A friend in need...

StubbornEnigma84

Following yet another bout of debt induced insomnia, I have decided to post my troubles on here for all to see in the hope that someone that was in a similar position to me can spot some light at the end of the tunnel.

As of this morning, I am in debt to the tune of £25,259.43. This all started a few years ago when I started spending on a 0% purchases credit card and someone introduced me to 0% balance transfers, so instead of paying off my credit card each month I would simply wait until the 0% period had lapsed and shifted the debt to another card. At the time, I was still living at home with my parents so I had no real financial commitments - just a phone contract, car insurance and running costs and a bit of housekeeping for my Mum - so I would spend my wages on holidays, alcohol, eating out and all sorts of rubbish. Then eventually I realised I was digging myself into a hole and started paying off decent chunks of my debt. I had a plan and I was going to pay off my debt within a couple of years.

Then my circumstances changed and I moved in with my girlfriend and her two children. Unfortunately, my debt spiralled out of control. In the early days, I was having to resort to credit to make ends meet each month and the balance transfer became my best friend once again. Within a few months, I'd used the majority of my savings on paying the rent and bills as well as kitting out the house with new carpets and furniture. Before I knew it, I had racked up over £30k of debt and I was struggling to make payments, inevitably I would have to resort to paying for groceries and household items on credit cards rather than cash, so I could make sure I had enough to pay all my direct debits. It became a vicious circle. One day back in 2014, I received a call from Lloyds Bank to inform me that I hadn't made any payments to my overdraft in a long time. I immediately tried to rectify the situation by transferring money to my account, but they could sense something was wrong and put me through to StepChange.

StepChange were helpful but they were advising me to either declare bankruptcy or use a DMP which would have meant defaults on my credit file, which I wasn't prepared to do. After a few months of battling against the tide, I finally broke down in front of my Father around this time last year and admitted my problems. He immediately gave me some money to pay off some of the card debt and allowed me to sell an ISA he had set up for me to allow me to pay off my overdraft. It was enough to make the payments more manageable and allow me to budget more sensibly.

Over the past year, I have tried to make payments to my credit cards but, unfortunately, I have slipped back into old habits by using my cards for both purchases and everyday items due to some hefty vet bills which resulted in our dog being put to sleep. Yesterday, I went to see my local branch manager to find out if they could do anything to provide me with a little bit more structure - e.g. a loan to consolidate my debts. Unfortunately, whilst they thought a loan would be possible, I failed the credit check and my application was declined. They recommended I tried a bank, like Sainsburys, who I have no financial connection with, so I hastily made an application last night which was also declined. Although I am able to make all of my minimum payments each month, with the occasional extra payment, I fear that another mishap could lead to me falling back on the credit cards yet again.

I'm not sure what to do next and whether it is worth looking at other routes. I want to avoid solutions such as an IVA or declaring bankruptcy because we would like to apply for a mortgage in the next few years and I am worried that we may not be able to do so.

I have suffered from depression and anxiety throughout this whole experience and, as I mentioned earlier, I have had many sleepless nights recently due to my money problems. At the moment, I can't seem to switch off and stop thinking about it, which is making me feel ten times worse.

Can anyone offer any help or guidance? Has anyone been in a similar position? And, most importantly, is there light at the end of the tunnel?

greensalad

Consolidating is failing into the exact same trap. You're just postponing and shifting the debt, not actually doing anything about it.

Post an honest SOA, snowball your debts, and see where we can go from there.

sourcrates

Hi,

Unfortunately there are no magic solutions to this problem, if you can't pay them off out of your regular salary and you refuse to look at debt solutions then your options are limited, as in there are none.

Then in the same sentence you say you want a mortgage in the near future.

I think you need a serious reality check here, you have a long history of not been able to live within your means, how do you think things will work out when you have a mortgage to pay as well ?

You need to tackle the debts, as a priority, before you even think about a mortgage.

National_Debtline

Hi StubbornEnigma84 and welcome to the forum.


I second greensalad's recommendation that you post up a Statement of Affairs:


http://www.stoozing.com/calculator/soa.php


Be prepared to accept that your credit report may have to suffer in the short-term in order for you to get on top of this in the long-term. The fact is that it is already in less than perfect condition, hence the loan rejection. Having some adverse data on your report will not definitively exclude you from the mortgage market - after all, even someone who is up to date with their cards, loans etc. can still look risky to a potential lender if they appear to be overstretched.


