Can somebody give me a little advice about 15k worth of debt?

DavidCroche

I would really appreciate a little advice on my current situation. I'll try be brief.

I found my mum dead in her flat 6 months ago and went into shock which lasted for a good 5 months. I'm seeing a therapist and thankfully have not succumb to depression. I was left with the funeral bill (region of £3k) and a couple months after the funeral my car brokedown. I went to buy another car in desperation for £1k and didn't test drive it. Yep. Car broke down pretty quickly and place refused to refund my money and I was physically threatened by a couple of meatheads when I went there to ask for it back in person.

What happened after that is a bit of a blur. I took complete advantage of my lack of credit and let the banks give me as much money as they saw fit. This amounted in a 4k overdraft with Lloyds, a £5k loan with Lloyds, and a £6k loan with Zopa. Not sure what I even spent the money on, but I have no assets to show from it apart from £1500 car and a £1000 motorbike. I think I was planning to kill myself on the motorbike 'accidentally'. Again, thankfully, I have sorted this out mentally through therapy.

Obviously this has left me in a grim position financially. I have spoke to step change and am now paying around £250 a month to my creditors. It will take about 6 years to pay. I spoke to Lloyds and they said after 6 months of £90/month they will seek a default. Now I just feel there is no real way to get out of this without a black mark on my credit file. I simply cannot afford to pay the money back at the rate they are asking for it. And yes, I will be selling the motorbike and potentially downgrading the car (if that's even possible).. but even then.. £15k is a lot of money to owe. That's not even taking into account the amount of interest being added.

As you can imagine, during this incredibly emotionally challenging time, my first thought is - forget this planet, I want out. I am going to move to SA with my 6 month girlfriend for a few months next year, but it's just a way to escape reality for a while.

I'm also working hard on building a software business and I KNOW I will be a much better position financially. The sensible thing to do, at least for me, is to stall my creditors as much as possible and then pay them off when I'm in a better position.

I guess my question is - what will happen if I just don't pay a thing and take the default and have them seek a CCJ or try to force bankruptcy? I will be quitting my job next year so I'm thinking of filing for bankruptcy then and having the whole thing wiped.

Any thoughts? I'm on the edge of something I'm not sure I know how to handle. I just need space for a while.

mrskingandthescarecrow

Hello, didn't want to read and run. I'm sorry for your loss.

I think you're in panic mode and you are in danger of making things worse than they already are or need to be. Rather than make any rash decisions, I would just take a moment to breathe and think things through.

If you post a statement of affairs, readers can give you more specific advice before you make any decisions or move away hoping the problem will sort itself out, because it sadly won't.

X

fatbelly

DavidCroche wrote: »

. I have spoke to step change and am now paying around £250 a month to my creditors. It will take about 6 years to pay. I spoke to Lloyds and they said after 6 months of £90/month they will seek a default. Now I just feel there is no real way to get out of this without a black mark on my credit file. I simply cannot afford to pay the money back at the rate they are asking for it.

This paragraph bothers me. Stepchange should have set you up on an affordable plan. Are you saying you do not have £250 per month to pay to your creditors? How much do you have?

DavidCroche wrote: »

I guess my question is - what will happen if I just don't pay a thing and take the default and have them seek a CCJ or try to force bankruptcy? I will be quitting my job next year so I'm thinking of filing for bankruptcy then and having the whole thing wiped.

Your creditors generally default you anyway - after 3-6 months of below-contractual payments.

Not much will happen if you stop paying - apart from receiving a lot of mail. Very few will try court action - the vast majority just sell the debt on.

None will make you bankrupt - you will have to take the initiative yourself.

But give us a SoA and we may conclude you'll qualify for a Debt Relief Order pretty soon.

It's probably sensible to sell the motorbike and downgrade the car - in a DRO you can have one vehicle valued at <£1000.

sourcrates

Agree with Fat-belly here, do an SOA and we'll see if a debt relief order may be an option for you.

Link to calculator here :

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

Be as honest as you can when filling it out.

Teacher2

There are several alarm bells ringing from your post.

Firstly, let me commiserate on the terrible situation of finding your mother deceased. You have done the right thing in seeking counsel and you should continue with that to have a lifeline and support. It is good you have a partner of six months to talk to.

What you now need is time, time to recover from shock, to grieve and, slowly, to move on. The experts say that the grieving period for a close, loved one is at least two years so you are no where near through the process.

What you need now is to take stock and to have some stability in your emotional and financial life.

To recover your financial position you should get a job and start to pay your debts back steadily. Use the DFW website for ideas about how to incur no new debts and to live frugally but happily. It will take the six years indicated but with a steady drip-feed of payback will be effective.

The alarm bells are the trip to SA which looks like avoiding the inevitable and burying your head in the sand. It will be expensive and you'll come back to an even worse situation. Also, the software business seem problematic. You are hardly in a position to start up a new company with all the expenses and tax implications this entails, not to mention the difficulties of doing so with a large debt already round your neck.

Slowly and steadily are the watchwords.

Good luck.