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endofRadio

Hello everyone, I'm in a bit of a mess, I'd be really grateful for any advice that anyone can give here.

I went self-employed about a year and a half ago, it all started to go really well until some personal problems got the better of me and regrettably everything spiralled out of control for about eight months. My doctor kept trying to sign me off sick before I reminded her each time that I was self employed. In the meantime I'd try and work, mess it up, waste money on materials replacing things end up earning NO money and that's where the financial problems started.

Prior to the self employment I'd been working full time earning about 20k. I had credit cards which I was always reasonably sensible with, I might splurge every now and then but it'd always get paid off quickly or balance transferred to a better deal. I've never been great at saving, although I had previously had a partner who'd sponged off me like no tomorrow. Before I got ill, I had about 2k sitting on 0% deals which was mainly money I had used to fund starting my own business.

When everything started going wrong I found myself buying all my supplies on credit cards and living off what cash I did have going into my account, REALLY stupid, but at the time it didn't feel like I had any choice, coupled with having to move house unexpectedly into a flat that really is more than I can afford, I'm up to my eyes in debt.

I have at present, approximately,

£1000 on a natwest card 18.94% APR
£1300 on a tesco card 18.94% APR
£700 on a mint card at 16.95 APR
about £5k on a barclay card with 22% APR

They're all pretty maxed out, I'm meeting the minimum payments just each month and obviously paying virtually the same again in interest. Obviously ideally I'd love to be able to get a loan and consolidate it all - but being self employed with what is currently a pretty patchy financial record for the last year I can't imagine I stand a chance.

I also owe about £500 in utility bills, a couple which have gone to debt recovery agencies, I keep thinking that I'm going to be able to pay them off next week and it never happens.

If anyone has ANY ideas or advice as to what to do next, I'd love to hear, I'd really like to not be handing over £150+ to the banks every month for absolutely nothing, I appreciate that there's no quick fix for this and whatever happens it's going to take a long while to pay off, but if I could make that while even a little bit shorter then it'd really help.

The good news is I feel mentally better than I ever have, and I'm really loving being self employed. It's still up and down depending on the work I get - I made about £2k last month and yet so far this month it's more like £200, but I feel a world more positive about it and as though it's headed in the right direction - a friend pointed out recently that if I've managed to maintain a half decent reputation after all of this then I must be doing something right. I'm also moving house again in the next few months to share with a lovely man which should almost half my current living costs. I realise many people are probably reading this and gasping at my stupidity and I can't really blame you, but now I'd really like to fix it as best I can or at least get on the right track before the stress of it all gets me back to square one.

Just to add, I've just checked my credit score with credit expert and it's 811, my credit report actually still has me as living at the address I was at over two years ago - although there is some mention of my newer addresses from barclay card and tesco etc. There are no negative entries on it from what I can see, and to my knowledge I haven't missed any credit payments.

StepChange_James

phrygian10 wrote: »

Hi

I've woken up this morning to hear my parents have taken another stupid Wonga loan ..
They actually rely on wonga every month for all the house payments.

I understand the APR / interest rate is 4217%
Every month their debt climbs higher with this payday loan company.

My poor folks have not really shown an inch of money savvy behaviour.
They're not trying to use price comparision sites for better loans.
Due to previous experiences they will never approach a credit card.
And they believe its their only choice, due to a supposed "black" credit rating.

Anyway i've taken it apon myself to help them out.
Im in work, but I cant afford to outright give them the money they need to just get out of debt with the payday lenders.
So I figure ill take out a credit card with as low interest I can possibly find, they can go through me instead of this stupid Wonga site.

I figure they need that money lent to them first to clear this wonga debt, then once more for the fallout, afterwards until they are sorted.

(there genuinely is infact a light at the end of the tunnel soon they just cant keep using Wonga loans.
They have successfully been paying back debt from a business my father used to own, which had been liquidated.
Very soon that will be finished and they'll be around £800 better off, every month.)

Sorry for the long winded story heres the short:

Im 22. Living in the UK.
I have never borrowed money (so thats neutral credit or something?)
I want to get a credit card to help my folks and stop them borrowing from Wonga. And offer them a better interest rate, through me.

Any suggestions?

Hi there,

I'd say that *foolish* has given you some very unfoolish advice. It's great that you want to help your parents but getting yourself into debt in the process isn't a great idea.

