About £5000 in debt and not sure what to do.

Waterpulse

This is my first post on here so apologies for any rambling. I have about £5000 of unsecured debt which I have been ignoring, made up of an overdraft, payday loans, credit cards and a phone contract.

When I was a student before I had any debt, I switched my bank account from Lloyds to Halifax to get their switching bonus. Lloyds never closed my account so I continued to use Lloyds as my main account and I just used the Halifax account for the £1000 overdraft (I never paid anything into the account and nothing was ever said). About 6 months ago they wrote to me saying my overdraft had ended and they've been adding unauthorised overdraft fees every month since then, which I have not paid. They constantly send me letters to pay. I have recently switched my Lloyds account to Santander (the Lloyds account is now actually closed) so Halifax can't offset and take money from me without my consent.

Last year when I was a student I took out a payday loan which I didn't pay, which was given/sold to BW Legal. I was paying £10 a week in a repayment plan with them but I haven't paid anything for 6 months. I was getting letters from them asking for payment but I haven't heard anything from them for about 6 weeks. I took out another payday loan which has been given/sold to ARC Europe, which I have made no payment towards. In June this year I lost my job (not my fault, I was bullied out) and so I stopped making payments on my 2 credit cards. These haven't been sent to a collections agency yet but I get constant letters from them to pay. During this time I took out another payday loan (which I haven't paid anything towards) so I could pay the rent. I couldn't afford my phone contract with EE so I took out a SIM only contract with another network and I haven't spoken to EE since (3 months ago). They have sent the 3 months' worth of payments to Moorcroft, I received letter from them today saying they are going to visit me at my house (I live in the South so I doubt they will). I'm expecting EE to bill me for a cancellation fee for the remaining months of my contract as my contract doesn't end until July 2018. I was paying EE £100 a month (unlimited everything with an iPhone and iPad, which was affordable at the time).

I have spoken to StepChange but as I started work again in August, they want me to agree to a DMP where I put all of my disposable income towards my debts. I really don't want to do this as I want to be able to enjoy my life; I don't want to not be able to go out with my friends or not be able to buy things I want just to pay my debt which would take over a year. When I took out the new phone contract I got a new number which none of my creditors know so they are unable to contact me by phone. I'm reluctant to start paying even one because I'm thinking what's the point, I'll still have the others who will no doubt be adding more interest and charges so I won't be any better off. If this is what I should do then I am open to suggestions as I have no idea what to do now. Nobody else knows about my debt as my parents would be unable to help and I don't want to worry or burden my friends or partner (who I don't live with). I don't own a car or any property. Thank you very much.

kram

Hi Waterpulse,

It would be good to do an SOA so that you can get the right advice.

Here's the link:

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

Good luck

K

redpete

Sometime you will have to take responsibility, admit that you have been living off other people's money and that your lifestyle will have to change until you sort it out.

Karonher

It is likely a DMP will be the best option for your amount of debt, and once that starts the interest will stop. If you are just paying it off yourself I don't think it will. If you do start a DMP go with a free company.

From what others have said about DMPs, you allow for a social life, although putting £100's a week will not be allowed. Some details are here although this is from last year.

http://www.wkda.org.uk/downloads/expenditure_guide.pdf

If you can cut back on some then there will be more for entertainment or putting aside to make full and final offers.

The good thing is that you are taking control and looking to sort this out. Good luck.

sourcrates

The thing is, you must do something about this, otherwise you face the threat of legal action, although there is a good chance that may never happen, you can’t just leave things as they are.

There are various options for dealing with your debt, 5k is not insurmountable.

nmr1991

you could go for a debt relief order like I am but it's likely you don't seem to check the boxes for owning assets under a certain amount or having under £50 a month to spare after essentials where you haven't been very forthcoming with your income.

Karonher

nmr1991 wrote: »

you could go for a debt relief order like I am but it's likely you don't seem to check the boxes for owning assets under a certain amount or having under £50 a month to spare after essentials where you haven't been very forthcoming with your income.

The OP is talking about paying the debt off without a DMP and also talks about going out and buying new things so I imagine the £50 spare is not going to apply.

-taff

You've been using credit to find a lifestyle you can't afford to pay for.

You can either pay your debts or not. If you don't, you will have your credit file trashed for 6 years from the default date which should make you unable to get any more credit.
If you do, and you don't default [which is unlikely given what you've written above] then credit will still be available to you.

What you have to decide is whether or not you are going to take responsiibility for yourself and pay what you borrowed back, or not.

Morally, what you have done is not in dispute. Personally, I don't care if you pay or not, it's not my life it could affect

Legally, if you don't set up repayment schedules for what you owe, you may be taken to court and get a CCJ, you may be hounded by debt collectors [ they can't do anything, they can just phone/write/visit- unless it's a council tax debt]

Your life of social butterfly is not necessarily over, you just have decide what your priorities are, and work to that, whether it's pay or not pay.

Westie983

Hi,

I would suggest you speak to step change again and get them to talk you through the DMP option.

Well done for facing up to the fact you have debt, but you do really need to start to do something about it.

Just ignoring it and taking out more credit will not be sustainable for the long term.

You need to take action and change your lifestyle a little to enable you to put money towards your debts.

Good luck.

https://www.stepchange.org

Westie983

enthusiasticsaver

If you continue to ignore this it will have serious repercussions on your future. If you want a mortgage, to rent a flat or finance for a car or simply utilities jeopardising your credit record like you are is not sensible. Post an soa and then we can advise better but living within your means is something we all have to do whether we like it or not. Sorting this out at £5k is easier than continuing to leave it until it is £50k.

Don't take out payday loans as they will make your situation much worse. Ignoring unauthorised overdrafts is very expensive.

DCFC79

I echo the advice posted, if you want to get this sorted you need to make sacrifices, its fine if you want to go out with friends but to do that you will need to cut back (or get rid altogether) on a luxury/unnecessary spend.