Desperate times, I see no way out of debt

Time_to_face_the_music

ThreetwentySeven wrote: »

I am fine dealing with creditors myself.

I am with Natwest and have a £2000 overdraft

OK you have debt with Natwest, so first action is that you need a new current bank account. It must be with a bank/building society that has no debt connected, if they offer you an overdraft facility, the answer is a firm no! I would recommend the Co-op but there are others available. If your credit rating allows it, you may even be able to get an account that offers you a financial incentive for joining, the Co-op give you money and also donate to a charity of your choice but there are other options out there.

Do not set up your new account with automatic transfer of direct debits etc, you will need to do this yourself. Obviously you will need new bank details to give your employer for payroll so get it set up as quickly as possible.

Step 2: You can do this now, you don't have to wait for new account to open - cancel all debt payment direct debits and continuous payment authorities (CPAs) going out of your current account. Your bank may tell you they can't cancel CPAs, they can and they must do it. Cancelling these is the only protection you have from pay day loan companies taking money from your account so it has to be done.

Step 3: Write to all of your non-secured debt creditors, except Natwest - you will do this later after new bank account is set up and safe. You are telling them that you need to reduce your payments, you don't ask them, you tell them. Use a letter like this:

You

Them

Date

Dear Sir/Madam

I am writing to inform you that I am currently seeking advice and assistance regarding my current financial difficulties.

I am working with the Citizens Advice Bureau to set up a Debt Management Plan (DMP). We will send you an offer of payment along with a copy of my budget and list of creditors.

I am unable to meet my normal monthly payments, would you please accept a token payment of £1 per month until we contact you with my DMP details. I would appreciate if you could hold any action on the above account until this time.

I would ask that you please consider stopping or reducing interest and any other charges on my account to help me during my financial difficulties and to avoid increasing my debts any further.

I would please note all future communication should be in writing only.

I thank you in anticipation of your assistance and co-operation whilst I am going through this difficult time, and assure you that I am doing everything I can to resolve my current financial situation in a responsible and sustainable manner.

Yours faithfully

You

Time_to_face_the_music

Next step: Check out online NorthEast Derbyshire Citizens Advice Bureau online DMP plan here:

https://nedcab.cabmoney.org.uk/dmp.asp

You do everything yourself online, it creates budgets, income and expenditure sheets, letters for creditors, the lot. I really can't recommend it highly enough, check out my signature if you want to see how effective it can be.

You need to be creative with your budget as to not include the secured/guarantor loan, this must be kept out of the DMP or it's going to be assigned to your guarantor. Up your essentials and invent some additional costs if necessary. I am not condoning dishonesty but I think a guarantor loan needs special treatment because it really is not fair for this debt to fall on someone else.

When you are happy with your budget and payment to creditors, save the DMP for future use.

Next step: keep up the token payments of £1 per month for a minimum of 3 months and save the money you are not paying to creditors as an emergency fund. You may even find you have enough to pay off one of your creditors.

When you are ready, readjust the online DMP figures and get everything ready to send to creditors or DCAs if they have transferred the debt

Final step but please do this ASAP: Go and join the fine people of the DMP & Mutual Support Thread:

https://forums.moneysavingexpert.com/discussion/4988866

This thread is full of the most knowledgeable, friendly, supportive people and they are all in (or have been in) the same boat as you. There is no judgement, just advice, experience and support.

Just over 3 years ago, I was in £82,344 of debt, now I am debt free. Like you, I thought there was no solution but there really is. I did it and you can do it too. We will help you.

TTFTM x

sanfrancisco

Where do you live and what do you do? You do a large amount of hours. Are you sure you could not be working more effectively.nis it time for change of career?

If you worked every Friday and Saturday evening in a restaurant, you could earn another 600 per month. One you get going and loving the debt free ness you could have no debts in a year. It is VERY empowering to sort your own money situation out. You will feel great.

I know lots of people are talking about dro's, bankruptcy, dmp etc but why just not sort this yourself.

