Struggling with debt? Ask a stepchange debt adviser a question

Emily246

HI, 

I am looking for some advise. 

My partner and I have racked up a debt of £31,000 (rounded), which was £38,000 but we have been paying off. 

We have both worked hard and managed to get promotions which means more money to pay off the debts but it seems regardless of all the work we put in, everything goes wrong. Both of our car engine had issues resulting on him taking out finance as he has a young daughter and me purchasing a car outright (my parents helped). 

Now 5 month into having his newer car, there is another issue which is going to need fixing. Being quoted around £560 for this. On top of this I have a service due and insurance in two months. 

I already work 7 days a week and it seems to be making such a unnoticeable dent. I still have to use credit cards to get petrol and there are little bits going back on the cards and his daughter also needs clothes. 

We spend £400 on petrol a month between us as his daughter lives 240 miles each way and we just don't seem to be making any headway on the credit card debt. 

We would like a mortgage and I have £10,000 in a help to buy ISA but if I use this, then I am not able to use the house ISA as I can only pay £200 a month into it and has taken me nearly 5/6 years to save this.

I feel so helpless at the moment and although I see the loan amounts dropping, I just cannot see a light at the end of the tunnel. 

Can you offer any advise on what to do? Every time I set a budget and plan of action to clear debts, something else comes along and needs paying for. 

StepChange_Allen

Emily246 said:

HI, 

I am looking for some advise. 

My partner and I have racked up a debt of £31,000 (rounded), which was £38,000 but we have been paying off. 

We have both worked hard and managed to get promotions which means more money to pay off the debts but it seems regardless of all the work we put in, everything goes wrong. Both of our car engine had issues resulting on him taking out finance as he has a young daughter and me purchasing a car outright (my parents helped). 

Now 5 month into having his newer car, there is another issue which is going to need fixing. Being quoted around £560 for this. On top of this I have a service due and insurance in two months. 

I already work 7 days a week and it seems to be making such a unnoticeable dent. I still have to use credit cards to get petrol and there are little bits going back on the cards and his daughter also needs clothes. 

We spend £400 on petrol a month between us as his daughter lives 240 miles each way and we just don't seem to be making any headway on the credit card debt. 

We would like a mortgage and I have £10,000 in a help to buy ISA but if I use this, then I am not able to use the house ISA as I can only pay £200 a month into it and has taken me nearly 5/6 years to save this.

I feel so helpless at the moment and although I see the loan amounts dropping, I just cannot see a light at the end of the tunnel. 

Can you offer any advise on what to do? Every time I set a budget and plan of action to clear debts, something else comes along and needs paying for. 

Hi Emily

Welcome to the forum and thanks for posting.

I'm sorry to hear that despite all your best efforts so far, things are still a real struggle. I know what you mean myself about there being one thing after another, so I can absolutely empathise.

It's difficult to give you tailored advice on here without seeing the full picture in terms of income, expenses and a bit more detail on the debts. It sounds like you're doing most things that you can.

What you could do is to register with us, either on the phone or online, do a full budget and then you can speak with one of our advisors about any suggestions we can make or options you may have to try something different.

Please visit our website and get started there: www.stepchange.org

I hope this will help in some way.

Allen

Brucema07

Hi

I have a few credit card debts and struggling to meet minimum payments.

 I'm trying to clear as much as possible due to remortgaging next May.

Two of the credit card companies have agreed to write off the debt, but what does this mean? Will this effect me remortgaging?

Thank you 

StepChange_Patience

Brucema07 said:

Hi

I have a few credit card debts and struggling to meet minimum payments.

 I'm trying to clear as much as possible due to remortgaging next May.

Two of the credit card companies have agreed to write off the debt, but what does this mean? Will this effect me remortgaging?

Thank you 

Hi there

Thank you for your post.

I'm sorry to hear you're struggling to meet minimum payments, I can understand why you're looking to clear the debt before remortgaging.

It's positive that two of your creditors have agreed to write off the debt, there is a chance that it may show on your credit file as paid, however if there are any missed payments, reduced payments or if the account has defaulted these will be recorded on your credit file for six years.

If the creditor has agreed to write of some of the debt based on you paying a lump sum for example, this may show on your credit file as partial payment. 

You can find more information here

It's difficult to say if this affect your chances of remortgaging, if you need mortgage advice you can contact StepChange for free here. 

I hope this helps.

Patience

BDeluxe

I've been put off contacting StepChange after reading several posts on other forums.

The main reason is people saying they were talked into an IVA and not being informed properly about the entire process. The gist of it is they entered into the IVA and paid the agreed amount but after 5 years they were forced to take out an extra mortgage on their property to cover the shortfall between what they had had already paid (plus charges) and the original debt which doesn't seem like it's beneficial to me. Surely if you were in a position to release equity then that would be the obvious (and cheapest) thing to do in the first place.