If your parents are stuck in a cycle of taking out new payday loans every month to get by then usually the best thing to do is to stop the payments with the payday loan comapanies (more info on how to do this here: http://moneyaware.co.uk/2013/01/payday-loan-debt-help-what-to-do-if-you-cant-afford-the-payment/).

Once the payments are stopped it's usually then possible to negotiate a repayment plan with the companies. We've an online tool that can help calculate this here: http://www.stepchange.org/msehelp. It's called Debt Remedy and it can help your parents plan a realistic monthly budget and advise on the best way to deal with debts.

I don't know enough about their finances to be sure, but it might be a case of negotiating fairly low monthly payments to begin with. Then when the business debt is cleared it should be possible for them to pay back these loans fairly quickly.

I hope this helps.

James

Former_StepChange_Rachel

endofRadio wrote: »

Hello everyone, I'm in a bit of a mess, I'd be really grateful for any advice that anyone can give here.

I went self-employed about a year and a half ago, it all started to go really well until some personal problems got the better of me and regrettably everything spiralled out of control for about eight months. My doctor kept trying to sign me off sick before I reminded her each time that I was self employed. In the meantime I'd try and work, mess it up, waste money on materials replacing things end up earning NO money and that's where the financial problems started.

Prior to the self employment I'd been working full time earning about 20k. I had credit cards which I was always reasonably sensible with, I might splurge every now and then but it'd always get paid off quickly or balance transferred to a better deal. I've never been great at saving, although I had previously had a partner who'd sponged off me like no tomorrow. Before I got ill, I had about 2k sitting on 0% deals which was mainly money I had used to fund starting my own business.

When everything started going wrong I found myself buying all my supplies on credit cards and living off what cash I did have going into my account, REALLY stupid, but at the time it didn't feel like I had any choice, coupled with having to move house unexpectedly into a flat that really is more than I can afford, I'm up to my eyes in debt.

I have at present, approximately,

£1000 on a natwest card 18.94% APR
£1300 on a tesco card 18.94% APR
£700 on a mint card at 16.95 APR
about £5k on a barclay card with 22% APR

They're all pretty maxed out, I'm meeting the minimum payments just each month and obviously paying virtually the same again in interest. Obviously ideally I'd love to be able to get a loan and consolidate it all - but being self employed with what is currently a pretty patchy financial record for the last year I can't imagine I stand a chance.

I also owe about £500 in utility bills, a couple which have gone to debt recovery agencies, I keep thinking that I'm going to be able to pay them off next week and it never happens.

If anyone has ANY ideas or advice as to what to do next, I'd love to hear, I'd really like to not be handing over £150+ to the banks every month for absolutely nothing, I appreciate that there's no quick fix for this and whatever happens it's going to take a long while to pay off, but if I could make that while even a little bit shorter then it'd really help.

The good news is I feel mentally better than I ever have, and I'm really loving being self employed. It's still up and down depending on the work I get - I made about £2k last month and yet so far this month it's more like £200, but I feel a world more positive about it and as though it's headed in the right direction - a friend pointed out recently that if I've managed to maintain a half decent reputation after all of this then I must be doing something right. I'm also moving house again in the next few months to share with a lovely man which should almost half my current living costs. I realise many people are probably reading this and gasping at my stupidity and I can't really blame you, but now I'd really like to fix it as best I can or at least get on the right track before the stress of it all gets me back to square one.

Just to add, I've just checked my credit score with credit expert and it's 811, my credit report actually still has me as living at the address I was at over two years ago - although there is some mention of my newer addresses from barclay card and tesco etc. There are no negative entries on it from what I can see, and to my knowledge I haven't missed any credit payments.

Hi there,

Thank you for posting today. I just want to reassure you that there's something we can do to help you.

The problems that you've described tend to crop up for many self-employed people so you're by no means alone. However it does sound like you would benefit from some fee and confidential debt advice from us.

At StepChange Debt Charity, we can give you long-term debt advice and solutions to get these cards and other debts under control. We would need to take a look at your budget in order to do this as we must make sure you prioritise your living expenses above everything else.

