Credit card default advice

t0m4d

Hi, I don't know if this is the right thread for this. I'm probably - almost definitely - going to default on my credit card. Long story short is I haven't made re-payments for past few months, and I had my head in the sand when they've tried to contact me, so now they've cancelled the card and when I rang them up they explained my only options now are to pay off the balance in full (which I can't do) or default on the card and come to some sort of payment plan.

The bank also gave me number for Stepchange, etc who I'll contact on Monday I think, but I want to get as much information and help as possible first.

Essentially what would the default mean? I understand it'll be a big black mark on my credit file and that I'll struggle to get credit for the foreseeable future. In theory I'm ok with this - I'm unlikely to be in a position to get a mortgage any time soon, and I'm happy to forego credit cards as that's what has gotten me into the mess in the first place.

Also, with regards to coming up with a payment plan, the man on the phone said they'll obviously not expect me to pay more than I can afford and that it's basically coming up with a list of expenses and outgoings and going from there. How reasonable are they on this? Obviously they want their money back, but what sort of amounts do they usually set aside from realistic expenses (I'm talking with regards to food, petrol, general living expenses and some sort of social life).

Also on this, will they work it out and then basically set up a direct debit for a set amount? Or will they basically want to take control of my finances and what I'm actually spending on stuff? Am I best getting an alternative bank account with a different bank as well?

I also have a loan with the bank, which I've never missed payments on, I don't know if this will be affected?

Any help is greatly appreciated. Cheers!

sourcrates

Hi,

It's you who decides your budget, not them, not the bloke next door, you.

How many debts do you have ?

If you go the stepchange route you will have to treat all your creditors fairly, which would mean defaulting on the other loan as well.

Post up an SOA (statement of affairs) and we'll get a fuller picture of your circumstances:

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

t0m4d

Hi, thanks for the quick reply! A few notes on the below: the rent I pay includes all bills (I live with a friend essentially, who owns the house, so I pay him £400 a month to cover rent and utilities, etc)

In total I have 4 debts I think; my personal loan, my CC, my OD and a PayPal credit account.

I'm not sure which category my debts fall into, so I've put them in unsecured? I don't know what the interest is on my overdraft - the minimum payment is the approx amount I get charged in interest each month, including the £6 arranged OD fee.

EDIT: Ooops I missed the actual CC debt off the form!! It stands at £6754.60 and obviously needs to be paid in full or defaulted.

[tt]Statement of Affairs and Personal Balance Sheet

Monthly Income Details
Monthly income after tax................ 1457.33
Partners monthly income after tax....... 0
Benefits................................ 0
Other income............................ 0
Total monthly income.................... 1457.33

Monthly Expense Details
Mortgage................................ 0
Secured/HP loan repayments.............. 0
Rent.................................... 400
Management charge (leasehold property).. 0
Council tax............................. 0
Electricity............................. 0
Gas..................................... 0
Oil..................................... 0
Water rates............................. 0
Telephone (land line)................... 0
Mobile phone............................ 46.69
TV Licence.............................. 0
Satellite/Cable TV...................... 27.99
Internet Services....................... 15.48
Groceries etc. ......................... 200
Clothing................................ 10
Petrol/diesel........................... 120
Road tax................................ 11.37
Car Insurance........................... 0
Car maintenance (including MOT)......... 10
Car parking............................. 0
Other travel............................ 0
Childcare/nursery....................... 0
Other child related expenses............ 0
Medical (prescriptions, dentist etc).... 0
Pet insurance/vet bills................. 0
Buildings insurance..................... 0
Contents insurance...................... 0
Life assurance ......................... 0
Other insurance......................... 0
Presents (birthday, christmas etc)...... 10
Haircuts................................ 10
Entertainment........................... 160
Holiday................................. 0
Emergency fund.......................... 0
Total monthly expenses.................. 1021.53


Assets
Cash.................................... 0
House value (Gross)..................... 0
Shares and bonds........................ 0
Car(s).................................. 600
Other assets............................ 0
Total Assets............................ 600

No Secured nor Hire Purchase Debts

Unsecured Debts
Description....................Debt......Monthly...APR
Overdraft......................2000......30........0
PayPal credit..................843.9.....26........18
NatWest loan...................2632.3....145.8.....6
Total unsecured debts..........5476.2....201.8.....-


Monthly Budget Summary
Total monthly income.................... 1,457.33
Expenses (including HP & secured debts). 1,021.53
Available for debt repayments........... 435.8
Monthly UNsecured debt repayments....... 201.8
Amount left after debt repayments....... 234

Personal Balance Sheet Summary
Total assets (things you own)........... 600
Total HP & Secured debt................. -0
Total Unsecured debt.................... -5,476.2
Net Assets.............................. -4,876.2

[/tt]

fatbelly

The first thing you need to do is to get a bank account not connected to your debts. This will be easier before the default gets applied.

http://www.moneysavingexpert.com/banking/compare-best-bank-accounts

t0m4d

Will the fact I'm overdrawn with my current bank affect this at all?

Karonher

There is a lot you can cut back on.

You could save at least £50 by cutting down brands on your food budget. Also look at reducing the price you pay for your mobile phone - SIM only starts at £5 a month and even if you have a contract they may help you if you say you are struggling.

Your entertainment budget can be cut until you are out of debt and ditch cable when the contract ends. You should be able to make over £200 of savings meaning that by the time you add what you already pay, what you have left over from your salary and your new cutbacks, you are paying over £600 a month off your debt.

You could be debt free in 10 months or less.

t0m4d

Hi, I'm planning on cutting g down where I can.

The figures above don't include the near £7k Co debt I have.

fatbelly

Your bank has the right of set-off - helping themselves to your income as it goes in to your account and applying it against other accounts. They are supposed to exercise this right according to certain rules but it's best not to give them the opportunity

http://www.moneysavingexpert.com/banking/setting-off

t0m4d

Yes that's something I've heard about. Will the fact I'm constantly in my overdraft with my current bank account affect me getting an account with another bank? Similarly I have a poor credit rating; would that go against me?

sourcrates

t0m4d wrote: »

Yes that's something I've heard about. Will the fact I'm constantly in my overdraft with my current bank account affect me getting an account with another bank? Similarly I have a poor credit rating; would that go against me?

You apply for a basic bank account, most banks do them, although you have to search for them, as they are not widely advertised.

There is no credit check, and no borrowing facility, anyone can get one.

t0m4d

sourcrates wrote: »

You apply for a basic bank account, most banks do them, although you have to search for them, as they are not widely advertised.

There is no credit check, and no borrowing facility, anyone can get one.

Thank you. And then I'd get my employer to switch my wages into the new account right? And change all my DDs (phone bill, etc.) to come from this account? And then try and slowly pay off the OD?