Getting professional help to beat debt. Diary

Getmeoutofdebt

Debt Diary

1st March 2012

I have been in debt for approx 15 years. I have done debt plan after debt plan, scrimped, budgeted, economised, sold belongings, everything to try and get out of it so far, other than get professional help. It mainly got out of hand about 12 years ago when I moved in with my husband and we realised that a loan he had taken out in the past was one of those scam ones that charge obscene amounts of interest and charge tiny monthly payments so it spirals out of control. He had borrowed £2500 and had paid back £5000 so far! We couldn't figure out why he was still paying it and when we looked into it they told us he still owed £19,000!!! His interest rate was 30% a month and he was paying about a quarter of what the interest charge was as his loan payment . We went to see a financial advisor and he told us we needed to pay the debt off by transferring it elsewhere before it got any bigger. I had a good credit rating whereas his was ruined due to this debt. I transferred the debt to various cards and loans. Then shortly after, we took out a loan to pay for our wedding and not long after that I crashed and wrote off a car that I had on finance. The car cost £10,000 but with the interest my finance was £14,000. The insurance only paid me out about £4000 and out of that I had to buy a new car which cost £2500. I ended up having to get a loan to pay the finance off and by this point, with my other debts I was owing about £32K!
I contacted Baines and Ernst after seeing an advert on tv. I thought it was a good idea to get help, not realising that they charged a fortune and that the money I was paying them wasn't going to my debts at first, instead paying their fees. Suddenly nothing was getting paid even though I was paying money to B&E each month. I was harassed by the people I owed money to and was getting upsetting phone calls while I was at work etc. I cancelled with B&E after about 3 months but by this point I had lost a few hundred pounds and my debts were bigger than ever due to default charges.

Over the years I have plodded on, trying my best to pay the debts, I have switched about taking advantage of 0% deals etc but the switching has left me with a bad credit rating and the fact that I was spending the majority of my wage on debt meant that the only way to cope with unexpected bills that cropped up and things like Christmas etc, was to borrow more.

Now all my 0% deals have ended and I am paying large amounts of interest.

With the lack of wage increases over the past few years and the price hikes, I have started to struggle to buy basic things like prescriptions, food shopping and things like trips to the dentist. I was insisting that my debts came first, but they weren't decreasing fast enough for me to be able to live a bit easier due to the interest.

After recently listing all my debts on an excel spreadsheet and monitoring things like minimum payments and interest charged etc, I have realised that I am probably never going to get out of debt if things stay the way they are.

I considered my options, I have no way of cutting back any more than I am doing now. I'm surviving on so little that I cannot economise any more. I have sold the majority of my belongings including little things like books and clothes etc. I have no home as such. I live in a 20 year old caravan on a farm which is worth nothing as it is falling apart and cannot be moved. To live here I have to work on the farm and cook meals which I pay for, for the farmer. Things are becoming strained here and I really could do with finding somewhere better to live but I can't even afford to rent a flat because I have no spare income. If the farmer wanted us off his land we would be homeless.

I don't want to go bankrupt. I really do want to pay my debts off. I just can't afford the interest and the minimum payments. Last month I paid over £420 in interest. I bring home £1200 and my food, fuel and other household bills come to approx £600. This leaves only about £180 which is actually being paid off my debt which stands at over £27,500. Whereas if I wasn't paying the interest I would be paying approx £600 off my debts.

I realised I needed professional help and went on the national debtline website.
I was diverted to the Moneysteps website where I could sign up, get help, input my debts and bills etc and get a plan and a financial statement.
I was informed that I should be focussing on being able to live and then paying my debts with with the money left over, this is my “Total available for creditors” and this came out at £360.

The options available to me after filling in all the information were;

1; contact all my creditors and ask them to freeze the interest and accept a lower monthly payment, ensuring that my payments were going to pay the actual debt rather than just the interest and giving me a little more money to live off so that I am not struggling to buy essentials.