There's two ways we can do this:

You can use our anonymous debt advice tool Debt Remedy that can provide a solution in just 20 minutes: http://www.stepchange.org/msehelp

If you'd prefer to talk to someone, we have a team of advisors who can talk you through your budget and give any advice and support along the way. Please visit our contact page for more information: http://www.stepchange.org/Contactus.aspx

You've taken the first important step towards putting your debts behind you, so please remember that and know we're here to help however we can.

Best of luck to you

Rachel

StepChange_James

andfear wrote: »

Hi

What is the best thing to do? We have a house that we rent out £30,000 tied up in the property but we owe £20,000 on C/C's = we don't take home any extra money from the property in fact it costs us.
my husband is Self employed and we refer to it as his pension.

Would we be better selling and paying off all debt or sitting tight and slowly chipping away at our debt. Most of which is interest free but we spend appox £500 making minimum payments and it doesn't feel like its going down.

Any advice welcome

thanks

Hello,

Thanks for posting. It's very hard to know the best way forward in this sort of situation. Selling the property and clearing the debt would mean you'd not have the debt to worry about and potentially have a bit of money left over if you get a good price.

On the other hand, if the property market were improve after you'd sold then you might regret it. Also the rental market could get better and mean you could charge a higher rent.

I'd suggest sitting down and planning out your finances based on whether you sold or whether you kept the property and see how things look.

Paying the minimums on credit cards can leave you feeling that you're just treading water, so if you've got the ability to make cut backs and pay more off the cards this should mean you start to make more progress. I appreciate that this is much easier said than done though.

You may have already done this, but I'd also recommend not using your credit cards anymore either. Paying down one debt and running up another can lead to a constant cycle that's hard to break out of.

I feel a bit like I've not really answered your question here but I don't think there is a straight forward right and wrong option. It'll be a case of working out what suits you best.

I hope this helps.

Regards

James

forgemaster1234

Hi. I have got a DMP's in place with 4 creditors and owe about 25k in credit card debt. I don't have any other loans but I do have a mortgage. I defaulted on my credit cards because I couldn't keep up the repayments and at present I am only paying tham a few pounds per month. I am dealing with this debt through the CAB. I would be grateful for any advice on how to improve my credit rating whilst trying to deal with my situation. I have looked at the possibility of getting a credit card for bad credit but when I did a soft check, I could only got a 50% chance of acceptance which I feel is to big a risk of rejection.
Any help on this would be much appreciated.

mum2one

forgemaster1234 wrote: »

Hi. I have got a DMP's in place with 4 creditors and owe about 25k in credit card debt. I don't have any other loans but I do have a mortgage. I defaulted on my credit cards because I couldn't keep up the repayments and at present I am only paying tham a few pounds per month. I am dealing with this debt through the CAB. I would be grateful for any advice on how to improve my credit rating whilst trying to deal with my situation. I have looked at the possibility of getting a credit card for bad credit but when I did a soft check, I could only got a 50% chance of acceptance which I feel is to big a risk of rejection.
Any help on this would be much appreciated.

The first thing that jumps out id you already have 4 creditors and you have a DMP in place, if you did go for another credit card, (which would be high interest) then the other creditors found out they would stop the arrangement.

Sorry to sound blunt, but if you can not afford the payments you have at the moment, by taking another card out, ur getting sucked further into the debt cycle. How would you be able to pay that new debt off??

I really think that you should look into a budget planner, (stepchange do a really good one) it may be that you need to look at your incomings and outgoings and that your paying too much out.

Everyones situation is different, but stepchange are there to help, x

StepChange_James

forgemaster1234 wrote: »

Hi. I have got a DMP's in place with 4 creditors and owe about 25k in credit card debt. I don't have any other loans but I do have a mortgage. I defaulted on my credit cards because I couldn't keep up the repayments and at present I am only paying tham a few pounds per month. I am dealing with this debt through the CAB. I would be grateful for any advice on how to improve my credit rating whilst trying to deal with my situation. I have looked at the possibility of getting a credit card for bad credit but when I did a soft check, I could only got a 50% chance of acceptance which I feel is to big a risk of rejection.
Any help on this would be much appreciated.

Hello,

Thanks for posting.

It sounds like you've set up arrangements to make lower payments with the credit cards you currently have. This means that your credit rating will currently show that you've got debts that you aren't currently paying, which means most companies aren't going to fancy lending to you.

