................ 100
Petrol/diesel........................... 200
Road tax................................ 0 need to budget for this
Car Insurance........................... 100
Car maintenance (including MOT)......... 0 need to budget for this
Car parking............................. 0
Other travel............................ 0
Childcare/nursery....................... 1200 how old are kids?how soon until this reduces? can you get some support or a creche or something from the Uni she will attend?
Other child related expenses............ 0 no pocket money or clubs etc at all? if so make sure you budget for it
Medical (prescriptions, dentist etc).... 0 probably need to budget a little here (dentist, eye tests etc)
Pet insurance/vet bills................. 30
Buildings insurance..................... 0
Contents insurance...................... 30
Life assurance ......................... 0
Other insurance......................... 0
Presents (birthday, christmas etc)...... 0 need to budget for this
Haircuts................................ 0 need to budget
Entertainment........................... 200 might need to look to reduce if you want creditors to accept a repayment plan
Holiday................................. 0
Emergency fund.......................... 300 are you saving this? how much saved? if you are not saving it then it is very large as an emergency fund each month.
Total monthly expenses.................. 3954

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

No Secured nor Hire Purchase Debts
Unsecured Debts
Description....................Debt......Monthly...APR
One............................400.......0.........0
Two............................1200......0.........0
Three..........................3400......0.........0
Eleven.........................1500......150.......0
Ten............................575.......100.......0
Nine...........................80........0.........0
Eight..........................1600......0.........0
Seven..........................1300......0.........0
Six............................1100......0.........0
Five...........................1600......0.........0
Four...........................9000......0.........0
Total unsecured debts..........21751.....250.......-

Monthly Budget Summary
Total monthly income.................... 4,626.55
Expenses (including HP & secured debts). 3,954
Available for debt repayments........... 672.55
Monthly UNsecured debt repayments....... 250
Amount left after debt repayments....... 422.55 where is this money going at the moment?
Personal Balance Sheet Summary
Total assets (things you own)........... 0
Total HP & Secured debt................. -0
Total Unsecured debt.................... -21,751
Net Assets.............................. -21,751


I would also add that my OH is just about to start university. She will maintain her income, but she has been offered a student loan, which she has not as of yet accepted, but I have thought about accepting and paying off some debts.

Now I have done the SoA, whats next?

Buttercups_and_Poison

Tixy wrote: »

Are all your debts with debt collection companies? are you currently paying anything towards the other 9 that don't have minimum payments listed?

If partner starts Uni will she lose all of her income - if so presumably you will need the student loan to pay priority costs rather than debt repayments?

Looking at your SoA

My wifes salary will continue whilst she is at uni.

Electricity - it is in arrears

Oil - I live in a farm house, this is costly for heating during the winter so we pay in advance to give us the winter off when the oil is double the cost.

Water - we live off a spring, so water is free

TV - Paid in full

Car maintenance is free, I get a company car and my OH leases hers, so it is all included.

Groceries - To be honest I was very conservative, it probably more like £500

Childcare - To youngest are aged 1 and 5 months hence lots of nappies and formula now, I also buy medicines and vitamins for the month. ( I do shop at sainsburys though...could probably change)

Medical cover - I have this from work for the whole family

Presents - We don't celebrate holidays

Entertainment - We allow £50 a weekend, but we buy annual passes to places so we can have a tight weekend if we ever need too.

Savings - All taken at source into an ISA from my work

Emergency fund is the car leasing for my OH - not practical to put her in an older car as the costs associated and the difference of leasing would not warrant the safety risks.

At the moment the money is being spent on nothing in particular, just disappears!

Debt one I am planning on paying off £100 in August and £100 September.
Debt Ten finishes in November
Debt Eleven finishes in December.

The other debts I have just defaulted and never contacted again! I was going to start with prioritizing the lowest and get rid of them? Is this not the way to do it?

joedenise

You need to prioritse the debts by highest APR first and working down through them. Try using the snowball calculator.

Denise

Buttercups_and_Poison

joedenise wrote: »

You need to prioritse the debts by highest APR first and working down through them. Try using the snowball calculator.

Denise

The interest is frozen on them.

dancingfairy

Hi- a couple of thoughts from me:
1) you need to be a bit more thorough with your SOA as this will show up where some of the money is going - you've said 500 for food so that's 100 of your surplus gone already.
2) tv licence - at some point this will need paying so you might want to put some money aside each month otherwise once it's due you will reach for the cards again and it can be psychologically demoralising seeing the debt rise again (even if it's temporary).
3) a spending diary will highlight any areas of weakness and where that 400 odd pounds a month is disappearing to - if you write everything down (apart from DD's etc) you spend you will see where you are wasting money and where you can cut back without too much problem.
4) In theory you should be able to make pay 672 a month towards your debts - well thats what your SOA is saying - even if you only manage to get hold of some of that surplus you can start to make inroads into your debts.
5) you can hide for 6 years from your debts and only pay some but this could lead to court action and it can be very stressful hiding from debt collectors and bailiffs etc and if they get a judgement in court then I believe they have up to 6 years to try and collect it - you might be better at least paying them something so if it did end up in court you could prove you were treating everyone fairly. Normally people pay the percentage to each debt so if one debt makes up 20% of your total debt you would pay them 20% of your debt reapyment money each month etc. The very, very small ones (1,9 and 10) you could perhaps pay off first before starting on the debt plan proper but I wouldn't want to just ignore the bigger debts for too long.
I can sort of see your logic but I can't see how having 8 defaults is going to look much different to having 11 on your credit file to be honest.
Have you got anything to sell to kick start things - a car boot or ebay clear out perhaps?
Best of Luck
df

Tixy

Your house sounds nice (if costly to heat). No cost for sewerage either? I guess you perhaps have a septic tank.

TV licence - you really need to budget for the next years bill (we recommend to people they include all expenses on the assumption that they can't get any more credit in the future and will be living to a budget.)

Does your wife's car lease cover new tyres and everything?

The disappearing £424, you really need to work out where that is going, perhaps start spending diaries. If you have that spare and can put it all towards your debts then you can certainly tackle your debts.

If your creditors are not chasing you then you could just start paying them off one by one (if you haven't paid anything for a while you might be able to agree full & final settlements with them all). The potential downside is when you start paying one the others then start chasing again (they'll see your credit file update).
The recommended way is to work out the total amount you can afford (say £672) and then split this between your creditors based on the balances. Eg the £9k debt would get the lion's share. This demonstrates you are treating all creditors fairly and if any are still charging interest its your best chance to get this frozen,

Do you know if any of your creditors are still adding on charges & interest to your debts? If they are not then you could certainly start to tackle them one by one. Hopefully you could be free of debt in less than 3years, probably quicker if some will go for full & final settlements or if you can reduce some outgoings a bit.

Do any of your creditors have CCJs?