Struggling with debt? Ask a stepchange debt adviser a question

freshstart2023

Hi, looking for a little advice please. I have found myself in a mountain of CC debt, completely my fault. I have never missed a payment in my life but have came to realise that as long as credit is available to me, I’m never going to get out of this and will probably only make things worse. I want to take a hold of this and start paying back my debts. I called Barclaycard last week and they suggested a payment plan. I said I would think about it and call back.  Having read the forum I understand that a DAS may be better (quicker) in terms of credit file recovery? However, I am in the process of hopefully changing jobs. I have been with my current employed for 15 years but I really need a change as it’s affecting my mental health.  The only issue is that if I change job my salary will reduce and it will be impossible to keep up my current repayments if I change job. Should I start looking at DAS now based on my current situation or wait until I am in a new job/salary? Thankyou 

StepChange_Aidan

icarus_69 said:

Hiya,

For various reasons I have built up a fair amount of credit debt. I am in a better place now - my income isn't incredible but I'm able to keep up with current repayments etc.

However, I feel that the current setup I have isn't as good as it could be, with regards to the interest I'm currently paying.

I'm hoping someone here can help by making some suggestions (e.g. balance and/or money transfer cards, loans to apply for).

My current credit score is just over 700. I am open to the idea of applying for new cards if this would help reduce the interest I'm having to pay.

Here's a breakdown of what I'm currently repaying:

Santander 39.94% EAR (variable):
- Balance -£1,862.96

Monzo - 33.4% per year / 39.0% EAR (variable):
- Balance -£288.92

MBNA - 28.1440% Simple annual rate (Purchases + Money Transfers) / 32.07% Effective annual rate (Purchases + Money Transfers):
- Purchases balance £635.55
- Money Transfer balance £222.21

PayPal Credit - 29.9% annual interest rate:
- Outstanding balance £205.29

PayPal "Pay in x" Promotional purchases (0% p.a. if paid within agreed timeframe/installments):
- Amount due £0.00 / Outstanding balance £346.85 (expiry of promotional 0% 26/01/23)
- Amount due £79.00 / Outstanding balance £152.60 (expiry of promotional 0% 07/03/23)

Any advice would be massively appreciated!

Hi,

Thanks for posting.

We’d need more information about your income and spending to be able to give specific advice, but generally, StepChange don’t recommend balance transfers or consolidation loans.

I’d suggest continuing to pay your regular repayments if you can afford them, but if you have any additional funds available you could pay extra to the debts with the highest interest to clear them faster.

If you’d like to put together a budget and get advice from StepChange, you could use our online tool or give us a call to speak with an advisor.

I hope this helps,

Aidan

StepChange_Aidan

freshstart2023 said:

Hi, looking for a little advice please. I have found myself in a mountain of CC debt, completely my fault. I have never missed a payment in my life but have came to realise that as long as credit is available to me, I’m never going to get out of this and will probably only make things worse. I want to take a hold of this and start paying back my debts. I called Barclaycard last week and they suggested a payment plan. I said I would think about it and call back.  Having read the forum I understand that a DAS may be better (quicker) in terms of credit file recovery? However, I am in the process of hopefully changing jobs. I have been with my current employed for 15 years but I really need a change as it’s affecting my mental health.  The only issue is that if I change job my salary will reduce and it will be impossible to keep up my current repayments if I change job. Should I start looking at DAS now based on my current situation or wait until I am in a new job/salary? Thankyou 

Hi,

Thanks for your post.

The Debt Arrangement Scheme (DAS) is available in Scotland and allows you to set up a Debt Payment Programme (DPP), a legally binding agreement to repay your debts in affordable instalments. Like most other types of debt solution, a DPP will show on your credit file for six years.

In a DPP you would make a monthly payment based on the amount remaining in your budget after you’ve covered your priority bills and living costs. If your circumstances change you would need to contact your DAS administrator for a review and may be able to apply to vary the payment or request a payment break.

If you’re expecting a change to your income, it may be better to wait until your new salary is confirmed before starting a long-term plan, but in any case, I’d recommend getting full debt advice before deciding. You can get help from StepChange online or give us a call to speak with our Scottish Debt Advice team.

There’s some more information about the DAS here.

