Feeling slightly better

Legacy_user

Hello everyone,

I have a sort of self managed DMP but after reading into everything and falling behind on a few payments to some creditors, one being defaulted soon and another two advised I’ll be defaulted anyway in a few months as I cannot set up a proper repayment plan for my overdrafts I have decided to send off the letter templates regarding token payment and sending my I&E. My ‘arrange to pay’ is going to take 5-6 years at least to pay off and then it’ll stay on for 6 years after so I’d rather they all defaulted me sooner rather than later so I can see a date that it will drop off my file.

I hope to build a small emergency fund and save some money whilst paying token payments. My total debt is around £13,000.

My income changes depending how many unsociable hours I work and if I can get an over time shift in so I want to try and save every penny I can to offer full and finals in a few years.

Does this sound ok?

National_Debtline

Hi Anniee88,


It is hard to say without seeing your full SOA, so I would suggest you post that so other people can help you too.


I can understand you wanting the debts to default so that they don't stay on your credit file any longer than necessary, but I cannot say I necessarily agree with the proposal of token payments with the goal to save money for full and final. Whilst I understand the logic and wouldn't completely rule it out as an option, it is not the accepted process. If you have a monthly surplus that should be offered to the debts to clear them that way. If your income fluctuates then we would advise you trying to do an average to be as consistent as possible.


With regard to the overdrafts, you need to make sure that you no longer bank with these banks and they should default if/when they call the balance of the overdraft in, in full. Unfortunately, we cannot say when that'll be. Best of luck,


Laura
@natdebtline

fatbelly

Anniee88 wrote: »

Hello everyone,

I have a sort of self managed DMP but after reading into everything and falling behind on a few payments to some creditors, one being defaulted soon and another two advised I’ll be defaulted anyway in a few months as I cannot set up a proper repayment plan for my overdrafts I have decided to send off the letter templates regarding token payment and sending my I&E. My ‘arrange to pay’ is going to take 5-6 years at least to pay off and then it’ll stay on for 6 years after so I’d rather they all defaulted me sooner rather than later so I can see a date that it will drop off my file.

I hope to build a small emergency fund and save some money whilst paying token payments. My total debt is around £13,000.

My income changes depending how many unsociable hours I work and if I can get an over time shift in so I want to try and save every penny I can to offer full and finals in a few years.

Does this sound ok?

Your strategy sounds pretty good for someone on a fluctuating income provided you will end up with a plan to clear your debts in a 'reasonable period' of 3-5 years. Failing that you may be better looking at bankruptcy or (possibly) a debt relief order.

I assume that you will be producing a financial statement based on your basic income. If that falls out to have enough surplus for exactly £1 per month to each creditor, fine, but if it produces more than that, they will ask for a pro-rata distribution of your surplus. If your surplus is negative, the creditors may not accept your plan. Court claims are always a possibility but usually what happens is that the debt gets passed to a debt buyer (who will usually be more receptive to a full & final settlement deal).

So what I think I'm saying is to take great care with your financial statement if you are going with that strategy. Good luck.

January2015

Hi

Impossible to say without seeing your SOA, but I just wondered whether you would be a candidate for a debt relief order (DRO)

System

Household Information[/b]
Number of adults in household........... 2
Number of children in household......... 2
Number of cars owned.................... 2

Monthly Income Details
Monthly income after tax................ 1400
Partners monthly income after tax....... 0
Benefits................................ 137
Other income............................ 0
Total monthly income.................... 1537

Monthly Expense Details
Mortgage................................ 0
Secured/HP loan repayments.............. 0
Rent.................................... 652
Management charge (leasehold property).. 0
Council tax............................. 89
Electricity............................. 38
Gas..................................... 30
Oil..................................... 0
Water rates............................. 54
Telephone (land line)................... 0
Mobile phone............................ 40
TV Licence.............................. 12
Satellite/Cable TV...................... 0
Internet Services....................... 29
Groceries etc. ......................... 200
Clothing................................ 20
Petrol/diesel........................... 80
Road tax................................ 2
Car Insurance........................... 25
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...................... 5
Life assurance ......................... 5
Other insurance......................... 0
Presents (birthday, christmas etc)...... 0
Haircuts................................ 0
Entertainment........................... 37
Holiday................................. 0
Emergency fund.......................... 0
Total monthly expenses.................. 1328


Assets
Cash.................................... 0
House value (Gross)..................... 0
Shares and bonds........................ 0
Car(s).................................. 900
Other assets............................ 0
Total Assets............................ 900

