Getting professional help to beat debt. Diary

Getmeoutofdebt

7th Jan 2012

Ten months in and I have received my first Default Notice. It has come from MBNA and basically asks me to get in touch. It states that I am £731 in arrears due to making reduced payments. I am asked to either pay more per month, pay off the arrears or discuss a reduced financial settlement.
If I don't do anything My debt could be sold or I could go to court.
I don't actually feel too bad about getting it. I'm not really worried.... not yet anyway, I have done plenty of research on here so I kind of knew what to expect.
I have replied to them via secure e-mail. (they said they prefer you to phone but I want printed proof of whats been said so I told them I can't phone due to my working hours) I told them that my circumstances haven't changed and that I can't afford to pay more each month. I have said I may be able to afford more in the future as I pay my debts, told them I want to work with them towards an agreement and want to pay my debt off. I played innocent regarding the reduced financial settlement and asked them to explain what they meant and how much this settlement would be. Chances are theres no way I can afford it but I'm curious to see just what they'd accept. If its a huge amount less then I may be able to beg steal borrow or sell something.... you never know...
So, I have printed off my reply and filed it with their letter and I now have to wait for them to get back to me "within 2 working days".
Fingers crossed.....
My best outcome would be for them to offer a settlement for a really reduced amount and then give me enough time to get it together but that would be a miracle! Chances are I'll get taken to court or the debt will be sold and I'll end up just paying what I'm paying already.
Just waiting now to see what happens

Getmeoutofdebt

9th Jan 2013

Phoned MBNA. They replied to my email the next morning and told me I could make a partial settlement or go on a fixed payment plan but either way I would need to phone to discuss.
The lady I spoke to was really nice. She explained both my options and wasn't pushy in any way.
My account will default on the last day of Feb, so pretty much a year into my payment plan. Until then I can still pay my reduced payments.

If I can get some money together in that time I can make an offer for a partial settlement. If accepted I pay what I have offered and they write the rest off and close the account and will not chase me for any more money but it will be registered on my account that I have made a partial settlement. This will stay on my credit file for 6 years.

I asked what amount roughly they would be looking to me to raise. She told me they look for 80% down to 40% of my current balance depending on my account and how much interest I have paid over the years etc. I owe 3450 and as an example she said a 40% settlement would be 1380. But a manager would have to make that decision and may not accept.

If I get to the end of Feb and I think I can make a settlement but haven't quite got the money together I can get a months extension if I pay the oldest defaulted amount. (the difference between the minimum payment and what I payed for the 1st month of my debt plan which is about £70.)
So.... if I can get some cash together by end of march I could pay it off for a lot less than I owe!!

The other option is a fixed payment plan. Basically I have to re-apply like I did when my debt plan started with a copy of my income / outgoings and they put me on a 5 year plan. However they would charge interest though at a lower rate to what I was originally charged.
I worked this out though and I would end up paying roughly £900 in interest.

So the best option is the partial settlement. And she was keen for me to go down that route too despite them getting nowhere near what I owe them.
Mmmmmm....... Tempting.... but where to get the cash? Yikes!
Then..... also to consider.... I have 3 more cards all due to default but they have not written to me yet.... So if I do manage to raise the cash to pay this off there is no way I will be in a position to make any deals with the others.... hmm! Time to have a think about it all!

Getmeoutofdebt

After discussing with MBNA the options I have now that my account is about to default, I am really keen to go down the Partial settlement route, providing I can get the cash together that is.... But.... I'm a bit paranoid about it all.
The advisor I spoke to on the phone said that should my offer be accepted, the money would be paid off my account, my account would be closed and the remainder of the debt written off. I wanted this in writing so I sent them a secure e-mail via the website asking them to confirm. They replied that my account would be closed and MBNA would not chase me for the remainder of the money.
Then I decided to search the forums on here... better to be prepared and have a bit more knowledge etc.... and although I found a lot of people who had done this and that was the end of the debt.... a couple of people reported that a few months later they were chased by debt collectors (rather than MBNA) for the remainder of the money that they were told would be written off! I replied to MBNA and told them I had heard about this happening and asked them to confirm that "No-one" would chase me for the remainder once the amount was written off / account closed. They replied saying they were confirming that "MBNA will not chase me for the remainder" Hmmm! Notice how they didn't really answer my question. They haven't said that "no-one" will chase me.... Just MBNA. So could they still sell the remainder on to a debt collector a few months down the line? I don't know. I'm really confused. It is going to be a struggle for me to get the money together to pay what the advisor told me would be the lowest amount I can offer but it will mean me saving just short of 2k!! An opportunity I don't want to miss out on if I can. But I don't want to find 6 months down the line that I still owe the 2K after all. Grrr!

artyfartyem

They could sell it on but if its closed and settled on the credit reference agencies I don't think they can. They didn't do it with mine and I only paid 50% of the balance... I know how scary the situation is though.

