Finally Waking Up

AlexDF

So since the new year started, I've decided I need to tackle debt problems I've built up over the past few years.

I'd rather not have judgement, because I know I've made mistakes.

I got into difficulty about 5 years ago (2007) when I was a student and stupidly took all the banks and credit card companies up on their offers of credit cards and overdrafts. I then left university, and without a job couldn't pay anything back.

Rather than deal with it, I stuck my head in the sand and just refused to acknowledge the debts.

In 2011, I made the same mistake again, and somehow was given credit by several companies, but then got into the old trap of not paying, and then I had to find the money for a deposit and payday loans became involved.

I then moved and just haven't paid the money back (Wonga were getting interest from me on increasing loans over 12 months though, so I didn't take it out with the intention of not paying it) - the companies know where I live now, but I just ignore the letters and phone calls.

I've always been bad with money - I've started by acknowledging the council tax as they've been sending bailiffs round for about 6 months that I've been ignoring.

We've agreed a payment plan for my arrears (£2,500 - how could I have let it get to that stage!). Not all of the debt is mine, some is from former housemates (I reckon about £800) but they chase me, and I know I'm liable in full for it. This is now being paid off, and with overpayments I'm hoping to have it cleared in 6 months.

I've taken a look at my credit report today (and I haven't in months) and this is what it shows :eek:

Total Debt: £12,995 spread across 14 creditors and 23 defaults. The highest is for £1,614 and the lowest is for £52 (although I think this may be more - it's a defaulted orange contract which had about 12 months left to run).

The only things on there which look good are my two current accounts with my bank (no overdraft on either)

So my question is, what is the best thing to do.

I'm trying to make extra income, and I think I can probably make around £1,000 extra over the next 6 months. I'm also due a bonus in June of probably about £700.

At the moment, I have about £50 free in disposable income, due to the council tax repayments I'm making.

The logical (but not necessarily moral) thing to do is to pay off the defaults one by one, starting with the newest ones first (because the older ones will start dropping off from next year and become statute barred). Obviously if they take me to court then I'd be looking to get the accounts settled to avoid a CCJ.

The alternative, I fear, is a DMP - paying each creditor off at the same time. My worry with this approach is that I've seen people suggest offering full and final settlements, but if I'm on a DMP I'm not going to be able to save the money to do this.

Any advice greatfully received on how you would start to tackle this issue. I would just like a fresh start and to not have to worry about credit checks for virgin media (passed by the way) and be able to get a contract mobile at some point in the future (and possibly a mortgage, but I don't expect that for many years)

Apologies for the very lengthy post

chevalier

First of all welcome to the boards.
Can I suggest that a SOA (statement of affairs) is a good place to start?

http://www.stoozing.com/msoc/soacalc.php

You can then format it for MSE, and some cut backs might jump out at you.

Ref the debts, I am unsure how to advise you. Well done on finally sorting out the council tax. As for the other debts, I am wondering that if you pay the newer defaults off, it may well let the older (ie the ones that are about to fall off the file) debts know where you are.

Someone will be along who knows the ins and outs better than me.

Good luck with your journey
chev

AlexDF

I have no intention of hiding from the debts - my bank (Lloyds) have my address, as do Moorcroft, Robinson Way and Lowells. My credit report shows all my addresses as well.

I've just gone through a stack of envelopes and it seems it's mainly Lowells writing to me, over 7 of the debts. I've had a few other letters, but the rest haven't actively been contacting me (which seems odd).

I'll get a SOA posted shortly...

datlex

Hi Alex,
Most people here have been in same boat as you to one degree or another, so I believe the only type of judgement you'll see is positive. In other words people will judge as great the fact you are fighting the debt monster.

As far as tackling them is concerned.

Obviously once your SOA is posted people will be able to see your income and non debt expenses, you then obviously know what you have left. SOAs do have limitations - for example they tell you what you spend on food - but you don't detail it into a shopping list.

My first suggestion is look at each of the items you include on the SOA and analysis them minutely. For example your food shopping - try brand shifting (unless you buy all cheapest already) you may find you like the cheaper brands better. I personally shop online for my groceries (it saves time and you can even order from work during a lunch break -assuming you are permitted to access the internet), but even if you don't you can still use it to produce a shopping list.

My second suggestion is that you separate out your money - one account for bills including debt payments, one for other spending including food and clothes and one for saving (which might at this point include saving to pay off a debt).

My third suggestion is that you sit down and work out as far as possible your known finances for the rest of the year using a spread sheet. I would then use this information to set up a standing order to cover your bills each time you know you are getting paid. Do not budget for unknown income at this time.

My final suggestion is for unexpected/ uncertain income. Put this into the savings fund. It will get eaten up by the other accounts if you leave it in there.

If you can sit down with your bank - most are quite friendly and you may even get a free cuppa out of it. The bottom line is for them, a paying customer makes them money, so they may wish to keep your business longer term.

Good luck with getting started.