This is terrifying

longtermplanner

You owe £15,000 in debt. To clear this in 3 years you would have to pay £400 a month to your debts. That isn't going to happen, is it? Not even if you reduce your utility bills and take £100 a month off your groceries. because there are things missing from your SoA - clothes, haircuts, presents, emergency fund. You can't manage your current repayments, that is why you are struggling.

Disability benefits may seem high to people that don't have disabilities! But they are there to cover the extra costs that you have because of the disabilities. It may be harder to shop and get the lowest prices, things may be more expensive, or wear out sooner or get broken more often.

If your only income is from benefits, then you should consider going bankrupt IMO. In bankruptcy people have to make monthly payments for 3 years, but as all your income is from benefits, you won't have to pay anything. The government accepts that if you live on benefits you don't have any spare income for your creditors.

(A DRO would be possible if your debts were less than £15000, but it needs to be clearly less as interest is being added all the time, so £400 from selling the car probably won't cover it.)

The bankruptcy fees are high but you will be able to get help from charities to help cover these, so don't let them put you off.

kerri_gt

Regarding the car you are going to sell, I'd question whether it is worth putting on the new tyres etc vs what you are likely to get for it. I would certainly calculate the costs (parts and labour) to have the work done to it versus what you expect to get if all that is done, and what you could get for it now without doing the work.

Your grocery budget looks high, visit the old style board for ideas on batch cooking and creative use of leftovers etc.

Lastly, your pets insurance seems high, can you get this cheaper?.

poppasmurf_bewdley

Your grocery bill is too high. You should be looking to halve it at the very least.

You have two cars, yet only spend £20 per month on fuel and £10 pm on car maintenance. And £55 pm on car insurance. You both seem to be on benefits, so surely one car will suffice.

£40 on pet insurance is too high when in your situation. This needs removing completely, or drastically pruning. It's nice to have pets but things have to be put into perspective.

£25 is very high just for a landline telephone. You should be looking at £15-£16 rental with no calls. You have free minutes on your mobile, which should also be cut asap. Your internet charge is massive. I'm with TalkTalk and my internet cost less than £4 per month for unlimited broadband. My total phone and internet is less than £20pm - less than half of yours.

For mobile, try GiffGaff. I pay £10 per month for 500 minutes, unlimited texts and 1Gb internet, plus free GG to GG calls.

One final things. If your cars are worth less than £1.5k each, then consider a Debt Relief Order, which is better than bankruptcy or an IVA.
http://www.adviceguide.org.uk/wales/debt_w/debt_help_with_debt_e/debt_debt_relief_orders.htm

Good luck in your efforts. Many of us have been in your situation.

CoffeeAndCake

Thanks for all of the replies.

I didn't want to go down the bankruptcy route because I'm hoping to become an accountant (please don't judge me on the irony!) and I wouldn't be able to if I was bankrupt.

StepChange told me that I couldn't have a DRO because I have more than £50 left each month after bills. I really want to make this work somehow and get rid of my debt once and for all. Will they allow me to pay less if I factor in things like haircuts, emergency fund etc? I thought I had to only include the essentials on the list.

I don't mind taking longer to pay things off if I can actually live in that time!

C&C

1DayAAT

Try Animal Friends for your Pet Insurance. A policy I have for my dog which covers all of the main things with a low excess is £7 a month. Peace of mind for his welfare but not breaking the bank.

Mort

CoffeeAndCake wrote: »

One of my debts is an overdraft that's attached to my current account. Will I have to change my account in order to pay this off (set up a basic account maybe?)

You should do this and make sure that the new account is with a bank who you don't have and debt with

CoffeeAndCake wrote: »

I've spent some time this evening switching gas and electricity suppliers, and internet and phone suppliers in order to save money each month. Will I need to wait until that is completed before I start the DMP?

No you won't. In fact use your old higher numbers, switching may not bring the savings promised (happened to me once) and if it does you will have a little extra to live on. The payments can be put to the lower rate at your first annual review.

