Scary realisation - Advice Needed

cennor

Hi everybody

After being an ostrich for years and burying my head in the sand, it finally dawned on me last week that I am deeply in the brown stuff.
I checked my bank account and found that I was about to miss my rent which is really unthinkable.
I do earn on paper a very good salary, but I work in sales and although my commission is again very good, it is only on paper and cant be guaranteed.
I added up all of my unsecured debt and it is in the region of £40k.
My minimum I need to earn each month (including a large child support) is in the region of £5k which is ok if I earn commission but if I dont then I am about £1k short. My job is new with very long sales cycles which means that I havent earnt a great commission for the last 4-5 months and I have now maxed out 2 overdrafts and a couple of credit cards. Even with the commission, it would take a very long time to get back onto an even keel - but as I say, thats not guaranteed - I am literally running on fumes trying to pay existing debts and to get by.
I have cut back on just about everything I can think of - have even given up smoking now - about time, but cant see the situation getting any better anytime soon.
I have read about DMPs and wondered if that might be the best course of action?
I do have some questions if someone could answer them for me:

1. I understand that it does affect credit ratings, but any idea how long for once it is paid off?
2. If I do get a good commission, can I pay lump sums into it to pay it off earlier?
3. Do all of my lines of credit get stopped once I enter into one?
4. What other consequences do I need to consider if I were to take one?

Thanks very much in advance for any advice - I really appreciate it

Tixy

Hi

1. Varies depending on how creditors mark your credit file. Could in theory be up to a maximum of 6years from when the debts are repaid, but usually is conisderably less, about 7years from when you start a DMP is probably typical.

2. Yes (the DMP provider should be able to advise on how they deal with commissions/DMP repayments)

3. Yes - all debts must be included and you agree not to take out any more credit whilst on the DMP or use any previously unused credit.

4. Some possibilities you may not have considered
-If you have any financial associates their credit files will be affected as well.
-If you have a mortgage and need to move house/ mortgage during the DMP this could be affected.
-It is possible (but rare) that you could still end up with creditors taking you to court to try to obtain CCJs.

Your outgoings sound very high - you may want to consider posting a statement of affairs on here for people to see if they can make suggestions you haven't thought of for reducing your outgoings.

If you are considering a DMP then make sure you use one of the charity/free providers not a commercial company that charges you fees. Once you have spoken to them they should be able to advise whether a DMP is a suitable option for you, and what other alternatives there may be.

cennor

Here is a breakdown of my minimum monthly outgoings.
Child maintainence will reduce in new year as ex getting remarried.
Monthly income without commission is c £4,200 - any ideas would be great

Rent 1450 House Ins 35 Car Ins 34 Lloyds t/fer 50 Tesco CC 100 Barclaycard 300 o2 35 Virgin 40 1st Direct t/fer 470 Mint cc 35 Car 340 child mainten 1500 Fuel 100 Train 350 Food 200 5039

cennor

Rent 1450
House Ins 35
Car Ins 34
Lloyds t/fer 50
Tesco CC 100
Barclaycard 300
o2 35
Virgin 40
1st Direct t/fer 470
Mint cc 35
Car 340
child mainten 1500
Fuel 100
Train 350
Food 200
£total £5039

quidsy

Your rent is the biggie, do you live alone? It may be advisable to look to downsize into a house share for a year or 2 which would release up to 1k a month which could go towards debt. Appriciate you may need a solo place due to looking after your child but 1450 per month paying alone is mammouth. Any option to get a lodger or a mate to rent a room from you?

elsien

You need to do a fuller SOA to get a clearer picture of what's going on and where your money is really going.
Off the top of my head you don't have things like council tax, clothes, entertainment, tv licence, etc on there. There's a link at the top of the page somewhere

Tixy

I would suggest completing a statement of affairs using on of the online calculators - we suggest this one, http://www.stoozing.com/calculator/soa.php

It will ensure you remember to budget for items that don't happen every month (such as car tax, car maintenance, presents, clothes etc) as well as monthly direct debits and will prioritise your payments putting living costs before debt repayments.

Is your rent all inclusive of council tax, utility bills, tv licence etc?
Are the debt repayments you have listed all the minimum monthly payments?

Is your child maintenance set by the court or agreed personally with your ex?

cennor

Hi

The bits like council tax, tv lic etc are covered in the 1st direct transfer as they come out of a different account.
My rent sadly is a consequence of living in Surrey - you dont get much for your money thats for sure and that is just the cost for the rent - all bills etc are still to come on top.
I do pay the min on all cards at the moment - getting killed with interest.
The child maintenance is agreed between me and the ex - it should be about half but I cant do anything there until after she remarries later this year

SerialRenter

Can you give us some more details about your rental?

Are you within a fixed term or has it gone onto a rolling monthly?

I too live in surrey and realise it's expensive, I have a nice 1 bed flat but i'm only paying half of what you are, so i think there's some room to save there.

cennor

Hi
It is on a term until Dec when I can effectively leave it if I want.
I do have shared custody of the kids so would need at least a 3 bed place which makes it so much more difficult to find somewhere a) a whole lot cheaper and b) nice and safe for the kids.
It is probably a bit bigger than I do need if I am to be 100% honest, the concern is, in my current situation how will I get another deposit together and if I take a DMP - how difficult would that make it to get another lease?

SerialRenter

Unless you defaulted on a payment you shouldn't have a problem with passing a check at a letting agents. Although i would suggest you look at going direct to a landlord to cut out the middleman and save on the ridiculous fee's they like to charge!

If your current contract doesn't have a break clause then hopefully other's money saving insights may be able to help to save a deposit for a new place by December.

Would a 2 bed be suitable? Would your kids be able to share a room when they came round? Or one in a pull out bed in the living room perhaps, dependant on how often they're over.
I do realise it seems mean to reduce to the standards they've been used to, but this is obviously a huge expense for you.