Struggling with debt? Ask a debt advisor a question

merseyblue76

Thank you Rachel,

After spending all weekend reading (and rereading) lots of information, I have more or less come to the conclusion that an IVA or Bankruptcy is probably the best way forward for me. I'll come across to the site and do the Debt Remedy and see if it comes up with the same.

Thanks again.

StepChange_James

Civic wrote: »

I'm new so apologies if this is in the wrong place. My wife and I have made the first steps and sent in the paperwork to Stepchange to set up a DMP. Total sum owing £56500 our creditors have been informed and this week we start to default on payments, made token payments of £20 to all 6 creditors as interim measure and said we are working with Stepchange. Obviously once DMP agreed will establish a sensible level of payment. Problems are that my potential surplus could drop in October as have been acting up for several years and now being marked down although still required to do same work which will have significant impact on my earnings. Done the important stuff such as changed DDs and bank account and esablishe a budget which we are starting to work to. What can I expect to happen now one creditor has already agreed to freeze interest forv 30 days and await Stepchange contacting them. Others well didn't appear interested at all. Never done this before ie always paid my way but am now worrying about charging orders on mortgage as it seems rules have now changed to make it very easy to obtain. Also OH is worried about doorstep collectors baliffs and being harrassed. While myself I am worried as civil servant and if don't accept DMP could only see bankruptcy as other alternative. This would cost me my job then a whole new can of worms. Any advice gratefully received

Hi Civic,

Thanks for posting. I think Mum2one's reply summed it all up nicely, so apologies if I'm repeating her post a little bit.

I wouldn't worry too much about your creditors' reaction at this stage. Until they've actually received our paperwork with details of your payment offer you can't know how they'll react. Generally speaking, most creditors are willing to accept our offers and freeze interest but there's a chance (like mum2one mentioned) some might not play along.

If any creditors don't co-operate then it's a matter of just sticking to payments anyway. As long as you're paying us, we'll send the money on to your creditors and they'll have to apply it to your accounts. They might use their debt collection tactics to try and get you to pay more but you can ignore that and just stick to the payment.

In October, once you know for sure what your income will drop to, it'll be a matter of giving us a call and explaining the situation. We'll be able to update your budget and give you fresh advice. This might mean continuing the DMP at a lower amount or if another option suit your new situation more then we can advise you on that.

Last year there were some changes in the law that made charging orders a little bit easier for creditors to obtain but they're still relatively rare. The creditor first has to obtain a County Court Judgment (CCJ) and most of them tend not to use the courts to enforce debts.

If you were to get a CCJ then you'd arrange it all through the post and the court will usually set your payment up at something similar to the DMP payment. (You creditors know how the courts work, so this is why they'll tend to not both going to court if they're getting a regular payment via a DMP.)

Bailiffs can only be sent for the types of debt on a DMP if you've had a CCJ, been told what to pay by the courts and not stuck to that arrangement. So it shouldn't get to that stage.

Door step debt collectors can be sent before that stage but they've got about the same level of power as a milkman does when collecting on their round. They can ask for payment but if you say you aren't going to pay them then they will have to go away.

It's hard to say if bankruptcy is worth thinking about or not. If it's likely to mean you'll lose your job then it'd be worth exploring all the other options first.

We'll be able to continuously advise you of alternative options while you're on your DMP, you can call up for a review whenever things change and will give you an honest opinion about what suits you best.

Hope this helps.

James

StepChange_James

kimbroolay wrote: »

Hi,

I currently have a Tesco credit card which is at £1,836 and my 0% balance transfer has ended so im now paying interest. ive tried to get a new balance transfer but for some reason I keep being declined.
I also have £550 left to pay off on a motorbike and £700 to my mum.

Should I get a loan to just clear it all? I cant decide what to do.

I also need a car for my new job, I would include this in the amount of the loan.

I hope someone can advise me on what to do! I started a lower paid job in june last year and ive been struggling ever since.

Hi Kim,

I'd recommend starting out by planning out a detailed income and expenditure budget. It's the best way to take stock of your finances and understand what options will suit you.

You can do this with a pen and paper and writing down all your money in and money out. If you'd like a bit of help, our online advice tool Debt Remedy will guide you through planning a budget: http://www.stepchange.org/msehelp. It'll also recommend what it thinks is your best option going forward.

Once you've got a budget set up you'll know what you need from your money to live off and what's left over to pay towards debts. That should tell you if you'll be able to afford the loans you've been looking at. If you've not enough money in your budget to keep up then give the loan a wide berth.

Even if you can afford the loan payments, we generally advise against consolidating debts. This is because we speak to loads of people who've tried it and found that they got deeper into debt because they needed credit to support themselves.

You mention that you've been declined for 0% credit cards. I'm not sure exactly but it could be related to the drop in income you mentioned, the credit card companies getting stricter on their criteria (0% offers are usually among the strictest) or if you've applied for a few it could be the number of recent searches on your credit file.

Martin's guide to improving your credit score covers all the important stuff to know about giving your credit rating a little bump upwards - http://www.moneysavingexpert.com/loans/credit-rating-credit-score#improve.

If you feel like you're struggling now then I'd suggest being very careful before taking on extra borrowing to pay for a car. You mention that you need it for work, so it might be unavoidable but I'd recommend planning your finances very carefully before taking on any extra commitments.

Hope this helps.

