50k Credit Card debt. Need advice.

Myles_Groning

Hi, I am about £50K in debt. This is to 4 credit cards (to 3 different companies, 2 are Barclaycard, and Bank of Scotland, and HSBC, the latter is my bank). All my debts are unsecured.

I only earn about 20k a year. 100% of my earnings goes in minimum payments. I am effectively a slave working full time for nothing. It has been this way for many years (over 15 years), and I cannot carry on like this anymore. I am at breaking point. I am not behind in my payments.

I have probably paid the original money back many times over. I have sold off nearly every asset of worth that I owned, just to eat. I have had hand outs from my parents over and over.

I have always been afraid to face up to this; I was terrified of courts, bailiffs, public disgrace, etc. Over the last year I have got myself a lot fitter (lost 8 stone in fact), have a brighter and stronger outlook, and want to get this sorted. I am 54 now, and need to get out of debt, to have any quality of life in the future.

I would rather not go bankrupt, but WILL if I have too, an IVA or DMP sound good to me, I like the idea of paying off, and also being able to live, and there being a goal date when I know it’s all behind me.

What is the best way for me to go? Any advice welcomed. A friend of mine says I should just phone the 3 CC companies and they will freeze interest and help. I’m not so sure. I like the look of the StepChange debt charities route.

If I take any of these options, will I affect the credit rating of other adults living at my address?

Today I was paid, there is money in my current account, and because my bank is one of the lenders I have a CC with, should I take the money out in cash before I proceed with whatever route?

Should I talk to my bank (HSBC) that I been with for 25 years?

Very confused, would appreciate help. Thanks.

sourcrates

Hi myles,

Welcome to the MSE boards.

Well it seems you have climbed the first hurdle, by admitting things need to change, let me just say that whatever you choose to do, as long as you are not financially linked to anyone else at your address, your debts will effect you, and you only.

The stepchange website is a great place to start, they have a debt remedy tool, wearby you input your details, and it spits out a solution, I would try that first of all, see what they recommend.

Usually the first thing people ask you to do on here is to post a statement of affairs (SOA), but I think with a 50k debt to deal with, tweaking your budget won't help much, I think a more formal solution will be necessary.

Do the debt remedy tool, see what it recommends, and we'll take it from there.

fatbelly

Whichever solution you go for, you will have to do an income/expenditure statement of affairs. Might as well have a go now. That way we can suggest which might be the best route to take.

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

Please format for mse

Oh, and don't talk to your bank. But you will need to have a new account with a bank that is not connected to your debts. Put your income into that.

National_Debtline

Hi Myles and welcome to MSE,


There have been some great tips on here so far, I would just like to add a few more and give you a snap shot of your choices.


If you would like to look at IVA's and DMP's before having to consider bankruptcy then your SOA will be a big part of this. IVA's require you to repay so many pence in the pound and IVA providers will help you calculate this depending on affordability and assets such as equity. If you are a homeowner with equity you may find that bankruptcy and IVA's are not the best option as they can put your home at risk.


Generally speaking, IVA's are a 5-6 year repayment plan and if you stick to it for that time the remaining debt will get written off. But it is a form of insolvency so will be very damaging to your credit file. It will guarantee no more interest or charges are added but is quite inflexible if you are struggling.


A DMP can go on for as long as it needs to in order to clear the debts, but reputable, free DMP companies will assess the timescale to see if it is suitable (for example, a 50year DMP is unlikely to do you any good). To help put that in perspective, if you were to aim to clear the debts in the next 10years, for example, that would mean paying approx. £400per month. And this also damages your credit file.


Post your SOA and details about whether or not you are a homeowner and then other posters can help guide you, good luck,


Laura
@natdebtline

runforlife

I would also advise that you don't make the minimum payments to your cards this month. It is inevitable you are going to be defaulted in due course and if you start with a DMP then you'll be paying less too. May as well save the cash and begin to build a reserve fund.

Life on a DMP is certainly bearable and you will once again have money to live with. My only regret was leaving it as long as I did trying to juggle money from one to another.

Good luck.

Myles_Groning

Thank you all SO much for the replies. I am not a house-holder. I have no assets! Advice please on getting new account to have my wages in. I have an overdraft with my present current account, which is also up to the limit! (apart from the salary just paid in). All my CC payments are due around 7th December, so would like to have the ball rolling before then if possible. Really do not think I could face another winter as I have done in past years, and have nothing left.

sourcrates

Myles_Groning wrote: »

Thank you all SO much for the replies. I am not a house-holder. I have no assets! Advice please on getting new account to have my wages in. I have an overdraft with my present current account, which is also up to the limit! (apart from the salary just paid in). All my CC payments are due around 7th December, so would like to have the ball rolling before then if possible. Really do not think I could face another winter as I have done in past years, and have nothing left.

In that case I'd seriously consider going bankrupt.

It's a lot more streamlined process these days, can all be done online, over the phone, and by post, no requirement to attend court.

You don't really want to be paying these debts into your retirement do you ?

An IVA would take you into your early sixties, so may be a possibility, but if there's no reason to dismiss bankruptcy, that would be my choice.

fatbelly

With 50k of debt and no assets the first question is 'why not bankruptcy?'

There might be a reason to avoid it but you haven't given one so far.

Any bank not connected to your debts should give you a basic current account that you can use for your income

runforlife

If you haven't any debts with Nationwide then I would recommend them. Good mobile app too. As i've said before I would be cancelling my CC payments now so you can start to bank that cash. Write to them to explain you are in financial difficulties and need some time to work things out. Stepchange can help you with that if you feel you need support.

Myles_Groning

Thank you for your replies and advice.

I am now begining to really consider bankruptcy.

Do I have to have another bank account in place before the next minimum payments are due on my credit cards?

What about direct debits I have in place for motor insurance and car road tax etc? (can I move these to wifes account)

Will I be able to get motor insurance after bankruptcy? (As they ask if you or anyone else on policy is bankrupt)

What happens after bankruptcy? Do they take a percentage of my salary? Will they take my car (£500) or my motorbike (£900)

Will my employers know?

fatbelly

If you choose a new bank account, they shouldswitch everything within 7 working days.

You can cancel the d/ds you don't want.

As far as bankruptcy is concerned you need to start reading up about it. Try here for starters

https://www.nationaldebtline.org/EW/factsheets/Pages/bankruptcy/how-to-go-bankrupt.aspx