Drowning In Debt

cakeforbrains

Could you look into lodging rather than renting a flat?

MrJester

Hi Craig.

Firstly congratulations. You've made a great first couple steps. What are they? Admitting you had a problem, acting upon it (by closing accounts and joining GA), and now you come to a place to seek help for your debts. A lot of people are here, have been here, and better yet have turned everything around.

Luckily you are in cheap rent, and have a foreseeable amount of time to battle this really well with paying so much low rent and maintenance etc, you have plenty disposable for the debts.

As others have said I think a great thing to do would be to get all the interest details. Getting your head around all of these is key, to know where you are at and what your options/plan of action is.

One thing I have found useful recently is using this Snowball calculator:
http://www.whatsthecost.com/snowball.aspx

Create an account and save your snowball, this will allow you to get a good overview of all and an excellent plan on how to tackle them which is easy to follow.
You can choose to do it by interest rate or by balance order. My recommendation would be by interest rate first, because of the payday loans which as we all know are ridiculous rates. and then once all payday ones are gone, consider working in a balance order - reason being you have quite a few and the benefit will be that you can tick off each debt one by one.

Give it a try and let us know. What really helps me also is to have a debt diary here on MSE, every day/week updating progress and seeking advice. Let me know if you plan to track this way, and id be more than happy to partake in your journey offering advice where i can.

Craig32

cakeforbrains wrote: »

Could you look into lodging rather than renting a flat?

Yes, this would certainly be an option. I am pretty low maintenance so I will assess all options.

For now, I have a minimum of 9 months at home paying low rent, allowing me to pay off much more than I can.

I have spent the morning reading about DMP's, and I am now trying to determine whether I am best going with a charity, or doing it myself. My main concern with doing it myself is my lack of knowledge with the jargon of it all.

I am concerned too that a charity may want to take more of my wage than I would like to repaying the debt. From my £1780 pay a month, I would like to pay £1000 to my debts, as I feel the £780 would allow me to live with paying rent, bills, transport etc.

I am going to continue reading up, and then will contact one of the charities this evening.

Craig32

MrJester wrote: »

Hi Craig.

Firstly congratulations. You've made a great first couple steps. What are they? Admitting you had a problem, acting upon it (by closing accounts and joining GA), and now you come to a place to seek help for your debts. A lot of people are here, have been here, and better yet have turned everything around.

Luckily you are in cheap rent, and have a foreseeable amount of time to battle this really well with paying so much low rent and maintenance etc, you have plenty disposable for the debts.

As others have said I think a great thing to do would be to get all the interest details. Getting your head around all of these is key, to know where you are at and what your options/plan of action is.

One thing I have found useful recently is using this Snowball calculator:
http://www.whatsthecost.com/snowball.aspx

Create an account and save your snowball, this will allow you to get a good overview of all and an excellent plan on how to tackle them which is easy to follow.
You can choose to do it by interest rate or by balance order. My recommendation would be by interest rate first, because of the payday loans which as we all know are ridiculous rates. and then once all payday ones are gone, consider working in a balance order - reason being you have quite a few and the benefit will be that you can tick off each debt one by one.

Give it a try and let us know. What really helps me also is to have a debt diary here on MSE, every day/week updating progress and seeking advice. Let me know if you plan to track this way, and id be more than happy to partake in your journey offering advice where i can.

Thanks Mr Jester for your words of encouragement.

I have used that Snowball calculator yesterday, and it did provide on a great way of tackling the problem.

A debt diary could be a great idea also, as just talking with everyone in here is already making me feel a lot better about myself, and that this can all be tackled and sorted.

Would you have an answer to the following question:

If I went ahead with a charity for a DMP, when would the first payment come out? August or September pay?

My thinking was, if it was to come out of September, then I could use my August pay to pay off the pay day loans totalling £700 and be 2 down from the off.

Craig32

I filled out the Debt Remedy Tool on the StepChange website, and they have come back recommending I go on the Debt Payment Programme (DPP) with an alternative option being the Debt Management Plan (DMP), with debt repayment at £969 over 2 years, 6 months.

DPP is an option I believe the Scottish Government introduced, and on the face of it, seems the better option.

Has anyone chosen a DPP over a DMP? If so, what were your reasons, and how did you find the experience?

I noticed there is a charge for this service, which is capped at 2%, so it would be costing me £19.30 per month.

cakeforbrains

Well done on reading up about DMPs.

Why don't you give Stepchange a call? They will be able to go through your income, outgoings, and debts and tell you how much you will be 'allowed' to keep for your own living costs. You might even find that it's more than you allow yourself in your own calculations.

Have a good think about the pros and cons of each route, though. At our lowest we called Stepchange who advised us to default on all payments effective immediately, open a separate basic bank account, and start a DMP or similar. We thought about it but ultimately, because we were still able to make minimum payments and we'd not defaulted or paid late on anything yet, we decided that we wanted to continue the way we were going for the sake of our credit files and future mortgage aspirations within six years. That was our personal decision, though, and we were actually only able to keep swimming due to an income increase.

