The 100K 5Year Plan

terman

Hi All
This is my first post on the Debt Free Wannabe board. I have been lurking for the past week and starting to feel more optimistic with all the success storys I read.
Mr and Mrs terman have managed to accumulate 100K of debt over a 7 Year period. Primarily through lending on credit cards whilst paying a mortgage we could not afford. (With 3 Children)
I Thought
I thought we jointly owed around 65K on credit cards and when our mortgage was paid off in October 2018. I set on my way trying to get low interest loans. I thought this would be easy as we wouldnt be paying a 1.2K / month mortgage anymore and I would then we would be able to look at clearing our debts within 5 years.
What no one will lend to me!!! Arrrggg
When all my loan applications were refused. I started looking into My Credit Score with ClearScore and then Mrs termans, finding out we had a Joint debt of 100K.
After being refused a few more low cost loans I realised we would never be able to pay this sort of debt with interest Averaging 19%.
Finally we contacted StepChange late Dec 2018 and completed the budget sheets. They were very good and helpful sugesting a DMP would be best for us both.
My side of the debt being 67K and Mrs termans being 33K
At the same time I contacted Payplan who were also very helpful and had very fast response even on a weekend. They suggested an IVA for myself and a DMP for Mrs terman.
Initially I thought this would be the best way so we said we would proceed and were passed to the various departments.
It was only when I received the IVA proposal that I realised the full extent of the fees and IVA costs that would not go to the creditors. Meaning that if I was lucky enough to remortgage (Not!!) I would pay the fees,costs + 100% of what I owed to creditors + possibly some interest.
Now I know the chances of getting a remortgage would be slim. But since if I managed to freeze interest and fees with my creditors in a Repayment Plan it would only cost 8K more(if I didnt manage to remortgage). It currently doesnt seem worth risking my side of the house for.
After reading the Debt Free Wannabes we currently are thinking the best option is to do a Self Managed Payment plan. Try and claim what we can for irresposible lending. We have sent MSE PPIChecks with Resolver (Not expecting any).
If we managed to Freeze interest on all our Creditors this would put my 67K @ £840 /month paid back over 80months (6.6 Years) and Mrs terman 33K @ 340/month paid back over 97months (8 Years)

Now our dream with the help of the Debt Free Wannabe's is to Settle our Debts in 5 Years. I have a few Questions to get us started with our strategy, that I will post next...…….

terman

We have initially sent letters to our Creditors, asking to Freeze Interest and Charges & also advised them that we would like then to write off some of our debts through irresponsible lending so that we can pay the debts off within 5 Years. We have said we would pay each creditor their share of our surplus cash as detailed above whilst we hear back from them.
We sent letters out Approx 27th Dec 2018.
We have had nothing back replying to our letters yet.


1/We have said that we will pay as advised by Payplan in the DMP and have already made a Payment. But now realise we would be better making a £1 payment to each for a few months to build a F&F fund. If we have not heard back by the time of the next payment should we reduce the payment to a £1 and state that since we have not heard back we will pay the token gesture of £1 whilst they respond to our claim of irresponsible lending.


2/ Should we send CCA requests off yet or wait for the Debts to be passed on to DCA's


3/When can you try to make F&F offers (Obviously the smaller ones initially) . Do you need to wait for debts to go into default or passed to DCA's. Do you normally need to wait 1 Year before making any offers. Some of Mrs termans creditors are relatively small, if we only paid £1 to creditors for a few months we may have enough to make offers to?

terman

Mr & Mrs terman have made some good progress this week. 3 of our creditors Nxt, Bar*Clays and M*NA have replied saying they will accept our payment plans and freeze interest,


Also we sent off lots of PPICheck reports over Christmas through resolver. We have been getting No PPI found letters back nearly every day.


Finally we have had some luck that I was not expecting. I knew I had Payment Protection with M&*S that in 2011 passed to Pi*nacle (But wasn't expecting much) I put a claim in with minimum information to both Pinnacle and M*&S. Pi*nacle said it was M*&S who sold it, so passed the whole claim back to them. M&*S have accepted the claim and said they will send a cheque for nearly £6K that is for all payments and standard interest. Yippee That is a good start to our F&F fund.


I put some Questions on the F&F board last week and the Guys there helped a lot

1/ I found out to hold fire with F&F's as they will not be interested until they accounts have defaulted and been passed to DCA.


