advice seeked

rdw696509

I need help - It's taken me a long time to realise it and come to terms with it, but i'm now at the stage where i know i have to take action i just need to know i'm doing the right thing and know it's going to work.

I'm 28, £44k in debt and i earn £22k a year!

My SOA is below i've tried to give us much info as i have:

Income:
Salary - £1360 (take home)

Outgoings:
Rent / Board - £300 (I pay this to my girlfriend who's house i live in - this is my contribution towards all the bills including council tax, tv licence, gas, electric, broadband etc)
Food - £150 (This is my contribution to the shopping bills - my gf pays more as we shop for her 7yo son also)
Mobile Phone - £20
Car Insurance - £35
Car Tax - £15
Fuel - £180 (i have a 50mile round trip to work every day)
Servicing - £10-15 (estimated)
Clothes/Shoes etc - £10-15 (estimated)
Going out - £100 (approx)

Debts
Lloyds Loan - balance - £26634 APR 9.9%, term - 84 months, 69 months remaining (£508 monthly repayment)
Lloyds Overdraft - £1350 (Limit £1350)
Egg CC- £2610 (limit £2780) 16.9% APR (min payment approx £60)
MBNA CC - £8466 (limit £8200) APR Unknown (min payment approx £230)
Mint CC - £5631 (limit £9450) APR Unknown (min payment approx £130)
Total Debt - £44691

I've been on the CCCS website and they recommend a DMP, this scares me somewhat as i'm worried about handing financial control to someone and then to have people still chasing me for money as that's what sounds like will happen - i've also read i could effectively do the same myself - should i try this first writing to everyone trying to get them to cancel intrest payments etc? Also most of my debt is with lloyds where my bank account is held - CCCS recommend setting up a new account for my salary - if i am able to do this, do i just go ahead and do it and leave lloyds with my loan and overdraft outstanding? also i can't see that another bank will want me?
I'm also aware that my debt is pretty high compared to my salary - i am scared sh!tless of the thought of Bankruptcy, i don't know if this is a solution for me or a very very very last option.
I am actively looking for a new job to increase my income, i have also looked at an option of Voluntary redundency at my current job which could give me approx £6k which i would hope to plough into my debts as long as can get a job to walk straight into - i will get about 3 months notice if i get the VR and think that should be enough time to find something.

One positive i have is i have a very supportive Girlfriend who is fully aware of the level of my problem, i know i probably don't cover my half of all the bills, but she is happy with my contribution.

If anyone can give me some advice or guidance on where to go next or some encouraging words to take the plunge going with a DMP please do - I'm just scared of what happens next so looking for some encouragement.

Thanks for reading my story,

R

WhyWasISoStupid

Just read your post, I'm 28 too with £34K of debt in a similar fashion to yours. I've recently had a pay rise which has helped, but doesn't detract from the fact that it seems a lot of debt to shift. I posted on this forum this evening for the first time, and I was suprised at the amount of response I had (see thread "can anyone offer me a strategy?) in the forum.

Don't be discouraged if you don't get much response this evening, it might be a bit late (I posted at 7pm and got lucky).

But what stands out is that your missus knows the score, and is supportive to you, which I would give anything for. I can't bring myself to tell any girls I meet about my financial affairs, so I remain single.

Good luck and all the best.

J

red74

R - WWISS is right, I'm sure by tomorrow loads of people will have relplied with lots of helpful, practical advise.

WWISS - If a girl is put off by your debt, then she isn't worth your time! Although sometimes the direct approach can get things out in the open, the night I met my boyfriend he announced he suffered from depression - not the best chatup line you would think but 4 yrs on and we're still together. The right girl will understand and support you in getting your debts sorted.

Best of luck to you both.

poppy10_2

OK, just while we are waiting for the regulars to arrive, I'll just summarize things a bit:

Income
£1360/month

Outgoings
£645 living expenses + £928 debt servicing= £1573

Net at end of each month=-£213

There doesn't seem to be much room to manoeuvre here, as your rent/bills are already very low and you don't have many extraneous expenses other than the going out of £100.

An IVA/bankruptcy may be a realistic option, because currently even the minimum repayments are tipping you further into the red each month.

Make sure you bump this thread in the morning, more knowledgeable people than me will be around to help you out. Good luck

chevalier

Whilst I can see that you are contributing to the household, that doesn't mean that you can't make savings. All of the utilities and insurances you can check if your gf is getting the best deal, because if her costs go down so do yours. So it will save you both money.

Once you have checked you are getting the best deals, then you need to have another look.
chev

RAS

Hi

Just to say that an IVA may not be an option as you may not have enough extra each month to pay into it. Also, if that fails, you need to be aware that it means that your IVA provider can make you BK. if you do consider this, you must arrange it via a debt charity as there are too many people on here who have discovered two years into a IVA that not one penny of their payments has gone to their creditors. It has all gone to pay their IVA providers fees.