CoffeeAndCake wrote: »

've also gone over my mobile usage and I'm on a much higher contract than I need (unlimited everything, I really don't use it). Is it worth trying to switch that too before the DMP, or will it be possible to do it after (I'm locked into contract with O2 with a few months remaining).

Personally I had no problems switching mobile provider or tariff during the course of our DMP

CoffeeAndCake wrote: »

StepChange reckon I can be debt free in 3 years. I really hope I can make this happen, but I'm so scared about the phone calls and letters

Thanks for any help,
C&C

Three years may be ambitious but the important thing is you are addressing the debt. If it takes a little longer don't worry about it. From personal experience the phone calls and letters are a pain but once the various creditors get with the idea that you are working through your debts they should settle down.

7roland8

May be wrong but son paid for Sky when he lived at home. Cancelled when he moved out but I can still watch TV with freeway for nothing. It's not the Sky channels but plenty to be going on with. I get the reception probe as friend lives in a valley and has Sky for that reason too.

CoffeeAndCake

I've taken some small steps today to start off my getting out of debt.

I've redone my budget on the StepChange website, which now predicts that I can be debt free in a bit more than 5 years. This is much longer, but much more doable I think. This gives us as a family much more to live on, as well as being able to put money aside for an emergency fund.

I have drafted letters to send out tomorrow to all of my creditors apart from my current bank (see below) along with a token payment. A few of you have suggested I make token payments for a few months in order to build up money in my new account before I set up my DMP with StepChange. My letter to my creditors basically says that I have taken advice from StepChange, I'm in financial difficulty, I'll be making token payments while I'm figuring out what to do and that I will contact them soon. Does that sound about right?

I've also phoned my bank to cancel the continuous payment authority on the Wonga loan. That was the scariest thing today so far. Do I need to contact Wonga about this? Can I do it by email? Are they likely to chase me before payment is due, and when payment doesn't come, are there going to be a lot of phone calls from them?

I've contacted Co-Op and arranged for an application pack to be sent out for their basic bank account. The advisor said it would arrive in 5-7 working days - do you think this will be ok for me? Will I need to switch banks sooner than that? I'm not being chased by my current bank for repayment of my overdraft and I have no other debt with my current bank apart from that. I will be missing payments with other creditors during this time.

I appreciate all advice I've been given so far, and I can't thank you all enough for helping me to start on this journey. I feel in control for the first time in a long time (even if it is terrifying!)

C&C

longtermplanner

CoffeeAndCake wrote: »

StepChange told me that I couldn't have a DRO because I have more than £50 left each month after bills.

I don't think the person you spoke to at Stepchange was one of their DRO experts then.

[FONT=&quot]The following is a quote from the Insolvency Services Guidance for Intermediaries: http://www.adviceuk.org.uk/wp-content/uploads/2013/06/Intermediary-guidance-v12.doc "In the case of these benefits payable to disabled people for their care, supervision or mobility needs, it is acceptable to record the same amount as expenditure"[/FONT]

ie your DLA and your child's DLA will show as income but you immediately set up an expense line for the same value. I bet when you remove your disability benefits like this you do not have more than £50 spare income each month.

The problem however remains that you are slightly over the £15,000 DRO limit. It may well be that this limit is going to be increased next year, there is a consultation under way about it. In which case starting out with a DMP and planning to change to a DRO next year if the limits change would be a good idea.

longtermplanner

CoffeeAndCake wrote: »

I have drafted letters to send out tomorrow to all of my creditors apart from my current bank (see below) along with a token payment. A few of you have suggested I make token payments for a few months in order to build up money in my new account before I set up my DMP with StepChange. My letter to my creditors basically says that I have taken advice from StepChange, I'm in financial difficulty, I'll be making token payments while I'm figuring out what to do and that I will contact them soon. Does that sound about right?

That sounds good but also ask them to freeze interest and charges during this time.