2/That I could submit now for CCA requests. But not likely to be unenforceable with modern high-street lenders. I have one card that I have had for over 25yrs so it could be worth ago.

jools1985

Well done on tackling your debts and having your plan in place. As for the 6K PPI payout - what a brilliant start to the year and to your DMP

terman

Thanks jools ,I think they must have heard me in the next village when I opened the letter. I will feel better when I actually get the Cheque though. I wonder if it will be one of those large 4ft ones they use on comic relief. :j
Need to start looking into irresponsible lending a little deeper though as we had £110K available to Mr & Mrs terman. I know we are responsible but it would have been an easier road ahead if we had reached this point at the £50K mark and the lenders certainly did not help and continued to up our credit limits. Whilst their low interest loan departments refused us on no disposable income.

Kitten868

I love your enthusiasm- it's great but I think you're finding you're rushing ahead before realising what you should be doing. I think you're there now.
First send CCA requests to all lenders as as you say some of them may not be enforceable.
Second it is best to start with the £1 payments so you can build up a savings buffer. You want your creditors to default you and kick off the six year clock.
Build up the fund to a point you're happy with and get used to being within your budget. Then you can start making payments to your creditors to bring the balances down.
But the best advice i can give is to keep trawling through this part of the forum and hearing other people's experiences. Reading about how other people in your situation dealt with it helps. There's so much help for you here but hold fire before doing anything else I think.
You can definitely do this xxx

terman

Hi Kitten
Some good advice, although Mr & Mrs terman didn't start looking for Debt help until Mid to late Dec
There are mistakes we have already made.
I certainly wish we had started making the £1 payments as you suggest for building the savings buffer and just asked for time whilst we looked at our finances.
I was keen to have our Interest Frozen as soon as possible so after we had decided the personal route, we started sending letters out for this and to stop phone calls. From reading this board I now know that this isn't always the best plan and things sometimes take time to get the most beneficial outcome.
I guess I'm looking for the best of both worlds -To have an 6/7 Yr plan with no hassle from creditors. But to be able to do F&F's, so we can be debt free in 5 Years.
I am not sure this strategy would give the 25% settlement figures I have seen some achieve but hopefully is possible.

terman

Creditor Contact.
As Mr & Mrs terman have 3 children and wanting to keep our debts from them. We had asked all our creditors not to phone and use email , Electronic Portals or Letter.
This would seem a straight forward request but highstreets lenders just keep replying back with
Please Ring Us:mad: they can not accept email or have access to portals
I may need to change our expenditure sheet as I hadn't allowed all this in stamps..

terman

On the 21st of Jan I sent a letter out to all Creditors that hadn't agreed Repayment Plans (2 out of 15 had agreed). Saying I would only pay them £1 for the next couple of months whilst we settled our Preferential Creditors (Gas/Elec Bill)


This week Mrs terman has responses back from Te*co ans S*insbury accepting her repayment plans and I have had a response back from B*Card saying they will accept mine once I am able to start making payments.
As I hadn't had any response back from my 3 largest Creditors (HS*C,Vir*in & Am*x) only text asking to phone them and letters asking to phone them. I found a little time to phone 2 of them.


HS*C -IT was clear that although I have sent letters out from 25Dec , 6Jan & 21 Jan. With I&E and Repayment Plans. None of them had been processed. After 40min on the phone they told me they where closing soon that they could Freeze Interest & Charges as they didn't have my I & E even though I have sent 3 copies in Letters, email and resolver. They asked me to fill in there online I&E but I said I would send another I&E out to them in the Post.


Vir*n - Again they had not processed any of my letters I sent out to them. I was on the Phone about 1hr whilst they read the letters and discussed with their Supervisor. Finally they agreed to put me on the hardship plan. Interest and charges would be stopped. they would default in 150days and after 180days debt would go to a 3rd party. RESULT:beer:

enthusiasticsaver

You seem to be doing quite well in getting payment plans accepted. F and Fs are usually not offered immediately and hopefully you have started to save some emergency money as you will not have access to credit now.

As you said ideally you would have made tokens, asked for breathing space and saved as much as you could while all the debts defaulted. The PPI money will come in useful both as emergency savings and the start of a F and F fund which will come later. Have you considered posting an soa on here? Soa is statement of account much like one you sent to payplan