Support with StepChange

cwhaley1

My employer has a service to help colleagues with mental health, debt, life issues, etc. I approached them with my concerns over debt and they offered to put me in touch with Step Change. After some heavy reading of the forums on here, I just wanted to better understand a likely scenario with a DMP before putting the time in for a 45 minute appointment.

I have a total debt of around £19.5k in unsecured personal loans and cards. It is split between 4 lenders. 2 loans with NatWest, 1 credit card with Barclaycard, 1 credit card with MBNA and 1 credit card with Virgin Money. I own a home with a mortgage and have a secure job which brings me £1,550 a month after tax. I am 27 years old.

My partner and I split house costs 50/50 and we always make sure these are paid ASAP. With me paying my own debt separately. My total monthly outgoings are:

NatWest Loan: £258.35 (1.5 years left)
NatWest Loan: £53.35 (6 months left)
MBNA £25.00 (minimum payment on £1100 debt)
Virgin: £59.00 (minimum payment on an interest-free £5000 debt)
Barclay £200.00 (higher payment on a £7000 debt)
House Ins. £7.50
TV. Lices. £15.00
Phone and Internet: £17.05
Mortgage: £308.00
Gas/Elec: £68.00
Water: £12.00
Council Tax £50.00
Phone £18.00
Train season ticket: £100

Total personal debt monthly DD: £595.70

This leaves me with around £350 a month, but I then use that on food, very rare luxuries such as a meal out once a month and general living costs. I have next-to-nothing left for myself every month. Anything I do put away (£20 to £40 a month) gets eaten up in general expenses.

I have considered a DMP for a while. Would StepChange be able to reduce my monthly debt payment to a point which allows to to put money away and pay the loans off in full at a later date? I'd be put off going through the stress/damage of a DMP if it only gave me a little bit extra each month to put away.

Just trying to compare to other people's experiences. Really hoping to get some help. Thank you :beer:

EDIT - to clarify. I'm not looking for a quick-fix. This will be a long process and I just want to work at it with determination and look forward to that debt-free day.

National_Debtline

Hi cwhaley1,


You are doing the right thing by trying to get advice and looking at your options. It would be even more beneficial to do a full SOA using the sticky from the DFW board - http://www.stoozing.com/calculator/soa.php Your SOA should look at your income and minus your living costs first - mortgage, gas/ electric, water, council tax, phone, travel, food, clothes, socialising etc. and the money that is left is the money available for your debts.


If the left over money will not cover the contractual minimum payments, then a DMP is a potential solution. A DMP helps you to arrange lower monthly payments with your debts. It is not legally binding so you should not use any fee charging company. It should use your full monthly surplus to make monthly payments to the debts and whilst you can have a savings allowance, this won't be much available to save to one side.


Try doing a more detailed SOA and post it here for further help.


Laura
@natdebtline

cwhaley1

Thanks for getting back to me. I have used the SOA calculator before but it just gave the same result I'd got from creating an Excel document.Nonetheless this is the output from the calculator giving a bit more detail on an average spend in the month. I am usually left with a very small amount of money at the end of the month (£20ish) but any emergencies and it goes on credit.

Would I even be considered for a DMP seeing as I can make the contractual minimum payments?


Statement of Affairs and Personal Balance Sheet

Household Information
Number of adults in household........... 2
Number of children in household......... 0
Number of cars owned.................... 0

Monthly Income Details
Monthly income after tax................ 1550
Partners monthly income after tax....... 0
Benefits................................ 0
Other income............................ 0
Total monthly income.................... 1550

Monthly Expense Details
Mortgage................................ 308
Secured/HP loan repayments.............. 0
Rent.................................... 0
Management charge (leasehold property).. 0
Council tax............................. 66
Electricity............................. 34
Gas..................................... 34
Oil..................................... 0
Water rates............................. 12
Telephone (land line)................... 17.5
Mobile phone............................ 20
TV Licence.............................. 15
Satellite/Cable TV...................... 0
Internet Services....................... 0
Groceries etc. ......................... 120
Clothing................................ 0
Petrol/diesel........................... 0
Road tax................................ 0
Car Insurance........................... 0
Car maintenance (including MOT)......... 0
Car parking............................. 0
Other travel............................ 100
Childcare/nursery....................... 0
Other child related expenses............ 0
Medical (prescriptions, dentist etc).... 0
Pet insurance/vet bills................. 0
Buildings insurance..................... 7.5
Contents insurance...................... 0
Life assurance ......................... 0
Other insurance......................... 0
Presents (birthday, christmas etc)...... 0
Haircuts................................ 10
Entertainment........................... 50
Holiday................................. 0
Emergency fund.......................... 20
Total monthly expenses.................. 814


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


Secured & HP Debts
Description....................Debt......Monthly...APR
Mortgage...................... 139500...(308)......0
Total secured & HP debts...... 139500....-.........-

Unsecured Debts
Description....................Debt......Monthly...APR
natwest 1......................390.......53........0
natwest 2......................6500......258.......0
mbna...........................1100......25........0
barc...........................7000......200.......0
virgin.........................5000......60........0
Total unsecured debts..........19990.....596.......-


Monthly Budget Summary
Total monthly income.................... 1,550
Expenses (including HP & secured debts). 814
Available for debt repayments........... 736
Monthly UNsecured debt repayments....... 596
Amount left after debt repayments....... 140

Personal Balance Sheet Summary
Total assets (things you own)........... 0
Total HP & Secured debt................. -139,500
Total Unsecured debt.................... -19,990
Net Assets.............................. -159,490

Created using the SOA calculator at https://www.stoozing.com.
Reproduced on Moneysavingexpert with permission, using other browser.

National_Debtline

Hello again cwhaley1,


Thank you for posting the SOA. Your budget does looks well balance but perhaps a little bit restricted so it may be worth double checking this with bank statements to check it is accurate. If this is correct it would show that the minimum payments are manageable and there is a further £140 spare thereafter. In this case, a DMP would not be a suitable option as a DMP is designed to help people pay less than the minimum payments, because they cannot afford them.


You could use the £140 to put towards an emergency fund, and once you have some money available for the unexpected expenses, you could use the £140 to overpay the debts to drive the balances down quicker. You may also benefit from looking at moving some of the balances to 0% interest cards as well. If you do this then you may need further advice, because you need to consider several things, such as, how long the interest free period would be for, and whether or not you can clear the balance in that time. If you can't, then what is the interest rate after the interest free period ends and could you afford the debt? I hope that helps,



Laura
@natdebtline