Massively in debt! Help please?

in2deep_2

Dont consolidate not ever, i have been and still am at around 80-90k in the red in the time ive had my consolidation loan i have paid in 37k and and only paid off 4k of the loan. so if i settled it today i have almost the original amont of around 60k+the 37k i have already paid in.:mad::mad:

Get onto step change NOW and start paying your £1.
Your credit rating will be shot for 6 years after its paid off but its hardly your main priority right now.

Adding it to your mortgage.??....been there done that.

I only wish i was in your position right now with only 25k to pay off, i wasn't much above that when i decided consolidation was a brilliant idea.

Don't end up like me having to sell your house to pay off your debts you still have time to sort it out now.

Just to add a bit more, my mortgage has always been paid and i have never missed or been in trouble with them they are also my main bank account with an overdraft, i just never mentioned my troubles to them and its never been an issue i have always paid everything on time with them and i dont have any credit cards with them either.

Good luck.

Sazzie23

Hi fuzzy head
Welcome to MSE forums.
Don't know if you are coming back on the thread, but remember the what do I do if I don't do the DMP is perhaps the most important. You cannot keep going, and trust us if you consolidate you will likely end up in a worse scenario in a few months/years.

Stepchange isn't for everyone, self managed DMP and pay plan are other options. I am with stepchange and it works for me and I'd highly recommend it, but you need to be certain before you start.

You credit rating will already be heading downhill, you are lucky that the 0% have been available! when they get withdrawn, or if one income gets reduced you will really be in the dudu.

You might think you have been frugal, but join us on DFW forums and you will see how frugal really lives.

Oh and I also pay monthly for my prepaid prescription,and on DD.

You might. Find helpful advice on the DMP mutual support thread, the link is usually on page one or two of DFW forums

Good luck

icontinuetodream

I echo the advice you have already had.....definite no to the consolidation loan and the secured loan.....when I first had a mortgage, I ended up with a huge amount of unsecured debt but a massive income....I consolidated, then increased the mortgage to pay off the consolidation loan, then ran up the credit cards again....fast forward a couple of years, life changes and income drops dramatically....leaving me with massive unsecured debt, unsecured debts which became charges upon my property and a larger second mortgage than first!!

In the past ten years, I have significantly reduced my debt by paying off some of them entirely, having some reduced or removed and steadily paying down the rest at a massively reduced rate but at 0% interest. My mortgage is now close to where it was originally and although I have maintained one credit card throughout this period, I have paid it off in full pretty much every month and haven't increased my debt since I first fell deeply into it.....yes, its a long and sometimes very difficult journey, but I am confident that within the next five years, I will have no debt, not a secured or unsecured one, nor a mortgage :j

I did my own dmp...still am really but I have also dealt with StepChange in a professional capacity and can fully endorse their service..... whatever you decide to do, the most important thing is changing your mind-set.....I don't care about my credit rating - I am never going to get anything on credit again! I have a small but steadily increasing savings pot which I can use for large purchases - all this has taken a long time to get to though and I can understand how scary it is at the moment but sometimes, you just have to bite the bullet and take the plunge....it will only start to get better when you decide to tackle the problem....well done on starting the process, coming on here and good luck for the future!!:T:D:D:T

fuzzyhead1

Hello! Sorry I haven't been back for ages. Just wanted to give an update.

Firstly, I was very concerned about the DMP not allowing for an emergency fund as I find that emergencies ALWAYS come up! In the last year we've had a broken boiler, hoover, car, microwave, etc etc. Some of these can be done without but others REALLY can't! The car for instance is essential and without it my husband would lose his job, we would lose everything and no one would ever get paid anything! I find it a bit ridiculous that allowing for emergencies isn't automatically included in the budgeting for the DMP. It's good though that it's possible to take a payment holiday (as someone said up thread) but I'm still not convinced that this would get the money together quickly enough to fix a car. I think a debt plan which doesn't allow for something as essential as getting to work is pretty useless as that would see us homeless.

Anyway, the main point of my update and also on a more positive note . . . we have a plan!

After my last post we found out that my husband has been on the wrong tax code for A YEAR (which explains quite a lot) and so we have a rebate coming which will be about 2.5/3k. He will then be on the correct tax code and so will be bringing home about £250 extra a month which will make quite a difference. He will then get a pay rise in March and also a bonus. The bonus will be between 3 and 6k after tax. I am also looking for work and hopefully will have something soon. We are sticking to a very tight budget and we be using the lump sums that will be coming in to pay off our one credit card which we get charged interest for first and then the others which are on 0% after that. Hopefully this will get a decent amount paid off this year. In 2015 we have another lump sum of 10k coming our way plus another work bonus. The plan at the moment is to have the majority of it paid off by the end on 2015.

Thank you everyone for all your advice. Perhaps I'll pop back at some point and update on our progress!

fuzzyhead1

loveka wrote: »

We phoned each credit card company and explained the situation. We had 2 cards both froze interest and accepted reduced payments. We had a business overdraft who reduced the interest to 3%.