2; Get a debt management company (Which is basically someone who will do the above on my behalf and then I pay them the £360 I have available and they pass that on to the creditors)

3; Get an IVA (Which seems to be a more legally binding way of doing both the above)

4; Go Bankrupt! (Last resort but it may have to be done if none of the above work!)





2nd March 2012

Phoned the national debtline. Told them I had completed the Moneysteps information and got my Financial statement but I had a few questions about approaching my creditors.
It took me a lot of guts to ring them, even though they are there to help. I was nearly in tears on the phone. I hate admitting to all this debt. I feel like such a failure. I feel more worried and scared of what is going to happen now that I have asked for help than I felt without help!
I am so scared that my creditors are going to start harassing me. I am not sure I am going to be able to cope with it if they do. I am already feeling stressed and depressed and I am finding it hard to sleep at night.
The lady who helped me on the phone was really nice and understanding. I felt ashamed to tell her how much I owed but she didn't seem to think that it was too much and she seemed to think it was a manageable amount to pay off. She talked me through all the options available to me in more detail and took all my details once more and did a separate financial statement. It was a bit frustrating having to go through it all again but I guess I am going to be doing this a lot in the near future.
She explained to me that I may get ccj's (county court judgements) and I probably will get grief and a lot of phone calls off my creditors. She told me that if I make some payment, even if it isn't the minimum payment, I won't get in any major trouble and that whatever they threaten me with they do not have any rights to force me to pay what I can't afford or to take belongings from me.
She is going to send me an information pack through the post. I need to read it carefully and fill in the budget sheets which I then have to send back to them for them to appraise. These budget sheets
will then go to my creditors along with my offer or reduced payment/please stop my interest letter. She says that this will help me to get somewhere as they will see that I am serious about paying my debts and that I am getting professional help .
She also told me I need to open a new “safe” bank account. This means an account that is not held at any bank related to ones where I have debts. It seems that if you owe someone money and are struggling to pay and you bank with them, they have every right to empty your wage out of your account without even informing you! Scary stuff! She recommended the Co-operative bank. I applied online straight away. I now have to wait 5 days for them to do checks on me to see if I can have an account, which doesn't sound very promising. Oh dear!
The advisor told me that whatever happens from now on, I WILL be okay and not to worry. I have a reference number and password so I can call them back any time. If anyone contacts me or threatens me etc I have to ring the helpline again. I didn't feel very reassured though. I came off the phone feeling very scared that things are going to start going very wrong in the next few weeks!




3rd March 2012

I am worrying! It seems like it is going to take quite a few weeks to get this initially sorted in some way. I am guessing that it is going to take at least a month to get the information pack, fill in the forms, send them back, get them authorised, receive them back again and send them off with the letter to my creditors. Also it will probably take a similar length of time to open the bank account and arrange for work to pay my wage in. It will probably be too late to get my March wage paid in which means waiting until the end of April before I can contact my current bank about my debts with them.

I went online to google the contact details for my creditors, ready for my letters to be sent and I found all sorts of blogs about people had done the same as me and been refused help by these companies and then harassed like mad. MBNA have a particularly bad reputation for threatening their customers even hunting them down on the internet to find alternate contact numbers to ring and threaten them on. One woman made the mistake of using her boss's office phone to call mbna and they logged the number and rang it 5 times a day for weeks getting her into a heap of trouble at work. I have a card with them! I'm very scared!

Tahlullah_Bear

Hi, I was so moved by your post that I. decided to stop lurking and join the forum to say hello, good luck and to let you know there are others out here who are interested in what you are going through and want you to succeed.

It takes a lot of guts to ring an organisation and admit you need help. That was the first step. I cannot imagine anything harder.

I will keep reading and wishing you luck on your journey.

TB

Getmeoutofdebt

Thanks Tallulah for your comments. I decided to put my diary on here after unsuccessfully trying to find someone else who had documented what I am going to be going through. I was hoping to find a similar story to what I am trying to achieve so that I knew what to expect after contacting the proffessional helpline. And I figured that maybe I may get some hints and tips on here from other users but also someone may find what I write useful if they are planning to do the same. There is nothing worse than not knowing what to expect. Thanks for your kind comments. Good luck to you too

ikati5

I have recently been in a very similar position myself, not enough money to pay bills etc so debts getting bigger and bigger , I contacted a money advice charity who have contacted all of my creditors on my behalf, if there is interest being accrued they can stop it and they then make payments on your behalf, but they do not take a fee.