No Secured nor Hire Purchase Debts

Unsecured Debts
Description....................Debt......Monthly...APR
Co op overdraft................1470......60........20
Santander overdraft ...........1999......100.......0
Argos .........................500.......20........30
Santander......................200.......200.......22
Barclaycard cc.................4000......50........3
MBNA credit card ..............3500......94........0
Next...........................1998......100.......22
Total unsecured debts..........13667.....624.......-


Monthly Budget Summary
Total monthly income.................... 1,537
Expenses (including HP & secured debts). 1,328
Available for debt repayments........... 209
Monthly UNsecured debt repayments....... 624
Amount short for making debt repayments. -415

Personal Balance Sheet Summary
Total assets (things you own)........... 900
Total HP & Secured debt................. -0
Total Unsecured debt.................... -13,667
Net Assets.............................. -12,767

System

I haven’t included my husbands income because he is a student and has his own debt that only lasts another year then he’ll be debt feee so I want him to pay he full amount of that (£200) plus he uses at least £200 Petrol and pays for half of the groceries, another £200 alongside his own mobile and car ins ect. When he is able to work we have that money as spare but again not guaranteed but something I could save when we do get it for full and finals.

I forgot that Santander is my last loan payment next month, I’ve always made sure i can pay that one as it had a means to an end if that make sense. So I’ve got £200 left between 6 of them. Do I offer them £36 each? And Argos can have £20 which is the minimum anyway. I haven’t include any money for presents ect as I’m not sure they will accept that as part of my I&E or should I and pay them less? I have no idea what is best to do.

I don’t think I am a DRO candidate as when my husband finishes uni in December 2018 ish, hell hopefully move on to a job that earns 27,000 as starting salary and I am planning to increase my hours by 6 a week which is around £5000 pre tax increase so things are going to get better/easier, just not yet.

fatbelly

If you were offering £200 as a debt management plan, you'd split it on a pro-rata basis so for example co-op would get 1470/13667 x 200 = £21.51.

However, I don't think they can expect you to live on as little as you say you do. Add £200 to your housekeeping and offer them £1 each for now. Then save on the side as you initially said you would.

System

fatbelly wrote: »

If you were offering £200 as a debt management plan, you'd split it on a pro-rata basis so for example co-op would get 1470/13667 x 200 = £21.51.

However, I don't think they can expect you to live on as little as you say you do. Add £200 to your housekeeping and offer them £1 each for now. Then save on the side as you initially said you would.

Thanks very much for your advice. This is what I thought was the best to do for now, I really do want to pay it all off as soon as I can but I have struggled to commit to the big amounts they want. Hopefully next year we can really make a big dent. I’ve got a letter template on my computer to send to them offering my token payments so I’ll aim to do that this weekend.

January2015

Hi

I think you have struggled to commit to the debt repayments because you SOA expenditure is so tight. You're grocery budget is low, you have no budgets for haircuts and christmas/birthday presents, and no budget for an emergency fund. That may a budget you would like to be able to achieve, but realistically you are finding it hard to do that and that's because things like haircuts, birthdays, christmas and sometimes unexpected emergency expenses do crop up. It is important to put in figures in your budget to cover these things.

Best of luck with clearing your debts

fatbelly

January2015 wrote: »

Hi

I think you have struggled to commit to the debt repayments because you SOA expenditure is so tight. You're grocery budget is low, you have no budgets for haircuts and christmas/birthday presents, and no budget for an emergency fund. That may a budget you would like to be able to achieve, but realistically you are finding it hard to do that and that's because things like haircuts, birthdays, christmas and sometimes unexpected emergency expenses do crop up. It is important to put in figures in your budget to cover these things.

Best of luck with clearing your debts

In addition to the above I though the car maintenance figure was too low by at least a factor of 2 and £20 a month for clothes for 2 adults 2 children also too low. I work on a minimum of £3 per person per week.

January2015

fatbelly wrote: »

In addition to the above I though the car maintenance figure was too low by at least a factor of 2 and £20 a month for clothes for 2 adults 2 children also too low. I work on a minimum of £3 per person per week.

I totally agree. I think the OP needs to look at calculating a realistic budget. I do think that once they have a realistic budget there is a possibility they could consider a DRO.

Although they thought they had a couple of hundred a month for debt payments, once they sort out a true budget that is soon going to eat up that money and I suspect they will struggle to have £50 a month left for debts.

Of course, it does depend on what assets they own though.