Anyway, I think my point is, get all your information, all your questions answered, and then sleep on it. You have a great attitude so I am sure whatever you decide it'll come right in the end. You will be debt free.

Craig32

cakeforbrains wrote: »

Well done on reading up about DMPs.

Why don't you give Stepchange a call? They will be able to go through your income, outgoings, and debts and tell you how much you will be 'allowed' to keep for your own living costs. You might even find that it's more than you allow yourself in your own calculations.

Have a good think about the pros and cons of each route, though. At our lowest we called Stepchange who advised us to default on all payments effective immediately, open a separate basic bank account, and start a DMP or similar. We thought about it but ultimately, because we were still able to make minimum payments and we'd not defaulted or paid late on anything yet, we decided that we wanted to continue the way we were going for the sake of our credit files and future mortgage aspirations within six years. That was our personal decision, though, and we were actually only able to keep swimming due to an income increase.

Anyway, I think my point is, get all your information, all your questions answered, and then sleep on it. You have a great attitude so I am sure whatever you decide it'll come right in the end. You will be debt free.

Thanks,

I am planning on giving a call to StepChange this evening. I am just trying to compile a list of every question I want answered before committing, so I was hoping for some feedback from folks here which could create more questions for me to have at the ready.

That is a good thing you done continuing to make payments. I have never missed a payment with any creditor I have ever had, but I am just getting nowhere with many in terms of reducing debts & need some sort of serious change to start making inroads.

sourcrates

Craig,


If you need time to think things through, and/or to get a good emergency fund together, and you are not too bothered about your credit file, you can stop all your credit payments, should you wish to.


The debt collection process can be very long winded, for example, if you stopped paying everything tomorrow, you would have a month or so before you would be passed to collections, they would attempt to get you to pay, if this failed, either an internal or external DCA, would then be passed the account to attempt collection, this could be for 6 plus months or so, if that proved fruitless, it may be passed to another DCA, this could happen numerous times, and over a period of a couple of years or more.


Eventually, the debt would be sold, and a DCA would buy it, they would then start the process again, and another 6 months or a year, would pass, eventually, if you had not paid up, they may take you to court to get there money.


Now I`m not advocating withholding payment as a lifestyle choice, just showing you that the collection process can take a very long time, so don't rush into anything with little or no emergency funds, take your time, and save up, apart from letters and calls, nothing else will happen anytime soon.

Craig32

sourcrates wrote: »

Craig,


If you need time to think things through, and/or to get a good emergency fund together, and you are not too bothered about your credit file, you can stop all your credit payments, should you wish to.


The debt collection process can be very long winded, for example, if you stopped paying everything tomorrow, you would have a month or so before you would be passed to collections, they would attempt to get you to pay, if this failed, either an internal or external DCA, would then be passed the account to attempt collection, this could be for 6 plus months or so, if that proved fruitless, it may be passed to another DCA, this could happen numerous times, and over a period of a couple of years or more.


Eventually, the debt would be sold, and a DCA would buy it, they would then start the process again, and another 6 months or a year, would pass, eventually, if you had not paid up, they may take you to court to get there money.


Now I`m not advocating withholding payment as a lifestyle choice, just showing you that the collection process can take a very long time, so don't rush into anything with little or no emergency funds, take your time, and save up, apart from letters and calls, nothing else will happen anytime soon.

Sourcrates,

Thanks for your response. That is an interesting option. Due to my lack of knowledge on the whole topic (I've been spending days reading up, so I am getting there), this is something I hadn't considered before.

Now I have come to live with my credit file is going to be destroyed for 6 years at least anyways, so I don't have many concerns regarding this.

In terms of an emergency pot, thankfully I have no children, dependencies or assets like property or vehicles so an emergency pot for myself doesn't have to be too large. If I could get a deal where £1000 of my salary goes to debt, I could comfortably live off the remaining £780 for the next 2 & 1/2 years. The past few months I have lived off absolute peanuts, so I know I could comfortably get by with this kind of money.

Your idea would be a great one if I had to build a big emergency fund though, and I appreciate your advise. All avenues of advice are greatly appreciated.

Craig32

Craig32 wrote: »

I filled out the Debt Remedy Tool on the StepChange website, and they have come back recommending I go on the Debt Payment Programme (DPP) with an alternative option being the Debt Management Plan (DMP), with debt repayment at £969 over 2 years, 6 months.

DPP is an option I believe the Scottish Government introduced, and on the face of it, seems the better option.

Has anyone chosen a DPP over a DMP? If so, what were your reasons, and how did you find the experience?

I noticed there is a charge for this service, which is capped at 2%, so it would be costing me £19.30 per month.

I actually misread a part of the DPP. The DAS Administrator takes a fee of 2% from your payment, whilst StepChange take a fee of 8% due to being my pay distributor.

Would anyone know why there is this charge for a DPP of 8%, when they don't charge for a DMP when acting as the pay distributor there?

Over the course of my payment plan that would be costing me £2,907, and it doesn't make sense to my novice eye.