After many sleepless nights and reading a lot of information and lurking on the Br forum, I have decided that now is the time for a fresh start and for £750 I can become bankrupt. There is no stigma anymore, there are an awful lot of people in the same boat and if you have no credit rating anyway, which I don't what does it matter. I breathed the biggest sigh of relief when I made the decision. There is light at the end of the tunnel, I can just see it. Good Luck!

Getmeoutofdebt

Thanks ikati5! I am a bit confused about bankruptcy which is why I wanted to avoid it if possible. My hubby doesn't want me to go BR because he says as we are married, he will have to do as well. My friend told me he had gone BR but he still had to pay out any extra cash he got etc for a few years and that he couldn't have any money in his bank because the br people had some kind of say over your accounts and could take extra cash you may accumulate? I'm not sure if any of this is still true. I am going to see how I can get on first before I consider it. But good luck to you and well done for being brave enough to do it! It's mainly fear that has stopped me getting help for so long!

ikati5

Why don't you give the national debtline people a call back, they will talk to you about bankruptcy, things have changed an awful lot recently, you 'can be' discharged in a year now, and I am fairly certain it will not affect your husband, he certainly wouldn't have to go bankrupt aswell. The debtline people have factsheets on it too, they sent me one recently.

I know its not the ideal solution but I would certainly explore it as an option before the final decision is made, you might get a nice surprise.

Getmeoutofdebt

Thanks ikati5. I'll check with them on Monday eve. Thats the first time I can contact them again due to my work hours / their opening hours. They are sending me some factsheets in the post so maybe they will cover it too. The hardest thing for me at the min is knowing what is best to do. I'd rather not go bankrupt if I can help it but then I don't want to go through the whole malarkey of contacting creditors, getting rejected, getting a debtplan, it not working etc, then maybe an IVA (but i hear that the majority of creditors have to accept that for you to get one and i have 5!) and then finally having to go bankrupt because nothing else has worked. I wish I had a crystal ball right now to see how things may work out! I'll quiz the helpline again on Mon. I didn't get all the answers I wanted the other day as I called late on and they were about to close.

Getmeoutofdebt

6th March 2012

Had my phone appointment with “Cashflow” Tonight. Cashflow is a tool used by the National Debtline and Citizens advice etc. You can only use it by invitation from your debt advisor. You log in and input your debts and outgoings and they then set you up a budget and a financial statement. The financial statement also shows how much of your available income is to go to each creditor. I filled it in yesterday after the link came through in an invite from national Debtline by email. I then had to book an appointment for today to go through it with an advisor.
It all went well apart from him querying my landline bill and my car insurance. He thought they were too high! My landline is £25 a month and also covers internet. My car insurance is £62. They are both the cheapest I could get. He said that everything else in my budget is below their guidelines which hopefully will go in my favour.
Now my Cashflow statements have been authorised by the national debtline, I can print off a covering letter and send it with my financial statement to my creditors. Then hopefully (according to the advisor) I can come to an agreement with them all and everything will be sorted, and if I struggle to get there or they charge me more interest than my monthly payment or get aggressive, I just have to ring the debtline back and they will help me. Sounds easy! Hmmm! Not quite! For a start the printer has run out of ink so I can't print anything off! I can't afford to buy any ink! I have attached them to an email which I am going to email to work in the morning from my phone and hopefully I can print it off and delete the e-mail before anyone sees it! The last thing I need is everyone at work being able to read about the state I have got myself in!
The next issue I have is how do you bloody well contact people? I have logged onto all the websites for my credit cards and can only find an address for one! The others you have to phone! I tried Barclaycard first as I had hoped they would be the most approachable due to the fact that they advertise the Moneysteps website which Is where I started off in the first place. The woman I spoke to was Chinese and didn't have a clue what I was telling her. I tried to make it simple “Hello, I am having financial difficulties. I am up to date with my payments but I am struggling to make them. I have got professional debt help and I need to send you a letter explaining my situation. Can you please give me an address to send it to.”
She then told me my balance. I told her I didn't want my balance, I need an address. She told me I didn't need to make a payment as it wasn't due. I told her I didn't want to make a payment I wanted to write to Barclaycard about my financial situation as I couldn't afford to keep up payments. She told me I should get professional debt help. I told her I have got help and they say I need to write to Barclaycard. She said she would have to report me if I couldn't make my payments. I got no address or further help. She just told me I had been reported and that I need to ring another number in 48 hours and speak to the people she had reported me to!
Next was MBNA. I was dreading this one. I have had issues in the past with them being quite nasty and they do have a bad reputation. She surprised me though and was really nice. She gave me a phone number to ring one of their specialist advisors who will try and help me review my account and put a payment plan into place. Only slight problem was that I couldn't ring tonight as they were closed. Fingers crossed they will be nice when I ring them tomorrow.
The only other issue is that I haven't heard a thing from the Co-operative Bank yet about opening my “safe” account. I don't know if that is a bad thing or a good thing. It's been years since I opened a bank account, I thought it was pretty instant but maybe not nowadays! Maybe I'll have to wait a week or two.... I have a funny feeling that this all could take months to get everything in place.....

