Rock Bottom - £65,000 of personal loan debt. Time for action

TheLostSheep

tlc678910 wrote: »

Hi,

If you want to sell your vehicle privately you might have to seek advice on the process as I don't think you can sell it while there are outstanding monies secured against it. (Not sure if the buyer would need to settle the finance?)

Fingers crossed you get your bonus and can use it to buy a car.
Tlc

Thank you very much for this. Re the car sale, advised there can be a private sale. They've advised that as long as get the £8.9k back then the vehicle finance company are ok. Doing it that way seems the best. A dealer sale would be low. Likely need a few weeks to sort this.

TheLostSheep

The many monthly money saving elements are very interesting, I am estimating that even within 24 hours I've totaled:

Pension reduced: £150 extra p/m
Lunch to work: £70 a month extra
Sale of assets Ebay: £110 (I'm sure I can find other items)

Have some temporary "breathing space" after making creditors aware. I need to go through every other line item above in SOA.

A question re Mortgage. It's at £600 p/m. There is the option to review. I have a slight concern that I am not sure if anyone can clarify. Surely the Bank will look at my credit file and see outstanding debt and be very concerned at a review? Bank statements, all be it from the non household account will not look clever with large loan repayments and a period of excessive gambling tnx over 6/7 weeks. There's never been any missed mortgage repayments. I guess just informing them of the circumstances and looking to lower payments is objective, not more borrowing.

itchyfeet123

cg81 wrote: »

Already today I’ve lowered my pension contributions to zero. I am estimating I’ll have around £150 extra per month from that minimum.

Not sure I agree with this strategy. How much was your employer contributing? Even if it's the legal minimum of 66% (ie 2% to your 3%) it more than outweighs even your highest interest debt.

TheLostSheep

Employer makes a x2 I am sure it is contribution. It used to just be matched. Are you suggesting that be better to go with the minimum amount given there’ll still be some sort of contribution?

I’d still have more monthly even if did that. My issue was that there’s £25k in pot but it’s lost a lot of value in last year

Broadyx

cg81 wrote: »

The many monthly money saving elements are very interesting, I am estimating that even within 24 hours I've totaled:

Pension reduced: £150 extra p/m
Lunch to work: £70 a month extra
Sale of assets Ebay: £110 (I'm sure I can find other items)

Have some temporary "breathing space" after making creditors aware. I need to go through every other line item above in SOA.

A question re Mortgage. It's at £600 p/m. There is the option to review. I have a slight concern that I am not sure if anyone can clarify. Surely the Bank will look at my credit file and see outstanding debt and be very concerned at a review? Bank statements, all be it from the non household account will not look clever with large loan repayments and a period of excessive gambling tnx over 6/7 weeks. There's never been any missed mortgage repayments. I guess just informing them of the circumstances and looking to lower payments is objective, not more borrowing.

Hiya, I have been watching your thread the last couple of days and was going to raise the question about your mortgage rate. If you stay with your same lender, providing you aren't in arrears, you should be able to do whats called a Product Transfer. This means you can switch your rate to another on offer and they won't re-score you or question your current finance situation. You may be able to log onto your internet banking and do it all through there and select a new rate. I know I can with my mortgage company, and that's also the process we operated at the bank I worked at.
I would log on and have a look, or give them a call. You don't need an adviser to carry out this for you, unless you want to look at extending the term at the same time.

Verityspinelli

cg81 wrote: »

Thanks for all the replies and advice. Carefully reviewing all points made and will reply.

Short update. All creditors contacted. VW have cancelled the planned DD as have Cre*t*on. VW state £8900 pays off the vehicle. My estimates are private sales are in the £10,500 to £11,000 range so my thought on equity was correct. They are willing to negotiate a short 1/2 month deferment or plan then either need to terminate, trade to lower cost or sell. Selling seems better. I’ve worries over reliability of a £2k vehicle covering the mileage I do but it’s one to seriously consider.

The Cre*ti*n loan I spoke to their collections team and explained situation. Stated £1 payments. They offer 3/6month plan if I provide my SOA and payslips which I will.

I found both surprisingly helpful. The people I spoke to seemed to want to help me fix this and offered suggestions. Stepchange was suggested which need to read about.

Z*pa want me to complete their SOA template.

Feel a bit of breathing space but lots to do still. Bit worried about state of my credit file having thought about it. VW state default shows whereas others stated Payment Plan with notes. Perhaps evidence car is going to have to go...

