Payday loan and budject planning help

Gareth_Leeds

This is my first post
I would appreciate some advice about my current situation. Taking Martin’s advice I have contacted cccs and I now have the contract to send back to them. Now in the contract it says take on no further credit. What I have been doing is living on Payday loans with the aim to reduce my loan each month which I have been doing.
I earn after taxes £1070 working 35 hours a week in an office
I have capped my outgoing moving to a rented shared house where all the bill are included with the rent at £400 pcm.
My budget is as follows pcm
Rent 400
Food 130
Travel 52
Insurance 16
Phone 20
Clothing and foot ware 14
I have really cut out everything and cancelled Christmas spending.
My debts
Barclaycard Credit Card £2,661
Barclays Overdraft £200
Capital One Credit Card £1,223
Wonga.com Personal Loan £801

The problem I have is that I have paid the wonga debt in full and on time every time. I then borrow the amount I need to pay rent and food. How can I live with borrowing from wonga and how can I set up the agreement with cccs. I do not want to start out on the wrong foot.

Any help really appreciated.

PS. Feels good to get it off my chest.
£4,885

Tixy

Hi

When you start a DMP with CCCS then you stop paying your creditors, so if you don't pay wonga back then you won't need to take out another loan.

CCCS normally advise on this when setting up a DMP and especially if you have payday loans - have they mentioned to you about opening a new basic bank account?

If someone has payday loans and is going to enter a DMP then they need to open a new bank account with a bank not connected to their current bank, and then have your wages paid into the new account - any move across any essential DDs to the new account. Once you've done that empty all the money from your bank account so that when the payday loan companies try to take funds from your account it will be declined. Then leave CCCS to get in touch with them along with all your other creditors so you can start a DMP.

Have CCCS confirmed that they will run your DMP for you? have you been through your budget with them and your list of debts?

Gareth_Leeds

Thanks Trixy

I have all the forms now to send back and DD certificate. I was just not sure as plan payday loan plan is working and it seems a shame to create a bad debt. I guess it is a bad debt anyway regardless. I get paid on the 27 should I move things now and set up the other bank account. This is something I have wanted to do for some time until now lack the motivation.
I should leave the debt unpaid and set up the agreement with cccs. Open a new bank account and transfer wages into the new account?

mildredalien

Hi Gareth,

as Trixy said the process when you start a DMP is to stop paying your creditors in full and start paying a manageable monthly payment. This will initially lead to defaults etc. as you stop the regular payments but should help you to manage in the long term.

Your budget has you spending £632/month on essentials, leaving about £400/month for paying creditors. However I would suggest putting in some expenditure for things like entertainment and emergencies, otherwise if you agree this level of repayments to your creditors you will be very tight each month. Seeing as you have had to take out payday loans to get by, do you think your budget is realistic? Are there any expenses you think you are underestimating/forgetting? Why did you need an extra £800 last month from Wonga? What did you spend it on?

If you can stick to a very tight budget and pay off around £400/month you could be debt free in a year though which is excellent!

dancingfairy

Hi Gareth. You have 2 choices. Either carry on your plan as before -gradually reducing the payday loans and then start tackling the other debts or a dmp with the CCCS. Obviously there are pros and cons to both options. A dmp with CCCS will mean your credit rating is shot (it's probably not great at the moment though) and creditors don't have to stop interest and charges (although many do - eventually). Obviously carrying on as you are it is possible you will end up paying more in interest etc but your credit rating will not suffer as much.
It really is 50:50.
Whatever you do I suggest a realsitic budget because let's face it a month is one thing but a year or 2 on that budget? You've got to have a bit of slack in the plan.
Best of Luck
df

Gareth_Leeds

Notes taken thank you for your insight, maybe back to the budget plan thinking with more of a long term budget that I can manage year long. I was eagerly aiming to pay off the debt as soon as possible seems like this is not the way. I’m still not sure and I am not too fussed about the credit score, it fact I only got in debt because I was trying to improve my credit which has spiraled out of control.
So I will:
Redo the budget plan in line with a yearly spend habit
Talk to cccs about the payment plan