I'm dubious about the benefits of using a new card to improve your credit rating in your current situation too, I'm not sure it would be worth the bother. You'll still be accumulating new negative information from your existing debts all the time you're making reduced payments.

Add to that the risk of running up the balance on a new card if temptation/disaster should strike and there's a chance it could make your situation worse.

The most effective way to improve your credit rating is likely to be trying to get your existing debts paid off as quickly as possible. Martin Lewis gives some good tips about improving your credit rating here: http://www.moneysavingexpert.com/loans/credit-rating-credit-score#improve.

But I'd say these tips will be most effective when you're either out of debt or making the full payments on the existing debts you have.

I hope this helps.

James

butlerj1

I don't know where to turn my partner works and last year he had his wages lowerd we have a mortgage which we are in arrears with and a secured loan with arrears the secured loan is with picture it is getting harder to make ends meet and with Christmas coming even more stress ahead we have 4 children who can help

StepChange_James

butlerj1 wrote: »

I don't know where to turn my partner works and last year he had his wages lowerd we have a mortgage which we are in arrears with and a secured loan with arrears the secured loan is with picture it is getting harder to make ends meet and with Christmas coming even more stress ahead we have 4 children who can help

Hello,

Thanks for getting in touch. It can be very stressful to be behind on important bills like mortgages and secured loans but there are things you can do.

If it's affordable then most lenders are willing negotiate arrangements to catch up on arrears where you pay the normal payment plus a bit extra that comes off the arrears.

Sometimes it isn't possible to afford this sort of arrangement but in these circumstances there are other options that you can explore.

Quite often mortgage companies will be more constructive if they know you're getting debt advice, so I'd recommend getting in touch with us. We'll help you plan a budget and see what options you've got available.

You can get advice from StepChange by using our online advice tool, Debt Remedy: http://www.stepchange.org/msehelp or by giving us a call: http://www.stepchange.org/Contactus.aspx.

I'd also recommend having a rummage around these forums for moneysaving tips for Christmas. There's loads of good advice about how to enjoy the festive sesason when money's tight.

All the best.

James

System

baldwin1976_01 wrote: »

Hi

I was wondering whether you could provide some advice on whether an arrangement to pay is better than a CCJ or default and how long it will stay on each of the three credit rating reporters files under my name.

I stupidly took out a pay day loan with Express Finance and was made redundant in May 2013. I am now temping and pay as agreed £16 a month towards the debt, but now they have sent a letter saying if it is not paid in full by the 23rd October they will default me. This I really don't want as my credit rating was improving and I have just found a very good job.

Lending Stream another payday Lender have agreed a repayment plan and there is no default on my file. By the way how long will an AP stay on my file 6 years from the date it started or the account is settled?

If I have an AP but all my other debt is clear will this mean I still have adverse credit and a poor credit rating?

Sorry to bombard you with questions I would just like to get back on track and will never take out a payday loan again.!!!

Many thanks

SBP

Hi,

Sorry for the delay in getting back to you.

An arrangement to pay is a payment, lower than the contractual amount that you’ve agreed with your creditor. A default is something that is registered on your credit file when you miss or are late with a payment and a CCJ is a County Court Judgment – it is registered against you after have made three or more defaulted payments (which results in a default notice).

All three stay on your credit file for 6 years. The CCJ is furthest along the collections process so that it is the most serious. An arrangement to pay is one of the first stages of the collection process so that should be your preferable option.

But Express Finance cannot make you pay more than you can afford – if they did default you on the 23rd October the debt MAY be passed onto a debt collection agency, they cannot make you pay more than you can afford either. Even if it went to a CCJ the court would send you a budget and ask you to pay what you can afford.

So, I recommend you use our online debt help tool Debt Remedy http://www.stepchange.org/msehelp – based on your budget it will recommend the best way to deal with your debts now and how much you should offer. You can then forward the payday lenders your budget so they can see that you can’t afford any more at this time.

An AP, like any credit payment full or otherwise, will stay on your credit file for 6 years. That does not mean it will affect your credit score for 6 years. You’ll probably struggle to get more credit while you’re paying off this debt but your score can improve before the 6 year period.

Here is a great MSE article on how you can repair your credit file when you’ve cleared the debt. http://www.moneysavingexpert.com/loans/credit-rating-credit-score

I hope this helps.

Thanks,
Jess