What are my options?

THastie

Hi there all.

Over the past few years I have been struggling with debt on my credit cards. I’ve not missed any payments, but my available credit/used ratio is appalling, which prevents me taking out any balance transfer cards to try and cut down minimum payments. I managed to quit using them about 2 months ago and now just pay them, roughly rounded up from the minimum payments.

This is my total debt:

Halifax Loan: £4600 - m/p £160.00
NatWest CC: £4750 - m/p £79.00
Barclaycard CC: £3360 - m/p £99.00
MBNA CC: £1033 - m/p £40.00
Car Finance: £111 p/m 26 months to go
Creation Finance: £47 23 months to go

Total monthly: £536

My monthly outgoings are:

Rent: £315
Council Tax: £75
Electric: £45
Gas: £90 (its communal and can’t change)
Phone: £44 (expires Dec 2019)
Car Tax: £11
Food: £300
Hair: £30
Petrol: £160

I think that’s all my outgoings.

I work in a commission based environment so my minimum wage after tax can be as low as £1100 and can fluctuate up to about £1600 with bonus. Generally it’s usually about £1300.

Over the past few months, all my credit limits were slashed to literally about £100 above the balance, although no late or missed payments happened. Before I had about £1000 breathing space on each card. I understand this is due to affordability and responsible lending.

I can just meet the minimums and get by, but obviously it will take decades to pay it off that way. The Barclaycard has an APR of 29.9%, NatWest is not as bad at 9.9%.

All I feel I’m doing is working to pay debt, which is my fault, but it is effecting me mentally more than ever before. I think about it 95% of my waking hours.

I was considering a trust deed (I live in Scotland) but I’m apprehensive as I’m scared the monthly payments would be more than my current debt outgoings, and how I would rent a property in the near future. I’m currently on a 30 day rolling lease, but have never failed to pay rent on time, but all it takes is for the landlord to decide to sell and I’m out almost immediately. This is a massive fear for me as rent around the city is very expensive.

I’ve looked at mid market council properties to save on rent (rent, council tax split 50/50 with my partner, so rent in full is £630 and tax £150) but, the form requires the landlord contact details and address, I don’t have their address and I fear if I ask for it, and they discover I will be moving in the near future they will issue me an order to vacate, which would cause absolute panic, which I don’t think I could cope with.

I’ve seen plans that offer to cut down your debt by about 75% but I don’t know if they are real or how they work.

Having a car is critical for me, as my mother is disabled and I cover all her transport, for example shopping trips. If I don’t have a car it effectively leaves her housebound. I feel my car finance is acceptable, payment wise, as it’s a MY14 car, very economical and reliable. I don’t have the savings to hand it back and buy a cheap car, buying a car <£1000 could cause me money in repairs and maintenance I don’t pay just now. Sometimes I take a long drive at night which soothes me when this money stress gets too much. If I lost the ability to do that I wouldn’t know what to do, it’s like my escape.

I really need some advice, as I’ve never asked for it before. I don’t have savings, nor a family member that could help. In fact if family found out they would be disgusted, as they are very anti credit.

Thank You all.

rollercoasting

Hello lovely.
Just wanted to say you have come to the right place for help, and that no one is alone here.

Have you done a snowball calculator? Might be worth doing to see how you could make a dent in this?

If you can only just make minimum payments and high interest is being charged, then a DMP might be the way to go. It will trash your credit file but it would mean you could get the debts defaulted and pay no more interest so what you do pay will reduce down what you owe. It's a big decision as you will feel the credit implications for 6 years from default. You would also be able to adjust your monthly payment amount so you can live comfortably and have an emergency fund.

There may be other options too. Have you gone onto the Step change website? They have a tool which can help tell you what your options are.

Hugs. You will get this sorted.

TriggerHappy

Hiya,

Based on what you have shown, you're looking at monthly outgoings of £1600 pcm which is obviously £300 above what you say is your average monthly take home.

In my opinion, the last thing you want to do is to be looking at taking on a new card or consolidating.

Do you have any assets of value which you can do without that you can sell?

Also, the food budget seems quite high?

It appears that you have very little in the way of wiggle room, so have you tried speaking to a debt charity? Might be worth calling and speaking to a free one like Step Change or Christians Against Poverty for advice.

It is possible that if you speak to your creditors they might be able to arrange lower payments for a set period or a payment holiday even which would allow you to hammer one or more of the other debts but as you're in Scotland I'm not sure what your options are in this respect...

I recommend Step Change btw, they got me out of a hole in the past - although it did trash my credit file and it will remain trashed for another couple of years too so that's something to consider.

TriggerHappy

I’ve seen plans that offer to cut down your debt by about 75% but I don’t know if they are real or how they work.

This will either add to your debt or may even be a scam, AVOID.

sourcrates

TriggerHappy wrote: »

I’ve seen plans that offer to cut down your debt by about 75% but I don’t know if they are real or how they work.

This will either add to your debt or may even be a scam, AVOID.

Your referring to an Individual voluntary Arrangement (IVA) in Scotland they are called Trust deeds, perfectly legitimate, but not right for everyone.

Please do your research OP, go on the stepchange or national Debtline (Scotland) website, bags of free information on debt solutions.

zippygeorgeandben

Well done for coming here and posting. We can offer help and advice along the way.

wjr4

Good luck with your journey. Quick question - does your mum contribute to your fuel/car costs as it is for her benefit as well? You can definitely reduce your food bill a lot by meal planning and batch cooking.