When I enquired about debt issues on MSE before I was told I really shouldn't take out equity from my property and a DMP or IVA would be much better, this makes me think the companies that run these services are more interested in the charges they can levy than actually helping anyone. I appreciate StepChange is a charity but they only actor in an advisory sense and are not the entity that actually offers and profits from the IVA's, is this correct?

I'd appreciate any feedback on this.

RAS

TimSynths said:

I've been on a DMP since 2008, I currently only pay £30pm but come Oct/Nov I'll have to stop it to put towards the gas and electric. None of the debts are on my credit file any more, what is likely to happen?

Tim

Please start your own thread so you can get tailored advice.

It would really help if you told us who is managing your DMP and how much you still owe. Any CCJs?

StepChange_Allen

BDeluxe said:

I've been put off contacting StepChange after reading several posts on other forums.

The main reason is people saying they were talked into an IVA and not being informed properly about the entire process. The gist of it is they entered into the IVA and paid the agreed amount but after 5 years they were forced to take out an extra mortgage on their property to cover the shortfall between what they had had already paid (plus charges) and the original debt which doesn't seem like it's beneficial to me. Surely if you were in a position to release equity then that would be the obvious (and cheapest) thing to do in the first place.

When I enquired about debt issues on MSE before I was told I really shouldn't take out equity from my property and a DMP or IVA would be much better, this makes me think the companies that run these services are more interested in the charges they can levy than actually helping anyone. I appreciate StepChange is a charity but they only actor in an advisory sense and are not the entity that actually offers and profits from the IVA's, is this correct?

I'd appreciate any feedback on this.

Hi there

Thanks for posting.

I can assure you that StepChange will only ever explain which debt solutions are available to you and which one we recommend, and why. If you had the option of an IVA, you'd almost certainly have the option of a DMP too and we would make that clear both verbally if you speak on the phone, and in your paperwork.

Yes, there will absolutely be times where we will recommend an IVA, like we will recommend bankruptcy, a DRO or a DMP to other clients, as we tailor the advice to each individual client.

The scenario you discuss above regarding equity is this. If you're a homeowner when you enter an IVA, it is a condition of the IVA that during the last 6 months of the initial 5 year IVA, you're required to make an attempt to re-mortgage to release some equity into the IVA. If you're unsuccessful, and there is more than £5,000 equity in the house, you then have to pay instalments for a further 12 months. 

My understanding is that's it's all but unheard of that you can successfully re-mortgage whilst on an IVA due to the effect it has on your credit score, so as an advisor I view an IVA as a homeowner as a likely 6-year IVA.

We would explain this at the debt advice stage and our IVA team would also make this clear to any clients looking to enter into an IVA.

If anyone believes that things haven't been made clear, like everyone we have a complaints process and all our calls are recorded so we can always get to the bottom of it.

I hope this is helpful.

Allen

Top_Cat_69

Hello. 

My defaulted credit card account was bought by Cabot & I have a regular payment plan in place. But they are both showing as defaulted accounts on some credit reports, can you tell me if that is correct or should It only show one as defaulted ?
Thank you !

StepChange_Allen

Top_Cat_69 said:

Hello. 

My defaulted credit card account was bought by Cabot & I have a regular payment plan in place. But they are both showing as defaulted accounts on some credit reports, can you tell me if that is correct or should It only show one as defaulted ?
Thank you !

Hi Top Cat

Welcome to the forum and thanks for posting.

The short answer is that there shouldn't be two defaults on your credit file for one debt. When a debt is sold, the original creditor should mark the debt as 'satisfied' as it's no longer outstanding with them as they don't own the debt.

So if it's happened a little while ago, I'd contact the original creditor and ask them to update your credit file for you.

I hope this helps.

Allen

NiteEyez1980

Hi sir

I was posting on the other forum.

In effect I have 61k of unsecured debt accross 2 loans and multiple credit cards. 

My story is on there if you wnat to read it however the consensus of the posts there is to basically stop paying my unsecured debt now and not to contact my creditors.

Now I wanted to contact them, ask them to freeze interest and I'll pay 50% of the minnimum fee.

My wife is gripped with fear that we'll be late charged to death and have the bailiffs around (and that's equal a divorce) 

Any advice will be great as what wasn't said in the forum is what happens after I stop paying. The debt won't disappear and in my mind the above will happen. 

I havent had a decent night's sleep in 6 months worrying about thaix please help. 

For some info. Homeowner, have 6 kids (4 lil ones at home) driving 100m+ a day to work. Non smokers. No hobbies etc

Please help