Feeling Totally Trapped

MattyF

Hi guys,

I have been pointed in your direction from the Credit Cards board - my post is copied below:

I'm hoping someone might be able to offer me some advice.

I have completed the credit file checks and there are no errors on my reports. I have lived at the same address for over 17 years, worked for the same firm for 10 years, and have never missed a single payment on any of my (unfortunately many) accounts.

Been on the Electoral roll for 17 years at the same address, and until today I had zero searches over the last 6 months and 2 over the last 12 months.

My unsecured credit is approx 87% of my yearly salary. I always make payments on time (minimum amounts as this is all I can afford).

I have a high percentage of my credit limit used which I think is one of my major problems.

I have applied for 3 0% transfer cards today - all declined/rejected - AA, Nationwide, Halifax. Barclaycard will get back to me in 5 days time (which I think will be another rejection). I will not be making any additional applications.

I just cannot see any light at the end of the tunnel.

For example - Beneficial Finance card. I pay £137 per month (min payment as all I can afford). This has been paid on time, every month for 6 or 7 years or more. The £137 payment shaves a whopping £11 per month off my balance.

I just can't see any way out.

I don't think the banks are interested because I am a good payer. I pay every single month without fail, and whilst I can just about manage financially each month, I am effectively never going to be able to pay these cards off.

I currently owe about £25,000 to various card companies.

Is there any way out for me?

Any help greatly appreciated. I just feel totally trapped, currently lodging with my Dad and with little hope of ever paying this debt off let alone being in a position to move out.

I feel the need to justify myself to a certain extent re the level of debt, yet I don't want to turn this into some kind of sob story.

I used the credit cards to keep my head above water whilst the CSA practically crippled me each month. To cut a long story short I had a DNA test carried out at the beginning of the year and it was negative.

The child that I had paid for wasn't mine. 11 years of payments, £36,000 and despite 9 months of fighting and £1000 in legal expenses they refuse to refund this money.

I just feel trapped.

Any help greatly appreciated.

DCFC79

Complete and Soa for starters, write to each creditor asking to freeze the interest, also cut the cards up. Post #2 on here has a link for an soa. Also you need to be ruthless with what you can live without.

Tixy

Hi and welcome

Well assuming you are declined by BC as well I would resign yourself to not getting more credit at the moment.

As DCFC says the next step to take is to try completing a statement of affairs (SoA) to see where your money goes each month, and make sure you check what the APRs are on all your current debts.

Any room to manouvre debt between the cards? if the APRs vary, to reduce the debt on your most expensive card.

If you are lodging with Dad hopefully your outgoings are fairly low? Any way to up your income? overtime? a second job perhaps?

If you posted up the statement of affairs on here people might be able to make some suggestions as to how best to manage the debts or how to free up more to make payments each month.

Mort

Hi MattyF,

If you complete the SOA people here will help you look at your income and expenditure and will make suggestions about how you could save money to put towards the debt you have.
You could also look at the articles on snowballing but I suspect that if you are struggling on minimum payments this may not work for you.

Stop spending on the cards if you haven't already, and don't apply for anymore. They really are not your friends.

MattyF

Hi everyone,

Thanks for the replies, much appreciated.

I've completed the SOA and taken as much care over this as possible:

Statement of Affairs and Personal Balance Sheet

Household Information
Number of adults in household........... 1
Number of children in household......... 0
Number of cars owned.................... 1

Monthly Income Details
Monthly income after tax................ 1657
Partners monthly income after tax....... 0
Benefits................................ 0
Other income............................ 0
Total monthly income.................... 1657

Monthly Expense Details
Mortgage................................ 0
Secured/HP loan repayments.............. 0
Rent.................................... 80
Management charge (leasehold property).. 0
Council tax............................. 0
Electricity............................. 0
Gas..................................... 0
Oil..................................... 0
Water rates............................. 0
Telephone (land line)................... 0
Mobile phone............................ 50
TV Licence.............................. 0
Satellite/Cable TV...................... 0
Internet Services....................... 0
Groceries etc. ......................... 200
Clothing................................ 25
Petrol/diesel........................... 100
Road tax................................ 15
Car Insurance........................... 25
Car maintenance (including MOT)......... 35
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)...... 30
Haircuts................................ 20
Entertainment........................... 150
Holiday................................. 0
Emergency fund.......................... 0
Total monthly expenses.................. 730