You need to be aware that if you go Bk, you will only be allowed to pay your portion of the household expenses and that £450 may be considered high for this. You will have to justify every single element in the £300. You certainly will not get £100 for going out. Irrespective of what option you chose you need to cut that out now and start paying it towards your debts.

A DMP, managed by a charity or self managed, would work, as you have money to put towards your debt after you pay for essentials but first we need to see the APRs on those cards so that we can see if any shuffling would help you get the discrepancy between your income and expenditure.

As you indicate, you need to get your travel costs down, so try for work closer to home. Can you lift share, take the train, anything that would cut you travel costs in the short term? Cut all non essential journeys out completely.

Can you get a part-time job to boost your income in the next few months?

I would suggest that you go over to the BK forum and ask their advice on what sort of expenses would be allowed if you took that option (and if you are consdiering an IVA, you need to take that possibility into consideration.

Are you paying for the OD? If so could you switch to the free OD with Alliance and Leicester? You have to be in credit for a few days each month.

You need to talk to one of the debt charities once you have got more information.

CCCS_Emily

Hello,

I am a debt counsellor with the CCCS; hopefully I can provide a few answers…

‘I've been on the CCCS website and they recommend a DMP, this scares me somewhat as I’m worried about handing financial control to someone and then to have people still chasing me for money as that's what sounds like will happen’
With a DMP you are still in control of your finances, we just deal with the payments to your creditors on your behalf. It is an informal agreement you have with us, it’s not legally binding like an IVA or bankruptcy. Yes, your creditors can still contact you but things tend to settle down once they start receiving the monthly payments. You need to remember that your creditors cannot have what you haven’t got.

‘i've also read i could effectively do the same myself - should i try this first writing to everyone trying to get them to cancel intrest payments etc?’
You can make reduced payments yourself. You would need to provide your creditors with a SOA and make sure that the surplus you have is divided equally amongst them on a Pro Rata basis. You can ask them to stop interest and charges but unfortunately it is up to them.

‘Also most of my debt is with lloyds where my bank account is held - CCCS recommend setting up a new account for my salary - if i am able to do this, do i just go ahead and do it and leave lloyds with my loan and overdraft outstanding? also i can't see that another bank will want me?’
If you have debts with your bank you need to move away asap. While you are still with them and making reduced payments to your debts they can just go into your account and take any money going in towards your debts. You would just leave your account with them dormant and start paying the over draft and loan off like the other debts. Changing banks puts you back in control of where your money goes. Also it will get you out of living in your overdraft. Everyone is entitled to have a basic bank account. You are not asking them for any credit facility; however it may take a bit of shopping around. Have a look at www.fsa.gov.uk

‘I am actively looking for a new job to increase my income, i have also looked at an option of Voluntary redundency at my current job which could give me approx £6k which i would hope to plough into my debts as long as can get a job to walk straight into - i will get about 3 months notice if i get the VR and think that should be enough time to find something.’
If you decided to go for the VR then you could use the £6k to negotiate full and final settlements with some of your smaller debts. This is where you write to your creditors and ask them for a settlement figure you then negotiate with them to try and get that amount down as far as you can. Always do this in writing and keep a paper trail, and do not pay anything to them until you have it in writing that they will take this as settlement and not pursue you for the debt in any other way.

Debt Remedy looks at your situation and suggests the solutions that are appropriate, so if bankruptcy and IVA was not mentioned then it did not see them as options. However if you are concerned and want to discuss your situation in a bit more depth you may want to give us a call www.cccs.co.uk

Hope that helps you out.

rdw696509

Thanks for everyone's comments so far - i've started a spending diary and hope to get a more realist SOA as i want to make sure i'm not over or underestimating my spending figs. I spoke to MBNA today - they've just told me i'm paying 27.9% APR!!! I don't think this can be correct can it? it was never that high when i took the card out as i wouldn't have gone anywhere near it. The good news is they recommended i speak to CCCS which i thought they would try to avoid me doing!

red74

Good news that MBNA are being constructive. And yes the APR could easily have increased from when you took the card out. I'm just lucky that the only card I have any debt on is 4.95% LOB, all the rest have risen recently due to the BoE interest rate rises I would imagine.

Robflh

Hi rdw696509

Unfortunately, there would seem to be no way of reducing you budget enough for you to be able to pay for everything each month.

Excluding going out, I make it that you are spending £696 per month and that will leave you with £665 for paying your debts.

A new loan for £45,000 over 84 months would have payments of around £680 per month. That is close but it may not be close enough.

A DMP, as I understand it, means paying all the money back at a reduced amount. I am sure someone will correct me if I have got that wrong.

An IVA would possible allow you to keep you £100 spending money each month and using an example of someone I know that has an IVA. They will have 55% of their debt written off.

So £44,691.00 minus 55% = £20,110.95.
£20,110.95 divided by 60 monthly payments = £335.20 per month. However, with the amount of money you have left each month you may only get a 30% reduction.

Lloyds have more then 25% of your debt and if they reject an IVA it will fail. I may have got the percentage wrong but they can stop an IVA.

Personally, I would go with an IVA. Sorry I cannot be any more helpful.