£55K in debt, need advice?

thetoffeeshadow

Hello all,

This is probably going to be quite a long post, so I hope some of you will bear with me to the end, as I could really do with some advice as to what I need to do regarding a large amount of debt,

Firstly, I should point out that everything I tell you in this post refers to both myself and my wife.

We have outstanding debt worth approximately £55,000. It has slowly built up over the past few years and unfortunately neither of us has tried to take control of the debt, but now, we know we have to as the debt is becoming less manageable.

All of the debt is in unsecured credit cards, and some catalogue, store cards . There are no loans,and we have never defaulted on any payments.

I was diagnosed with Cancer a couple of years ago and unfortunately I have been unable to work since, due to treatments, hospital appointments, tiredness and feeling generally unwell. My wife also doesn't work as she is my main carer.

We receive benefits, this includes PIP, ESA, Carers Allowance, and Child Benefit, and up until now we have just about managed to pay the debts each month but it is now getting to the point that it is becoming a struggle.

Bills are always paid on time, Gas/Electric, Water, TV License, Sky (minimum package) and BT for phone and internet.

We own our house outright so there is no mortgage or rent to worry about and we are exempt from council tax.

So my question to the forum, is should we now consider a DMP, as we know that in a few months, our outgoings will surpass our incomings, and we would be in the situation of not being able to pay all of the debts each month.

The other option we are looking at is to sell our house, however, we would need to be able to buy somewhere at a reasonable price, so that we could use some of the sale money towards paying off the debt.

If we start a DMP now, and say in 6 months we have £25000 left over from the sale of our house, can we stop the DMP and try to arrange full and final settlements with each of our creditors?

Would the credit card companies be willing to accept a reduced final settlement figure or because we have always paid on time, they do not see us as a bad debt?

Any advice will be greatly appreciated, and for the DMP we are thinking of using Stepchange.

sourcrates

Hi,


They won't be seen as bad debts until defaulted and sold on at least once, only then would settlement offers be concidered.

You can start a DMP and do whatever you like with the house proceeds, but if it won't cover all your debts, maybe you should pursue another avenue, as you are no longer working, and ask the creditors to write off the remaining debts as you have no realistic prospect of ever paying them off.

thetoffeeshadow

Hi,

Thank you for the reply. How would I go about asking for the debt to be written off? I didn't think that would be an option?

enthusiasticsaver

You would write to your creditors giving them income and expenditure details showing you cannot meet the payments. If there is no or little chance of your finances improving they may write off the debts. I would do a DMP to start with though and going through stepchange is a good idea. I would not sell the house. How old are you and your wife?

thetoffeeshadow

I am 52 and my wife is 46. We want to downsize as our children are almost all at university. 2 there already and the other one hopefully going next year

enthusiasticsaver

Do your children not come back in university holidays? Personally I would not consider downsizing until they are financially independent. Not sure what pensions you have but you may need the additional money raised from downsizing to live off rather than clear the debts but it is your call of course. At this stage I would do the DMP based on your current income and expenses so you know the DMP payment is affordable and hopefully all interest frozen. If you do sell at some point in the future and realise some equity you could do a F and F offer depending on whether any of them have written off the debts.

thetoffeeshadow

Yes the children will come back during holidays, so maybe we should wait before selling as you suggest. We are currently looking at both Stepchange and Payplan, is either better than the other?

enthusiasticsaver

Usually people recommend stepchange but I have no experience of either I am afraid. So long as they don't charge I don't think it matters. You can also self administer your own but that takes a lot of energy which if you have been ill you may not want to do.

thetoffeeshadow

Is it recommended to default on your debt before entering a DMP. I am finding some conflicting information online. We have never defaulted and honestly don't want to do that, but should we let ours debts default before entering a DMP?

heartbreak_star

If you enter a DMP your debts will default anyway.

I hope your treatment goes well

HBS x

owen_money

heartbreak_star wrote: »

If you enter a DMP your debts will default anyway.

I hope your treatment goes well

HBS x

Not always, Barclaycard for example will still charge interest and not default if they can, so long as you can pay a certain amount. I also had MBNA x2 who didn't default, but at least they did stop interest.
Halifax defaulted quite quick, and oddly Marbles called me and offered to reduce the £10k debt to £5k and gave me a loan for the £5k at 0% apr over 6 years???? I went for that deal!

If you want them to default then I think token payments of £1 are the way to go until they do?

That being said its been nearly 14 since I was up a certain creek without a certain implement