Assets
Cash.................................... 0
House value (Gross)..................... 0
Shares and bonds........................ 3000
Car(s).................................. 500
Other assets............................ 0
Total Assets............................ 3500

No Secured nor Hire Purchase Debts

Unsecured Debts
Description....................Debt......Monthly...APR
RBS Credit Card................6550......147.......24.1
Beneficial Finance ............6863......137.......24.9
Opus Credit Card...............1950......72........39.8
First Direct Loan..............2189......274.......12.9
HSBC Card......................4800......125.......24.9
Vanquis Card...................1350......54........36
Capital One Card...............2100......84........32
Next Account...................2395......225.......24
Barclaycard....................500.......12........29.9
Bank of Ireland Card...........2900......73........16.6
Total unsecured debts..........31597.....1203......-


Monthly Budget Summary
Total monthly income.................... 1,657
Expenses (including HP & secured debts). 730
Available for debt repayments........... 927
Monthly UNsecured debt repayments....... 1,203
Amount short for making debt repayments. -276

Personal Balance Sheet Summary
Total assets (things you own)........... 3,500
Total HP & Secured debt................. -0
Total Unsecured debt.................... -31,597
Net Assets.............................. -28,097

The shares that are listed as an asset are not available to me until September 2013. They are company shares that are tied up due to tax/NI purposes.

DCFC79

MattyF wrote: »

Statement of Affairs and Personal Balance Sheet

Household Information
Number of adults in household........... 1
Number of children in household......... 0
Number of cars owned.................... 1

Monthly Income Details
Monthly income after tax................ 1657
Partners monthly income after tax....... 0
Benefits................................ 0
Other income............................ 0
Total monthly income.................... 1657

Monthly Expense Details
Mortgage................................ 0
Secured/HP loan repayments.............. 0
Rent.................................... 80
Management charge (leasehold property).. 0
Council tax............................. 0
Electricity............................. 0
Gas..................................... 0
Oil..................................... 0
Water rates............................. 0
Telephone (land line)................... 0
Mobile phone............................ 50 This is high
TV Licence.............................. 0
Satellite/Cable TV...................... 0
Internet Services....................... 0 So no internet
Groceries etc. ......................... 200 Seems high for 1 person, i think £100 is enough
Clothing................................ 25
Petrol/diesel........................... 100
Road tax................................ 15
Car Insurance........................... 25
Car maintenance (including MOT)......... 35
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)...... 30
Haircuts................................ 20 Surely you can cut this down, i get mine cut every 4 or 5 months.
Entertainment........................... 150 Maybe cut this down
Holiday................................. 0
Emergency fund.......................... 0
Total monthly expenses.................. 730


Assets
Cash.................................... 0
House value (Gross)..................... 0
Shares and bonds........................ 3000
Car(s).................................. 500
Other assets............................ 0
Total Assets............................ 3500

No Secured nor Hire Purchase Debts

Unsecured Debts
Description....................Debt......Monthly...APR
RBS Credit Card................6550......147.......24.1
Beneficial Finance ............6863......137.......24.9
Opus Credit Card...............1950......72........39.8
First Direct Loan..............2189......274.......12.9
HSBC Card......................4800......125.......24.9
Vanquis Card...................1350......54........36
Capital One Card...............2100......84........32
Next Account...................2395......225.......24
Barclaycard....................500.......12........29.9
Bank of Ireland Card...........2900......73........16.6
Total unsecured debts..........31597.....1203......-


Monthly Budget Summary
Total monthly income.................... 1,657
Expenses (including HP & secured debts). 730
Available for debt repayments........... 927
Monthly UNsecured debt repayments....... 1,203
Amount short for making debt repayments. -276

Personal Balance Sheet Summary
Total assets (things you own)........... 3,500
Total HP & Secured debt................. -0
Total Unsecured debt.................... -31,597
Net Assets.............................. -28,097

The shares that are listed as an asset are not available to me until September 2013. They are company shares that are tied up due to tax/NI purposes.

Re your phone contract, any chance to reduce it/chage tariff ? If your close to the end of the contract you can either threaten to leave to get a cheaper deal or leave completely and get a pay monthly sim/30 day contract.
Re the no internet do you get free internet as part of your phone contract ?

Tixy

Okay - well there is pretty much no chance of you getting accepted for anymore credit from anywhere, your debts already exceed you annual income by a way.

