Struggling with debt? Ask a stepchange debt adviser a question

in2deep_2

Hi, I have around £25k on cards but it’s all at 0% until the end of the year.
Im making minimum payments (£400pm) and managing but I already know I can’t afford the full rates at the end of the year.
what do I do? Seems silly to upset the 0% at the moment.
I could in theory afford to consolidate but with my borrowing so high I don’t seem to qualify  for a loan even though I’d be paying less (but for longer).

what’s my next move??

Thanks

StepChange_Aidan

in2deep_2 said:

Hi, I have around £25k on cards but it’s all at 0% until the end of the year.
Im making minimum payments (£400pm) and managing but I already know I can’t afford the full rates at the end of the year.
what do I do? Seems silly to upset the 0% at the moment.
I could in theory afford to consolidate but with my borrowing so high I don’t seem to qualify  for a loan even though I’d be paying less (but for longer).

what’s my next move??

Thanks

Hi,

Thanks for your post.

I wouldn’t typically recommend taking out a consolidation loan as you’re likely to end up repaying more in the long term. It can also be difficult to obtain one if your credit file already shows a high amount of borrowing, as the lenders have no guarantee that the loan will be used to clear the existing debt.

There’s some more information about debt consolidation here.

If you know that you’re not going to be able to manage the credit card payments at the end of the year, a solution such as a Debt Management Plan to repay them at an affordable rate could be the answer. However, we’d need more information about you and your finances to be able to give a specific recommendation.

If you’d like to get advice from StepChange, you can create a budget and review your options on our website or give us a call to speak with an advisor.

I hope this helps,

Aidan

Jasebroke4abit

Hi Everyone.  I have been reading all these forums for the last week or so and it’s really helping me to get started on this journey. 

Thanks for all the useful information and making me not feel so alone through this tough time in my life. 

I have 52k of debt with 6 credit cards and 1 loan with my current bank. 

I own a house worth 300k with 200k mortgage and secured loan of 40k all in my name. (These I can manage easily). 

I have a Mrs and our 2 kids living with us. 

My 0% period for my cards are coming to the end and I’m terrified as I can’t move the money anymore. 

I’ve been speaking to stepchange and will be going ahead with a DMP for £266 a month for 16 years. I know that’s a long time but I’ll save and clear it all with settlements hopefully within 5 years. 

I’ve not started my DMP yet as I’m confused about defaulting, not defaulting, payment markers etc.

So my questions are: 

step change don’t seem keen on me defaulting before starting my plan. Why? 

I have 7 creditors, what if most default and some don’t? When do I start my plan? 

And how long after ignoring a default will I start getting into deeper trouble? 

I worried if I wait for all to default I’ll end up with balliffs at my door. I have a nice car and some valuable things in my house such as TVs etc which we obviously need. 

I’m also worried if the debt gets sold before I start my DMP will the new debt collector accept my DMP? 

When is best to cancel my direct debits? 

And do I need to phone each creditor to let them know I’m dealing with stepchange or will that put an agreement to pay marker on my account? 

I’ve never missed a payment in my life so this is terrifying and don’t feel right. 

Sorry for all the questions! 

It’s taken me a couple of weeks to build up the courage to write on here. 

Thanks in advance for any advice 



 

Acaldow1

Hi, I've been looking into this forum and my options and looking for some support. I currently have a mortgage, 2 loans and 2 credit cards. I live with my husband and 4 year old. We both work full time but the cost of bills and our debts is just spiralling. We have 35k debt over two loans and two credit cards. Currently don't have money left for food or any emergencies as bills and debt payments take everything. Step change have suggested a DMP to pay off but I'm unclear as to whether this is the right thing. I don't want to rush into anything. I've seen threads on here saying to default on payments before rushing in. Is this right?? I currently don't default on anything because I'm scared to do so! I don't want to lose my house or cars as these are required for our jobs! Any advise helpful as it's affecting my health. 

sourcrates

@Jasebroke4abit and @Acaldow1.

You have both posted questions for the forum, but in the stepchange debt advisors thread.

If you want answers from them, great, but if not, please post in the general DFW forum by starting a new thread.

kjo13

Hi I hope I'm in the right place...I am currently absolutely drowning and confused about how to claw myself out of the mess I've found myself in. I always had two credit cards with under 800 on each (not great I know) bit due to change in circumstances (legal care of a family members child) which meant childcare fees so I could work I have ended up moving to 0% cards then stupidly spending on them and now have about 6 cards all owing 1000-1500. I am struggling to make the minimum payments and just don't know what to do. Do I default on them all and take the hit and hope no one knocks my door ie bailiffs? I had arrears in priority debts but am sorting that slowly with payment plan but the credit card debts are keeping me awake at night. I work full time 38k and rent rather than own my house but I just no longer know how to manage the credit cards. I cannot use some of the options ie bankruptcy and DPO because I have a car which I need for work and its worth more than 2k. Any help gratefully received!

StepChange_Aidan

Jasebroke4abit said:

Hi Everyone.  I have been reading all these forums for the last week or so and it’s really helping me to get started on this journey. 

Thanks for all the useful information and making me not feel so alone through this tough time in my life. 

I have 52k of debt with 6 credit cards and 1 loan with my current bank. 

I own a house worth 300k with 200k mortgage and secured loan of 40k all in my name. (These I can manage easily). 

I have a Mrs and our 2 kids living with us. 

My 0% period for my cards are coming to the end and I’m terrified as I can’t move the money anymore. 