A DMP isn't legally binding- you don't have to prove any of the figures. There Iis an allowance for smoking for example that you could put down even if you don't smoke! I know you are worried by 'what if' and that's totally understandable, but don't let it get in the way of starting a DMP, either self managed or with Step change. It will be such a relief to you. You could even wait until you have had the MOT before starting it. I would phone Step change and talk to someone if I were you put your concerns to them, you won't be under any obligation to do anything. Good luck.x

That's interesting about pretending you smoke to get some emergency money. Everything else was so tight when I looked at it (300 a month for food for 4 people . . . doable but not fun for years on end! Especially with various food intolerances/illnesses which require a certain diet and a half vegetarian, half not household! . . . Hardly any budget at all for clothes/shoes which when there are children with growing feet? . . . Not allowing the children school dinners meaning their lunches would have had to come out of the 300 food budget as well, despite us having them on school dinners at the advisement of the NHS paediatrician that one of my children was under), that I am surprised that they don't say that smoking isn't essential and so not allow for it! Is it allowed because it's an addiction?

I did phone one of our credit card companies and discuss what we would happen if we couldn't make payment (so far this hasn't happen at all, not even a late payment) and they immediately froze the card and said that they would keep adding interest/would not freeze it or lower it in any circumstances! What lovely people! Luckily this is the card we will be paying off first.

fuzzyhead1

in2deep wrote: »

Dont consolidate not ever, i have been and still am at around 80-90k in the red in the time ive had my consolidation loan i have paid in 37k and and only paid off 4k of the loan. so if i settled it today i have almost the original amont of around 60k+the 37k i have already paid in.:mad::mad:

Get onto step change NOW and start paying your £1.
Your credit rating will be shot for 6 years after its paid off but its hardly your main priority right now.

Adding it to your mortgage.??....been there done that.

I only wish i was in your position right now with only 25k to pay off, i wasn't much above that when i decided consolidation was a brilliant idea.

Don't end up like me having to sell your house to pay off your debts you still have time to sort it out now.

Just to add a bit more, my mortgage has always been paid and i have never missed or been in trouble with them they are also my main bank account with an overdraft, i just never mentioned my troubles to them and its never been an issue i have always paid everything on time with them and i dont have any credit cards with them either.

Good luck.

Thanks so much. You are right that now is the time to deal with it (preferably a few years ago but hindsight eh!), we realised this over Christmas and are taking it very seriously. The shock of realising how bad things were actually made me ill. I've calmed down now that we have a plan!

fuzzyhead1

seanavfc92 wrote: »

Also, maximise your income. Take on part time work somewhere, sell unwanted items, do mystery shopper reports, online surveys, etc etc.

I am working on this. I am looking for work in the area I specialise and am optimistic about getting some soon. I am also looking for any other work I can get.

Can you recommend anywhere in particular to look for mystery shopper/online surveys etc?

I am also looking for perhaps a part time job in a shop or something, but as the pay will be low it needs to not incur childcare costs.

antonic

As someone who last year completed a 90 month DMP with Payplan, all the advice you have been given is accurate.

Your credit file is most probably ruined already, bu your continuing moving around of your debts on your credit cards - when I started my DMP mine was certainly trashed - but as I dont want credit it didnt bother me.

When you start your DMP most creditors will freeze interest, which will make a big difference to your repayments, before I started mine I was paying about £600/mth, afterwards it was about £230/mth.

When I set my original budget and at all future reviews with Payplan (my DMP provider) , I was largely truthful but not 100% truthful, to give me some extra money..

I congratulate you on taking the first steps to becoming DF, you can do it like I have !.

Monkeyballs

Hi,

It all sounds like you're making strides to becoming debt free but one important thing to consider (which I don't think has been mentioned) is to look at the reason for your debts.

You mentioned that several things which would obviously have contributed but please do remember to live within your means because getting a sudden reprieve is like a blast of fresh air making you feel all young and giddy and wanting to start enjoying life again and you know what, you've paid £10k off your £25k of debts so what does it matter if you blow a grand on a holiday...

You get the picture

MB

fuzzyhead1

Monkeyballs wrote: »

Hi,

It all sounds like you're making strides to becoming debt free but one important thing to consider (which I don't think has been mentioned) is to look at the reason for your debts.

You mentioned that several things which would obviously have contributed but please do remember to live within your means because getting a sudden reprieve is like a blast of fresh air making you feel all young and giddy and wanting to start enjoying life again and you know what, you've paid £10k off your £25k of debts so what does it matter if you blow a grand on a holiday...

You get the picture

MB

Yeah i know exactly what you mean! There are all sorts of reasons for our debt, having babies, illnesses, bereavement, depression etc. This has all been such a wake up call i can't imagine ever getting so complacent about it again. My husband i can imagine getting all giddy and wanting to splash out though. I keep having to remind him of just how bad things are. I think because I've been the one looking into the options and getting the advice he's been able to pretend it isn't happening a little bit, despite my explaining it all to him. He can't deal with this stuff very well. Luckily he isn't a big spender anyway and runs it all by me first anyway as i do him. Just need to keep focused!