Hope you're ok x

Getmeoutofdebt

Thanks Em,
I'm probably just winding myself up about it all. I was excited at first that I may be able to settle it but now I'm just driving myself round the bend! I want to settle like yesterday! I don't want to have to wait... get the cash together... go through the motions... Plus I don't want (considering I can settle) MBNA to drop off my financial statement before I have worked out the next step with my other cards. Because then my payments to them will go up and I'd rather use any extra to save towards another settlement if I can rather than paying it off monthly. I know it seems like nothing much but for some reason it all suddenly feels like too much to think about. I think my main issue is not knowing yet what will happen with my other cards. MBNA are the only ones who have contacted me so far regarding defaults/ the next step etc.
I feel like I'm starting my plan all over again!
Anyway apart from that I'm fine! Lol! How are you getting on?
xx

Getmeoutofdebt

Well after a lot of thinking and also e-mailing MBNA for proof in writing that they won't chase me for any remainder if I go with the reduced settlement option (which they confirmed in writing) I have put an offer to them.
I decided to offer just over 40% of my balance, rounding the £1380 minimum offer up to £1400. I have also made this month's payment of £57 so that should go in my favour hopefully.
I don't really have the cash but I have almost paid my overdraft off so decided to re-use my overdraft money and add a little bit of bonus that I got from work this month.
I didn't really want to use the overdraft money but figured that if it means having an overdraft again but saving 2K on my credit card I may as well make the offer.
I sent them a letter and also copied it into an e-mail to them on the 23rd (3 days ago) They e-mailled back saying they would look into my offer and get back to me.
To be honest I doubt they will accept as I have gone in at a low offer but its worth a try and I still have an extra £200 I can add to that if they decide to barter with me.
If they don't accept then I am going to have to let them default me and sell my debt or go on the fixed payment plan and pay £900 interest over 5 years. At least if they don't accept I will have paid my overdraft off instead.
I hope they get back to me quickly. I can't stand waiting!

Getmeoutofdebt

I can't believe it! Only eleven months into my debt plan and MBNA have accepted a reduced settlement offer of £1400 on a balance of £3400!!! Writing off two thousand pounds!!! Oh My God!!!!! The relief and happiness I feel right now is amazing!!! I want to laugh, cry, jump around....... I didn't even need to haggle with them. They accepted my first offer! Phew!!!
I am now on a major mission to sell some more stuff on e-bay and get some more cash together in case I can offer another creditor a similar amount. I am going down the line of buying junk off friends and selling it on ebay and car boot sales as I have run out of my own things to sell. It is working pretty well as quite a few people have stuff they want rid of but can't be bothered. I sell their stuff and give them half of what I make. I am being inundated with stuff to sell!
I'm feeling majorly positive today! Lets hope I don't have a disaster to bring me down from my little debt busting high! (that's what usually happens! Lol)
Good luck to you all in a similar position! I hope my little achievements bring you some hope and some ideas for your own debt busting plans. :j

artyfartyem

Fantastic news!!! Well done xxx

Getmeoutofdebt

Well my DMP is 11 months in now and I just got a letter off Yorkshire bank Visa today asking for another review. I need to fill in a budget planner, tell them what I have paid off in the past 11 months, explain my circumstances and tell them what agreements I have in place with my other creditors.
Apparently it is so they can work out how to deal with my account. This is the third review I have done for them in 11 months now but this one sounds more serious. I replied today and sent them my financial statement etc. Lets see what they come back with.....
It's like starting my debt plan all over again... waiting to see what everyone is going to say to me. Fingers crossed eh?

Getmeoutofdebt

Well, in two days time I will have completed my first year on my self managed DMP! It has flown by! I have had some ups and downs but for most of the time it has been surprisingly easy and I wish I had done it years ago.

I have managed to clear £8900 off my debt (£2k was written off by MBNA the rest I paid) bringing it down to £18999 which is still a long way to go but if I can keep it up I could do it in just over 2 years.

I decided to write this entry to help those starting out. I have searched endlessly on here for people a little further down the line than me to see what lies ahead and what to expect but I struggled to find people in the same situation on a self managed plan. I decided then to share what I have found out / done so that other people looking for help might get some good ideas and also see that its not as scary as you think its going to be when you first start out on a plan.