Kind regards,

Aidan

Tufty80

Hi StepChange,

I was hoping for some advice regarding our situation.

We (my wife and I) have unsecured debt (that has interest payments) of approximately £48k. We also have an existing consolidation loan that is secured against our property with around £18k remaining, and £7k in unsecured (but interest free) debt.

We live in Scotland and have approximately £250k equity in our home, so had been planning to look at releasing some of that equity to pay off the debt with interest (both the £48k unsecured and £18k secured), but we have been declined by our mortgage provider. They said that we meet the affordability requirements no problem, so it's likely related to our credit reports.

We did have a number of late payments in the first half of last year due to some family issues, but do now have 6 months of clear payments history on our account. We are just about managing to make the monthly payments but it has been a real struggle - we have an old house with oil heating and haven't been able to afford to heat the house, and that along with the debt hanging over us has been really stressful for us both.

After being declined the equity release yesterday, we started looking into the DAS option and we've spoken with PayPlan about setting this up. I'm just a little concerned about what this means for our credit rating in the future, and whether it will cause us other problems in the long term.

I guess the advice I'm looking for is whether the DAS option is best for our situation, or whether we're better continuing to struggle to service our debt monthly with a view to increasing our credit scores and then being able to release the equity in our home to pay off the debts? I'm just concerned about entering into a DAS and then adversely affecting our credit scores way into the future as we look at future mortgage terms when our fixed rate comes to an end etc.

I'm also not sure if we did continue to service our debt monthly how long we'd likely need to do this for without missing payments for it to improve our credit rating enough to be able to use the equity release option - initially the bank had said six months (when we had three), but we reached that and it was still declined.

My other concern is that we need to change our car as the one we currently have isn't suitable for our family (2 adults, 3 growing kids) due to space and it's only rear wheel drive which is a safety concern when it's snowy/icy here. Our current car is on PCP and we're looking to change it in the near future - would entering into a DAS likely impact on our ability to get another car on PCP?

Apologies if that's a bit of a ramble, but just trying to articulate our current situation.

Thanks in advance for any advice you might be able to offer.

StepChange_Aidan

Tufty80 said:

Hi StepChange,

I was hoping for some advice regarding our situation.

We (my wife and I) have unsecured debt (that has interest payments) of approximately £48k. We also have an existing consolidation loan that is secured against our property with around £18k remaining, and £7k in unsecured (but interest free) debt.

We live in Scotland and have approximately £250k equity in our home, so had been planning to look at releasing some of that equity to pay off the debt with interest (both the £48k unsecured and £18k secured), but we have been declined by our mortgage provider. They said that we meet the affordability requirements no problem, so it's likely related to our credit reports.

We did have a number of late payments in the first half of last year due to some family issues, but do now have 6 months of clear payments history on our account. We are just about managing to make the monthly payments but it has been a real struggle - we have an old house with oil heating and haven't been able to afford to heat the house, and that along with the debt hanging over us has been really stressful for us both.

After being declined the equity release yesterday, we started looking into the DAS option and we've spoken with PayPlan about setting this up. I'm just a little concerned about what this means for our credit rating in the future, and whether it will cause us other problems in the long term.

I guess the advice I'm looking for is whether the DAS option is best for our situation, or whether we're better continuing to struggle to service our debt monthly with a view to increasing our credit scores and then being able to release the equity in our home to pay off the debts? I'm just concerned about entering into a DAS and then adversely affecting our credit scores way into the future as we look at future mortgage terms when our fixed rate comes to an end etc.

I'm also not sure if we did continue to service our debt monthly how long we'd likely need to do this for without missing payments for it to improve our credit rating enough to be able to use the equity release option - initially the bank had said six months (when we had three), but we reached that and it was still declined.

My other concern is that we need to change our car as the one we currently have isn't suitable for our family (2 adults, 3 growing kids) due to space and it's only rear wheel drive which is a safety concern when it's snowy/icy here. Our current car is on PCP and we're looking to change it in the near future - would entering into a DAS likely impact on our ability to get another car on PCP?

Apologies if that's a bit of a ramble, but just trying to articulate our current situation.

Thanks in advance for any advice you might be able to offer.

Hi,

Thank you for your post.

