In £11k worth of debt. What are my options?

greasedlightning

Hello MSE,

Familiar story, went off the rails due to 'muh depression' and racked up a ton of debt

I owe approximately £11k in total to credit cards and unsecured loans.

Aquacard £3.5k
Barclaycard £2k
Paypal Credit £2.6k
Capital One £300

Then there's a payday loan I'm repaying at £133 pm until November 19
Two more loans paying at £30 pm until early 2020

As a result, I've fallen way behind in my credit card payments, especially to Aqua. I pay the bare minimum when I can, but now I don't have the disposable income to cover this. I'm only taking home £700 pm and after rent, food, bills etc. I have about £87 left for the credit cards.

A family member has very graciously offered to loan me £4k towards my debt problem. As grateful as I am, this will only eat into a chunk of the debts and I'll still be unable to meet the minimum repayments.

Is it possible to use the £4k to make a full & final settlement to the creditors proportionate to the outstanding amounts? What are the chances this will succeed?

Many thanks for your help

sourcrates

Hi,

You need to get some debt advice from one of the free debt charities on how to tackle the debts, the 4K would be better kept by the family member to be honest, as settlement offers only work well with old defaulted debts that have been sold on a few times and may have questionable paperwork.

LawAbiding

As you are doing, it's time to face the reality that these debts are not helping your health and day to day living.

It's very similar to a position I was in, approx 7-8 years ago, up to my ears in debt and the best I did then was to contact a free Debt Management Plan provider, who will take control communicating with your creditors and offer a monthly payment dependant on your circumstances.

When you do, be 100% honest with everything, there is no shame to reveal, let's be honest, others including myself have been in worse situation then you.

Its the best thing I did, and all these years later, whilst I am not debt free, I am in much more control.

greasedlightning

Thank you for your replies.

I just want to get this debt done and dusted so that I can move on with my life. I don't think I will be able to while this is still looming over me.

I'm put off by a DMP. I've read that a lot of people are basically stuck in limbo, making payments but never actually clearing them as the creditors still add interest.

I don't see why the creditors wouldn't accept a settlement offer. I can't afford to pay them back now or in the foreseeable future. Worst comes to the worst, I'll file for bankruptcy and they'll get eff all.

LawAbiding

DMP can ask for interest and charges to be frozen as long as you stick with the DMP, this is what happened with me, otherwise like you said, you stuck in limbo. Explore it, don't be put off by what people say, as everyone's situation is unique.

Alternatively, miss payments on all of them, which would cause defaults on your credit report for 6 years, the debts will be passed to debt collectors, who stop charging interest, and arrange plans with them.

I have had payment plans of £0.50 per month with debt collectors, going upto £20 per month, never more.

If they every refused to accept my £0.50, I also said, take me to court and explain to a judge why you were not accepting it.

But whatever you do, get advice from the professionals.

sourcrates

If you fill out a statement of affairs I can tell you what options are available to you, you may qualify for a debt relief order, as full on bankruptcy for 11k is a tad extreme.

http://www.stoozing.com/calculator/soa.php

greasedlightning

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................ 700
Partners monthly income after tax....... 0
Benefits................................ 0
Other income............................ 0
Total monthly income.................... 700

Monthly Expense Details
Mortgage................................ 0
Secured/HP loan repayments.............. 0
Rent.................................... 250
Management charge (leasehold property).. 0
Council tax............................. 0
Electricity............................. 0
Gas..................................... 15
Oil..................................... 0
Water rates............................. 15
Telephone (land line)................... 0
Mobile phone............................ 70
TV Licence.............................. 0
Satellite/Cable TV...................... 0
Internet Services....................... 20
Groceries etc. ......................... 50
Clothing................................ 0
Petrol/diesel........................... 0
Road tax................................ 0
Car Insurance........................... 0
Car maintenance (including MOT)......... 0
Car parking............................. 0
Other travel............................ 0
Childcare/nursery....................... 0
Other child related expenses............ 0
Medical (prescriptions, dentist etc).... 0
Pet insurance/vet bills................. 0
Buildings insurance..................... 0
Contents insurance...................... 0
Life assurance ......................... 0
Other insurance......................... 0
Presents (birthday, christmas etc)...... 0
Haircuts................................ 0
Entertainment........................... 0
Holiday................................. 0
Emergency fund.......................... 0
Total monthly expenses.................. 420


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

No Secured nor Hire Purchase Debts

Unsecured Debts
Description....................Debt......Monthly...APR
Aqua CC........................3436.08...140.......0
Paypal CC......................2657.64...47.88.....0
Barclaycard CC.................1490.44...37.09.....0
OMNI CAPITAL RF loan...........399.36....30.72.....0
POUNDS TO POCKET loan..........1333.7....133.......0
RATESETTER loan................327.14....29.74.....0
Capital One CC.................389.38....15........0
Total unsecured debts..........10033.74..433.43....-


Monthly Budget Summary
Total monthly income.................... 700
Expenses (including HP & secured debts). 420
Available for debt repayments........... 280
Monthly UNsecured debt repayments....... 433.43
Amount short for making debt repayments. -153.43

Personal Balance Sheet Summary
Total assets (things you own)........... 0
Total HP & Secured debt................. -0
Total Unsecured debt.................... -10,033.74
Net Assets.............................. -10,033.74

JayRitchie

That SOA looks strange. Why do two adults only earn £700 a month without benefits on top? How do you only spend £50 a month on food?

sourcrates

Hi,

I’m afraid that SOA is far too simplistic, no council tax, no electricity, Tv licence, clothing, house insurance, entertainment, emergency fund, and only £50 on food ????

You must try to fill it in as accurately as possible.

greasedlightning

I live with a family friend. I pay her £350 out of my monthly wage (£700) and she takes care of everything.

Dean000000

Sill my question, but why are you only earning £700 a month?

Are your working a full week?

Your salary is around 8500/annum?