Things I learned along the way.....
Creditors seem to be more accepting if you are self managed. I tried going through a company years ago and it was a disaster. The creditors have been very good to me now I'm dealing with them myself and National Debtline and their Cashflow programme have been a great back up. The creditors seem to take you more seriously with the back up from Cashflow.
The thing I was most worried of when starting out was being chased, telephoned or taken to court, but so far this has not happened. National Debtline taught me that as long as you are making a reasonable monthly offer and paying on time you will be fine. You can't pay any more than you can afford and the creditors have to pay costs to take you to court and all the court will do is tell them to freeze interest and work out a repayment that you can afford, which is what you are asking them anyway!
Debt collectors are not that scary! They have no rights to come and take anything from you. They buy your debt for next to nothing then try and make some money off it by collecting a bit more than they have bought it for. My friend is a debt collector. He put my mind at ease no end. He says they buy debts of thousands just for a few hundred pounds. Most cases they will accept a settlement offer from you if it covers what they bought the debt for. So if your debt gets sold on to a debt collector it could work out to be a positive thing rather than a negative! So far none of mine have been sold on. MBNA would have been the first to sell but they settled with me themselves instead. Probably for more than they would have sold it for.
Do everything in writing!! Keep everything sent and received in a file! You need proof of everything. Creditors can and will go back on their word. Don't agree to anything over the phone.
Make a spreadsheet showing money paid, interest charged, current balances etc. It helps to keep you motivated and see where you are at.

You have to be determined to succeed. It's hard at first but once you get in the right frame of mind it gets easier. Economise on everything and ask "Do I really need this?" if you get the urge to spend.

Plan ahead! Every Sunday I write out a meal plan for the week ahead and a shopping list. I get recipes from BBC Good Food online, they have some really good ones that are cheap to make. I try and work the week so that I am using the same ingredients more than one day to save on costs. I only look for, and buy , what is on my shopping list. No extras!
Plan ahead for things like Xmas (I save all my £2 coins in a jar) and for family weddings, car tax etc.... whatever may be coming up in the next few months (I put away any left over shopping money in another jar) You may not save enough to cover it but to have some money put aside is a great help.
I ask for basic things I need for xmas / birthdays. If I need new tea towels they go on my "what to ask for at xmas" list. That way you are getting other people to buy it and you know you're not going to end up with a load of rubbish you don't want at xmas.'

Ebay & Surveys. I Ebay everything! I went through the whole house at the start of my debt plan and if I hadn't used it, worn it, appreciated it in the last 6 months it got sold. (I have missed nothing and made lots of cash!) Then I moved on to selling things for friends at a commission. I've had people more than happy to offload their junk on me if it means me splitting the income with them. Even if it looks like junk try it. I have sold rusty keys for a fortune! People want things for all sorts of reasons, they collect odd things, need something for an art project... I've sold things I'd never have dreamed would sell!
I also do online surveys with My Survey and Opinion Outpost. You need to be patient with these and it can get a bit boring but it does add up. I transfer the My Survey credits to my Nectar card and with my points over the year (combined with nectar points from shopping & fuel) I buy my christmas food shop. Opinion outpost lets you transfer money into your paypal account which is handy.

How my creditors have treated me.....
MBNA credit card; Froze interest straight away, accepted my reduced payment bringing my monthly payment down from £119 to £57. After 10 months they warned me I was due to default in 2 months and offered me a reduced settlement offer or a fixed payment plan. I settled for £2k less than what I owed them.

Yorkshire bank Visa; Froze interest and accepted offer of monthly payment reduced from £117 to £83 (I owed a lot more on this visa than the others) They rang me after 3 months asking for an update. I posted them a letter saying I was in the same situation but thanked them for their help and asked for longer. They gave me another 6 months and wrote asking for another update. I posted off another letter & financial statement and offered an extra £3 a month. I got no reply but my latest statement shows they have accepted my new offer as my monthly payment.

Barclaycard; I have two cards with them due to the taking over my Egg card, Reduced interest to 2.5% so I'm paying £9 a month on average and they reduced each monthly payment by about £50 per card. I have had no contact from them at all. I even wrote to them after 10 months when I got the offer from MBNA to see what they planned to do with my account after the first year was up (defaults, selling on to debt collectors etc) and they just said they would get back to me but they didn't and nothing has changed.

My overdrafts and catalogue were smaller debts so I didn't contact them regarding my debt plan. I used them as something I could pay extra off if I wanted, by using Ebay earnings etc. I'd heard that once you are on a debt plan if you pay extra off (particularly Barclaycard) they decide you can afford it after all and put your interest back on. With my catalogue I got commission every time I paid something off so I saved the commission until I could buy something then sold the item I'd bought on Ebay and payed the money back off the catalogue.
I had paid them all off until I got the settlement offer from MBNA and then I had to use my overdraft to pay it. So now I owe on the overdraft again but it saved me £2k so it was worth it.

At the moment I am trying to pay off my overdraft again and then after that I plan to save my ebay money in my paypal account (I don't want it in my bank in case creditors can tell its there) I want to be in a position where I have something to offer if I get any more settlement offers. I doubt I will raise enough but I have to try.

So..... thats my first year in a nutshell. Hopefully anyone reading it may have found something of use in there. Fingers crossed this next year is as easy and successful. Good luck to you all reading this with your own debt busting plans
:j