Any reduced payments that you make to your creditors through the DAS would be recorded on your credit file for six years. This doesn’t mean you won’t be able to apply for credit in the future but could make it more difficult and you might not be able to get the best deals.

I wouldn’t be able to say how long you would need to go without missed payments to be able to apply for the equity release, as each company will have their own internal criteria or scoring system to make these decisions - they won’t use the credit score you can see on credit reference websites.

In most cases, paying a reduced amount to the creditors via the DAS will be a better option than struggling to afford the regular repayments, but I would need more details to be able to say for certain which is the best debt solution for your situation.

If you’d like to put together a budget and get advice from StepChange you can get help online here or you could give us a call to speak with our Scottish Debt Advice team.

I hope this helps,

Aidan

icarus_69

Hiya. I'm considering a DMP but want to understand what my best options are. I have just under £4000 debt spread across current account overdraft, paypal credit and a credit card. I am able to make payments, but what I want more than anything is to not be paying interest. What are my options? Would a debt management plan, managed by stepchange, mean I don't pay any interest? And how long would I not have to pay interest for? Would this be for just a month? Or longer?

ED17

Hi, Hope this is the right page.

Im 24, living with parents and I don't really know how I've let it get this bad but something now needs to be done.

I've currently racked up £1250 overdraft with RBS (39%EAR) & a £2000(19%EAR) overdraft with Monzo. I also have a £7200 loan left of £8200 Loan from Monzo to pay.

I've seen the recent post about overdrafts about looking to get out of overdrafts with the rising interest rates. I don't know if I've done it right but It says I have 0% chance of bein accepted on any credit cards on your calculator.

I really don't know enough about what to do, so please can you explain what is the best way forward!

ow100

Hello!

I'm new to the site and have found the information on here really useful. Currently I am in £13,000 worth of debt. This includes 3 loans and two overdrafts that I have maxed out. Although I work full-time with a decent monthly pay I am still struggling to keep on top of these. I have barely any money left to spend once everything comes out. It is effecting my mental health and I am losing sleep just thinking about my future and how I'm going to keep up with all the money that I need to pay back. Only a handful of my friends know a bit about my situation, my family has no idea and my partner who I live with does not know either. I just can't bring myself to tell them and I feel embarrassed and ashamed that I have got myself into this situation.

I have made some lifestyle changes (this includes not going out as much, not going on many holidays in the year and generally just not overspending). I feel like this is helping but I still have nothing to show for it at the end of the month. 

I filled in a form for StepChange and they have advise that I go on a DMP. I'm worried this will affect my already wavering credit score and I just wanted to have some advice about going on one? In my opinion this really is the last resort as in the near future me and my partner would like to apply for a mortgage (his credit score is good and he has no debts). 

Any advice will be welcome - Thanks!

susiemoney

I am struggling financially, I have about £30,000 of debt across various cards and loans. I have had my head in the sand for a while, ignoring calls and letters. But I've now worked out an income and expenditure statement as best I can (I have just started freelancing and so far have earned £0 some months and £4,000 gross others). Most creditors are being supportive with a token payment agreed for now.

One creditor - Link - has already passed the details to a law firm Kearns. Which I think is their in-house firm. I know this is my fault for sitting on it for so long. I called Kearns last week to go through the income / expenditure. They took details of my rent, utilities and council tax, and travel. They didn't ask about health expenses (I receive PIP as I have limited mobility), food and household costs, communications costs or anything other than the basics. Then they told me I have £200 a month surplus income. I asked how they had arrived at this figure and it seems they have taken the standard 'allowances' for things like food.

The person I spoke to wasn't able to complete a full assessment with me. I have to complete a form and they will 'decide if they will accept any other expenses'. I'm assuming I just need to fill in the form at this stage, but any further advice would be great, especially if they challenge any of my figures (none of which are excessive).

1stTimer

Hi

I have a DMP open with Stepchange since 2019 and want to firstly thank you and your company so much for all the support and help, I was sinking in debt and my anxiety was through the roof. Since the day you took over I have been able to breathe again so will be forever grateful:-)

I am now brave enough to go self managed and tackle the final creditors myself so have gone ahead and cancelled my account with you. Do you send me details of who I owe and amounts? I’m afraid I may have been a bit quick. I took screenshots of the companies and amounts but have no idea how I go about contacting them now with the little details I have.