How have you been managing the £276 shortfall so far? Have you been slipping further into debt each month over the last few months.

You could probably cut back on your outgoings just about enough to cover that shortfall, by halving groceries, mobile and entertainment but would still take a very long time to get the debts repaid, and would then only be doable because of Dad taking so little in living expenses.

You could try limping through until you can sell the shares and put those towards your debts, at that point you should then be able to start making inroads in to the debt, paying more than the minimums.

But I'd also consider speaking to one of the debt advice charities see this link - IMPORTANT - Where to seek professional impartial advice about your debts. to talk through the options with them. A DMP may be an option for you, if you paid £900 a month and most creditors agreed to freeze interest then it would take around 3years to pay off the debt. A DMP does have a major impact on your credit rating through, so take some time to discuss options with a charity before deciding on what is best for you.

MattyF

DCFC79 wrote: »

Re your phone contract, any chance to reduce it/chage tariff ? If your close to the end of the contract you can either threaten to leave to get a cheaper deal or leave completely and get a pay monthly sim/30 day contract.
Re the no internet do you get free internet as part of your phone contract ?

Mobile contract ends in March 2013. I'll have a look at seeing if I can reduce the tariff. I'm currently with Orange. £10 of the monthly charge is for Orange care (insurance).

I have internet access at home via WiFi - which is included in my modest £20 per week rent that I pay to my Dad.

Growurown

I agree with Tixy, you need to discuss your options with a professional organisation such as CCCS or Payplan. Don't use anyone who charges for their services. If a DMP is the route you eventually go down then there is lots of help and advice on the DMP Mutual support thread in this board.

MattyF

Tixy wrote: »

Okay - well there is pretty much no chance of you getting accepted for anymore credit from anywhere, your debts already exceed you annual income by a way.

How have you been managing the £276 shortfall so far? Have you been slipping further into debt each month over the last few months.

This has been a combination of slipping into more debt and making occasional share sales - approx £90 per month of shares become available to me each month as they 'mature'. I believe that there is a 'hardship' clause with the shares that allow early release so I will speak to payroll re this.

You could probably cut back on your outgoings just about enough to cover that shortfall, by halving groceries, mobile and entertainment but would still take a very long time to get the debts repaid, and would then only be doable because of Dad taking so little in living expenses.

You could try limping through until you can sell the shares and put those towards your debts, at that point you should then be able to start making inroads in to the debt, paying more than the minimums.

The 'plan' (as poor as it may sound) was to limp through to September next year. By this point the First Direct loan would be paid off and I could cash the shares in which would then pay off the Next account and Vanquis card - thus 'releasing' £553 per month back into the 'pot'.

Looking at the above figures this would cover the shortfall and give me another £277 per month to pay towards my other debts.

Of course the problem is limping through until the First Direct loan is paid off.

A DMP may be an option for you, if you paid £900 a month and most creditors agreed to freeze interest then it would take around 3years to pay off the debt. A DMP does have a major impact on your credit rating through, so take some time to discuss options with a charity before deciding on what is best for you.

Is there any way to get creditors to freeze interest without a DMP?

Thanks for all of the help.

Tixy

Not really, if they are freezing interest then its a form of debt management, even if its a self-managed DMP.
It wouldn't hurt to phoning up all of the cards and seeing if any will agree to drop the interest by a few %, worth a try (the possible downside is if they refuse they might then try an interest rate hike not long after - though thats not a problem if you are not using the cards as you'll be able to opt out.

If you want to go for the 'limp through' option, I think its doable, but cutting back. The obvious starting places are groceries, which are doable on £100, and entertainment.

Getting overtime or a second job would of course help even if its just for a few months. Something like seeing if anywhere is recruting tempoary staff in the run up to xmas (bars? maybe even shelf stacking at a supermarket).

Worth a read are The Downshift Challenge Tool
(grocery shopping tips)

and Cheap Petrol & Diesel Cut your fuel spend by a third

and Cheap Cinema Tickets / Restaurant Vouchers for cheap entertainment ideas.

Any chance you might have any reclaims that might help? potentially missold PPI on loans? credit card charges you could reclaim?

Is the bank of ireland card maxed? if not you could slow stooze from opus. That is say buy your £100 fuel on bank of ireland, then use the £100 in your current account to pay extra off the opus card.