It just seems that up until now you've refused to let yourself even contemplate options beyond further borrowing, and this may be contributing to your current unease.


Dennis
@natdebtline

Kitten868

You've had two fix all opportunities that you haven't taken advantage of. I think you should contact stepchange and go for the dmp. Living within a budget and paying back at a rate you can afford is going to get out of this money rut. A DMP doesn't mean you'll never get a mortgage. It means that you're being practical repairing this. Do the dmp by the time you've paid off your debts and saved up your deposit your defaults won't matter or will have timed out xxx

StubbornEnigma84

Here is my SOA:

Statement of Affairs and Personal Balance Sheet

Household Information
Number of adults in household........... 2
Number of children in household......... 2
Number of cars owned.................... 1

Monthly Income Details
Monthly income after tax................ 1838.24
Partners monthly income after tax....... 0
Benefits................................ 0
Other income............................ 600
Total monthly income.................... 2438.24

Monthly Expense Details
Mortgage................................ 0
Secured/HP loan repayments.............. 0
Rent.................................... 700
Management charge (leasehold property).. 0
Council tax............................. 147
Electricity............................. 91
Gas..................................... 0
Oil..................................... 0
Water rates............................. 56
Telephone (land line)................... 0
Mobile phone............................ 24
TV Licence.............................. 12
Satellite/Cable TV...................... 0
Internet Services....................... 0
Groceries etc. ......................... 300
Clothing................................ 20
Petrol/diesel........................... 100
Road tax................................ 11
Car Insurance........................... 53
Car maintenance (including MOT)......... 25
Car parking............................. 0
Other travel............................ 0
Childcare/nursery....................... 0
Other child related expenses............ 0
Medical (prescriptions, dentist etc).... 10
Pet insurance/vet bills................. 0
Buildings insurance..................... 0
Contents insurance...................... 6
Life assurance ......................... 0
Other insurance......................... 0
Presents (birthday, christmas etc)...... 10
Haircuts................................ 7
Entertainment........................... 30
Holiday................................. 30
Emergency fund.......................... 0
Total monthly expenses.................. 1632


Assets
Cash.................................... 700
House value (Gross)..................... 0
Shares and bonds........................ 0
Car(s).................................. 3500
Other assets............................ 0
Total Assets............................ 4200

No Secured nor Hire Purchase Debts

Unsecured Debts
Description....................Debt......Monthly...APR
Halifax CC.....................5639.56...80........0
Barclaycard 1..................4731.63...108.......0
Barclaycard 2..................5580.94...106.......6.9
Tesco..........................1804.51...25........0
Lloyds CC......................3602......38........0
Natwest CC.....................3900.79...75........6.9
Total unsecured debts..........25259.43..432.......-


Monthly Budget Summary
Total monthly income.................... 2,438.24
Expenses (including HP & secured debts). 1,632
Available for debt repayments........... 806.24
Monthly UNsecured debt repayments....... 432
Amount left after debt repayments....... 374.24

Personal Balance Sheet Summary
Total assets (things you own)........... 4,200
Total HP & Secured debt................. -0
Total Unsecured debt.................... -25,259.43
Net Assets.............................. -21,059.43

greensalad

So you've got £374 after paying minimum and yet you're not making progress? There is a mistake on your SOA, or you aren't budgeting your full spending.

Snowball calculator says with the £806.24 a month you can afford to spend on servicing debt, you can be debt free in 66 months. It's quite a long time, so I'd suggest you go on DMP.

yasmin2

From personal experience, don't consolidate the debt as you will just end up spending on them again - from reading your posts I don't think you are looking at the underlying reason for your overspending. CUT up the credit cards!!

DawnW

Can your partner not get a job, even part time?

ReadingTim

DawnW wrote: »

Can your partner not get a job, even part time?

Quite, especially as the OP seems to be supporting her kids...

Dobbibill

Hi StubbornEnigma,

Welcome to the forum.

There are several things you can do, although none of them are going to be a quick fix. You didn't acquire the debt overnight and it's not going to disappear overnight either.

1 - keep a diary of everything [and I mean EVERYTHING] you spend.

2 - tweak your SOA as you find things that need to be included, anything that is missing is just going to give you false hope.

3 - if you truly have money left in your budget then put together a plan of how you are going to tackle the debt and stick to it, throwing any spare money at the debt

4 - Remember how you got into debt and address that problem too, if you dont address that it will likely happen again.


Being realistic, I would move the £30 from the holiday to the Emergency Fund. You can't really afford a holiday at the moment.

All the best