elantan

GMOOD can i just say thanks for sharing your experience i think alot of people will gain alot from your story


Good luck with it all i hope it gets sorted for you sooner rather than later

Getmeoutofdebt

10th March 2012

My welcome pack and debit card arrived today from The Co-operative bank! Phew! So that's my “safe account” sorted. Now I just need to arrange for my wage to be paid into it and get my direct debits transferred over.

I have been up and down the last few days. I am worried about sending the letters off to my creditors. I got my information pack through the other day from the National Debtline and it all sounds so easy but I am worried that it isn't going to be like that. The info pack says that basically you just have to keep haggling your credit card companies to stop the interest. If you lower your payment, they need to stop the interest or the interest will end up being more than your payment and your debt will increase and you will never pay it off. I have to remind them of this fact if they do not stop the interest. I have to tell them that the payment I am making is a goodwill gesture and that if the high interest means that I am not paying my account off then it is pointless me paying at all. Also an interesting point in the information pack is that these companies lose out by taking you to court. They have to pay court costs and also the court will agree a reduced affordable repayment and they will force the credit card companies to stop the interest.... so in effect the creditors will end up paying the courts to end up doing what you are asking them to do in the first place! So if you look at it like that it seems pretty straightforward. The problem is I am not good at asking / fighting for things. I get confused easily when confronted and I am worried that I may not be able to stand up to these companies if they phone me or send someone to my home. If they contact me in writing it will be much easier as I will have time to think about my reply and even get advice. I am just worried that once my letters have gone out, the phone is going to start ringing a lot!

I keep wondering if I am doing the right thing by going ahead with this. Part of me keeps chickening out but then I realise that if I don't then I will end up broke for the rest of my life while I just pay a ton of interest every month and never pay the debts!

dolly47

Your definitely doing the right thing, this is the worse bit just don't panic. Dont be bullied by the big boys as you can't give them what you don't have.

We went though this a few years ago and it does get better. Once everything is in place you'll sleep easy and life will settle down. It's hard to see it now but you will come thorugh this and a lot wiser too.

The Co-Op is an excellent bank and we have retained the cashminder as our main account even though our credit rating is now excellent and the only debt is the mortgage. Its useful to open a 2nd account for direct debits etc so you know exactly what you have available and try keeping a small notebook so you can track your spending, with drawals etc - it can be a useful tool for reviewing your foodshopping etc.
If you don't have savings open an ISA or join a local credit union and set up a dd/ standing order for a small amount each month it'll soon build up and you have something to fall back on in emergencies.

Good Luck and remember the MSE members are a knowledgeable and friendly lot.