You are young you have no children take control. By owning it (I know an americanism) you will feel great. In the short term you are going to have to get into more debt. Suck it up, buy the travel card and take charge of your life and finances.

Good luck x

ThreetwentySeven

Time to face the music, amazing advice I can't thank you enough. I'm astonished at how quickly you became debt free.

Sanfrancisco, I live in a town called Abingdon, just outside Oxford. My hours are long because it takes over an hour to get to and from work. Plus it's a small Web development company that I work for, so few staff and lots to do, resulting in regular overtime.

I've tried to sort it out myself, there aren't that any part time jobs close to home that fit around my full time job. The only shifts I could do are night shifts that start at 10/11pm, but that would mean I'd be getting literally no sleep.

I don't see how or why I should get.into more debt?! I tried consolidation loans but I'm not eligible. I don't think I could get into more debt, all loan.companies have been refusing me.

japmis

ThreetwentySeven wrote: »

I live in a town called Abingdon, just outside Oxford. My hours are long because it takes over an hour to get to and from work. Plus it's a small Web development company that I work for, so few staff and lots to do, resulting in regular overtime.

In the medium to long term can you move closer to work? (Unless your work is in Oxford in which case it's probably cheaper not to live there given it is extortionate!)

ThreetwentySeven

I could move closer to work, but my contract doesn't run out until December At my current place. I couldn't afford to move right now, besides it is extortionate everywhere around here, no getting away from the high rent.

blisteringblue

Hi ThreetwentySeven, I've just moved my DMP to self managed with the NEDCAB system and it is easy.

You posted earlier that your creditors refused to allow reduced payments, don't worry about them refusing, you have the power to pay them all you can afford.

Do exactly as Time To Face The Music says and you won't go far wrong.

thegreenone

Hi, is there any way your guarantor would pay just one month of your loan so you can pay off the pounds to pocket loan? You set up an SO to repay them at say £20 a week. This would free up £127 a month. Keep your salary going into natwest, Set up a new, basic bank account elsewhere and transfer £100 of this to the new bank account plus travel, rent, bills and food. Don't touch natwest at all. The £27 then £47 will gradually chip away at the overdraft and everyone will be paid. Once the overdraft is down move some money to 118 to tackle that one.




Fingers crossed.

AliceBanned

It is not true that you always need savings in order to borrow from a credit union. I couldn't recommend them enough. Have a look at the link below:


http://www.moneysavingexpert.com/banking/credit-unions#borrowing


I turned to a credit union when I had maxed out my cards and everything was on top of me. Apart from being more lenient borrowers to people with poor credit rating, they aim to help you a bit psychologically by steering you in the direction of getting slowly out of debt. They are community-based too and you get a little bit of a feeling of moral support, which you never get from a bank.


I have the same level of debt as you and am slowly repaying it without worrying too much. I takes time but you need to start with sorting out your income and outgoings. Once you make a dent in some of the credit cards you can get some momentum and then you will feel better. I would recommend trying to get some cheaper borrowing through a credit union, perhaps to cover one of the cards, if you can get this - credit unions aren't super-lenient but they try to help people out of a hole if they can, as long as you are doing everything you can to sort it out it gives you a bit of breathing space from the banks.


You sound like you haven't defaulted or got CCJs so no need to ruin your credit rating by going bankrupt or even a DMP may not be necessary.


I share your pain on the hard work and then nothing left to show for it, but slowly it will shift if you can get yourself started. I think you are having to pay off the loan and credit cards too quickly and it is eating into the money you need to live. A credit union might be able to help or even just advise on what your options are.

AliceBanned

PS some credit unions even do cheap 'pay day' loans. Please first get out of your cycle with the payday loan companies if you can, as a priority. A credit union payday loan is a completely different type of loan and is less likely to wreck your credit rating - I had two and they aren't even listed on mine.


Using 2 credit unions helped me to avoid a DMP and payday loan cycle, as long as I stuck to a regime to keep on plugging away at the debt.. still a way to go but I can see some progress and have access to some 0% cards which really reduces the pressure once you get to that point.