James

MissKG

I just wanted to pop back and say thank you to James for your advice. I have been on to Stepchange today and am in the process of setting up a DMP that (if accepted by the creditors) is going to make things a lot more manageable for me on a day to day basis and, most importantly, leaves me debt free within 3 years and 9 months. To say this is a relief is an understatement - not only is there a light at the end of the tunnel but I will be able to pay for things from money put aside rather than putting them on a card to worry about. The process was dead easy and the advisor I spoke to was lovely and helpful. Life is going to be a lot easier from now on so thank you so much for your help James and for being the catalyst that spurred me on to actually make the change :beer:

meyercorina

Due to having a baby, going back to work part time, buying a house in the last 2 years, my financial situation has gotten desperate. I'm not sure where to turn or what my options are but my situation is this:
My husband's wages cover our mortgage and household bills. Just.
My wages cover childcare costs and my own personal bills like petrol, mobile phone contract, toiletries, etc plus anything my son needs. Unless I have unexpected bills I can just about cover these costs.
I have lots of debt, mostly credit card and pay £200 into debt every month. This just covers minimum payment but with monthly interest it never seems to be going down....
Debt:
£4,500 on MBNA credit card
£5,000 on Natwest credit card
£1,500 overdraft on my Natwest current account
£500 overdraft on joint account

Looks like I will still be paying this debt off into my retirement. :rotfl:

harvey180

Hi,

I've been on a DMP with Stepchange for 4 years and we are managing well.
I have various creditors but only one of these has taken out a CCJ. I'm looking towards life after the DMP and wanted to ask if I was in a position to clear the debt associated to the CCJ before the rest of the debts if that would be a good move in terms of rebuilding our credit record.

I don't want to go near loans / credit cards in the future, just want to be able to renew the mortgage on the best possible deal.

Any advice / thoughts appreciated.

Thanks,

StepChange_James

MissKG wrote: »

I just wanted to pop back and say thank you to James for your advice. I have been on to Stepchange today and am in the process of setting up a DMP that (if accepted by the creditors) is going to make things a lot more manageable for me on a day to day basis and, most importantly, leaves me debt free within 3 years and 9 months. To say this is a relief is an understatement - not only is there a light at the end of the tunnel but I will be able to pay for things from money put aside rather than putting them on a card to worry about. The process was dead easy and the advisor I spoke to was lovely and helpful. Life is going to be a lot easier from now on so thank you so much for your help James and for being the catalyst that spurred me on to actually make the change :beer:

Great news! :T You've brightened up my afternoon.

Though I should point out that it was you that did all the hard work.

StepChange_James

meyercorina wrote: »

Due to having a baby, going back to work part time, buying a house in the last 2 years, my financial situation has gotten desperate. I'm not sure where to turn or what my options are but my situation is this:
My husband's wages cover our mortgage and household bills. Just.
My wages cover childcare costs and my own personal bills like petrol, mobile phone contract, toiletries, etc plus anything my son needs. Unless I have unexpected bills I can just about cover these costs.
I have lots of debt, mostly credit card and pay £200 into debt every month. This just covers minimum payment but with monthly interest it never seems to be going down....
Debt:
£4,500 on MBNA credit card
£5,000 on Natwest credit card
£1,500 overdraft on my Natwest current account
£500 overdraft on joint account

Looks like I will still be paying this debt off into my retirement. :rotfl:

Hello,

It sounds like you're just about managing the payments on your debts but doing this is making it hard to manage day to day costs. I can understand how being trapped in this cycle can make it really hard to see a way to pay off the debts.

There are alternative options and it's worth looking into other ways you can deal with these debts.

I'd strongly recommend getting in touch with us for some advice. The first thing to do is visit our online debt advice service Debt Remedy (http://www.stepchange.org/msehelp) to help you find a solution to your debt problem quickly.

Debt Remedy will assist you in completing a financial statement with information on your household, employment, income, expenditure and debts. From this the service will automatically determine your options.

To help you fill in the form, it’s best to gather together information about:
• Your income
• Your expenditure
• The creditors you owe money to

You’ll receive a downloadable advice booklet providing a tailored solution for you based on your current circumstances and advice on ways you may be able to improve your situation.

Kind regards

James

StepChange_James

harvey180 wrote: »

Hi,

I've been on a DMP with Stepchange for 4 years and we are managing well.
I have various creditors but only one of these has taken out a CCJ. I'm looking towards life after the DMP and wanted to ask if I was in a position to clear the debt associated to the CCJ before the rest of the debts if that would be a good move in terms of rebuilding our credit record.

I don't want to go near loans / credit cards in the future, just want to be able to renew the mortgage on the best possible deal.

Any advice / thoughts appreciated.

Thanks,

Hello,

Your credit file would look better if the CCJ had been repaid rather than having a balance outstanding. Though the record of receiving a CCJ will stay on your file for 6 years from the date of it being entered, whether it's paid off or not.

So mortgage companies you apply to would see you've had a CCJ but if the balance had been repaid at the point you applied then it would probably look better in their eyes.

Once a creditor has a CCJ the payment needs to be treated as a priority, so if you've not spoken to us since getting it please give us a call so we know the payment the court has set and make sure it's treated as an important payment on your DMP.

Kind regards

James

harvey180

Thanks very much James for the reply. Can I check, does the CCJ come off my file 6 years after I receive it or 6 years after I make my last payment.

My concern was that I would have to wait 6 years after my DMP has finished before mortgage lenders would look at me.
By the way, I've let Stepchange know about the CCJ, when I received it.

Thanks,
J

StepChange_James wrote: »

Hello,

Your credit file would look better if the CCJ had been repaid rather than having a balance outstanding. Though the record of receiving a CCJ will stay on your file for 6 years from the date of it being entered, whether it's paid off or not.

So mortgage companies you apply to would see you've had a CCJ but if the balance had been repaid at the point you applied then it would probably look better in their eyes.

Once a creditor has a CCJ the payment needs to be treated as a priority, so if you've not spoken to us since getting it please give us a call so we know the payment the court has set and make sure it's treated as an important payment on your DMP.

Kind regards

James