Sometimes it’s making the first steps that are the scariest, well you’ve done that and hopefully things are looking a little brighter, well done OP for taking those steps, there’s lots of useful advice from these guys. I wish you the best in your journey forward. Stay Motivated.

sazaccount

Hi

I hope you don't mind me posting but something in your op has stuck with me you said you only have £100 until payday (mid Feb) I suggest popping over to the old style board for some great advise on making this money stretch and/or taking account what's in the cupboard/freezer to try and minimise any additional spending until payday.

Suseka97

cg81 wrote: »

A question re Mortgage. It's at £600 p/m. There is the option to review. I have a slight concern that I am not sure if anyone can clarify. Surely the Bank will look at my credit file and see outstanding debt and be very concerned at a review? Bank statements, all be it from the non household account will not look clever with large loan repayments and a period of excessive gambling tnx over 6/7 weeks. There's never been any missed mortgage repayments. I guess just informing them of the circumstances and looking to lower payments is objective, not more borrowing.

Have been watching your post with interest and am really pleased to see all the help you've been getting. Go MSErs
I just wanted to comment about the mortgage review and add my experience. I'm in a DMP, have been now for 6 years and currently self-managing. During that time I have reviewed my mortgage twice and never had a problem. Of course I had to stay with the same provider (my credit file is at rock bottom) but was able to do it online with no problem and I wasn't credit checked - literally took minutes to do each time. I was able to get better rates and drop my monthly payments too.

Also, re your pension - I know another poster has suggested you revisit the intent to cancel. I know it may be seen as an expense you cannot afford, but it is an investment in your retirement and if you are getting any sort of matched contribution from your employer - I really wouldn't cancel it. There are other ways to save (as you've already identified) and if you end up in a DAS surely you would want to pension contribution to remain as a legitimate expense. Just a thought.

Good luck

nsl101

Your situation is very similar to mine in dec 2017, I made 2 new years resolutions and they were simple..
1) no new debt nothing (car finance, credit cards, pay monthly phone, pay monthly car insurance, etc).
2) reduce outgoings and replace with provisioning for future expenses, and divert a small proportion into debt over payment.

So to explain a little more about this, In december 2017 i had 46k of debt, I consolidated all my creditcards, loans that were not 0% interest into one personal loan. This is a choice i made to take control but It had pro's and con's. Face with the choice again i might do it differently however I will list them.

Pros:
- I had a smaller monthly obligation which meant I could breath and reduce my stress on cash flow. This in turn also freed up a small amount of money to put towards future expenses which were normally not provisioned for which ended up pushing me further into debt.
- The interest became under control, credit cards with 0% rate offers seam good but theres always a need to go back and review them regular to ensure you dont incur costs and you dont end up paying interest.
- I know if i do nothing in 6 years this debt is gone. On credit cards i would be paying the minimum and i would still have as large of a debt today as I did in Dec 2017.

Cons:
- I now have to pay 7% interest on 35k worth of debt. - this is potentially more expensive than if i kept the debts as they were and monitored them closely and worked them down with the snowball method. however the stress increases with this method.
- I am likely to fall back into old habits and spend the extra i'm saving monthly by having stabilised the debt in a loan for a fixed period.
- The debt now feels bigger and less possible to settle.

I would urge you to think carefully about consolidation of you debts into a larger personal loan. This wont fix the problem, as the problem starts with spending more than you can afford.

I have worked hard on reducing my outgoings, no netflix, no contract mobile paying car insurance upfront, taking an amount i spent for christmas last year - divided by 11 add 5% for inflation and then i dump that into a savings pot . simple things like this makes all the difference. It feels hard at first but once you get started it becomes addictive.

My advice is to do one thing each day to move you forward on saving money and paying off debt.
I would start by just writing down everything you spend in a notebook as a couple, and i mean everything down to the last penny. I found i spent more than I thought as I never actually notice how often i thought "Its only a few quid"...

You have to change your behaviour, if you want to solve this and not be in the same position again, I wish i knew what I know now at 38 when I was 28 I would be well on my way to becoming financially free by now. I did a sum and added up how much Id spent on cars and interest etc over the past 10 years, and basically I could have paid my debt off 3 times over that money could have gone into investment and worked for me.

I will be interested to follow your thread and good luck if you need any advice these people really know there onions. I am more than happy to help too. I don't keep my diary as up to date as i should but In short last year i did clear 8k of capitol on my debts overall. This I would not have done without the advice on this forum.

Good luck

runninglea

Good luck and will follow your progress