I’ve been speaking to stepchange and will be going ahead with a DMP for £266 a month for 16 years. I know that’s a long time but I’ll save and clear it all with settlements hopefully within 5 years. 

I’ve not started my DMP yet as I’m confused about defaulting, not defaulting, payment markers etc.

 

Hi,

Thanks for your post. I can see that you’ve already had plenty of useful advice from others in your separate thread, but to answer your questions:

Jasebroke4abit said:

So my questions are: 

step change don’t seem keen on me defaulting before starting my plan. Why? 

 

We would typically recommend starting a debt solution straight away if it’s suitable for you. In a DMP, your creditors will normally default the accounts after 3-6 months of reduced payments but if you wanted to ensure that they do first, you could delay setting up your plan.

Jasebroke4abit said:

I have 7 creditors, what if most default and some don’t? When do I start my plan? 

And how long after ignoring a default will I start getting into deeper trouble? 

I worried if I wait for all to default I’ll end up with balliffs at my door. I have a nice car and some valuable things in my house such as TVs etc which we obviously need. 

I’m also worried if the debt gets sold before I start my DMP will the new debt collector accept my DMP? 

 

Defaults are recorded on your credit file and will make it more difficult to obtain credit in the future. However, six years after the default date, all record of the debt will be removed.

If a creditor doesn’t default the debt, this means that it will affect your credit file for longer, they could also continue to add interest and charges.

Once an account has defaulted, the creditor can then pass the debt onto a collections agency or could take court action to recover the money. Please be aware that it could take months or even years for the creditors to take any further steps.

For most types of debt, the account would first need to default and then court action would have to be taken to then pass it onto bailiffs. Again, it can take a long time for most types of debt to get to this stage, and it’s usually avoidable.

If a debt is sold to a collections agency before or during a DMP, this doesn’t change our advice, you’d just need to let us know so that the funds can be directed to the new company. Collections agencies are typically more likely to accept a reduced payment from a DMP, but even if they don’t, we would still recommend continuing offering each creditor a share of what you can afford.

Jasebroke4abit said:

When is best to cancel my direct debits? 

And do I need to phone each creditor to let them know I’m dealing with stepchange or will that put an agreement to pay marker on my account? 

 

I would recommend cancelling any existing payment arrangements as soon as you can. In the short term, you could let the creditors know that you’re getting advice from StepChange and will be in touch with more information soon. If you need any additional time, there’s also the option of applying for Breathing Space, which is a government scheme where your creditors cannot contact you, take further action or add interest and charges to the debts for 60 days.

Creditors could add an arrangement to pay marker on your credit file, but there’s no guarantee if they do this.

There’s some more information on the debt collection process here.

I hope this helps, but if you need any further help or advice, please get in touch.

Regards,

Aidan

StepChange_Aidan

Acaldow1 said:

Hi, I've been looking into this forum and my options and looking for some support. I currently have a mortgage, 2 loans and 2 credit cards. I live with my husband and 4 year old. We both work full time but the cost of bills and our debts is just spiralling. We have 35k debt over two loans and two credit cards. Currently don't have money left for food or any emergencies as bills and debt payments take everything. Step change have suggested a DMP to pay off but I'm unclear as to whether this is the right thing. I don't want to rush into anything. I've seen threads on here saying to default on payments before rushing in. Is this right?? I currently don't default on anything because I'm scared to do so! I don't want to lose my house or cars as these are required for our jobs! Any advise helpful as it's affecting my health. 

Hi,

I’m sorry to hear about you’re feeling, and I hope we can help.

We would normally recommend a DMP in situations like this, as it helps you to prioritise your essential living costs and just pay a reduced amount of money to your debts. However, if you’re uncertain about the advice, please get in touch so we can discuss your options in more detail.

Your accounts will usually default after 3-6 months of missed or reduced payments. We would recommend starting a DMP if it’s right for you, but you could wait for the defaults to make sure that they off your credit after six years. It’s very unlikely for your car or home to be affected by unsecured debts such as loans or credit cards.

Whatever you decide to do, remember that your ongoing bills and living costs are much more important than debt repayments. Please don’t feel pressured into paying anything that you can’t afford.

Regards,

Aidan

StepChange_Aidan

kjo13 said:

Hi I hope I'm in the right place...I am currently absolutely drowning and confused about how to claw myself out of the mess I've found myself in. I always had two credit cards with under 800 on each (not great I know) bit due to change in circumstances (legal care of a family members child) which meant childcare fees so I could work I have ended up moving to 0% cards then stupidly spending on them and now have about 6 cards all owing 1000-1500. I am struggling to make the minimum payments and just don't know what to do. Do I default on them all and take the hit and hope no one knocks my door ie bailiffs? I had arrears in priority debts but am sorting that slowly with payment plan but the credit card debts are keeping me awake at night. I work full time 38k and rent rather than own my house but I just no longer know how to manage the credit cards. I cannot use some of the options ie bankruptcy and DPO because I have a car which I need for work and its worth more than 2k. Any help gratefully received!

Hi,

I’d recommend continuing with the arrangements to repay the priority arrears if these are affordable, as these will be the debts with more serious consequences of falling behind. Credit cards are a non-priority debt, you should only offer to pay what you can to those, after you’ve covered your priority bills and living costs.

If you’re struggling with the minimum payments to the cards and need to avoid insolvency options like bankruptcy or DRO, it may be best to look at an informal debt solution such as a Debt Management Plan, but I’d need more details about your situation to be able to give specific advice.

If you’d like to create a budget and get help from StepChange you can do this using our online tool or give us a call to speak with an advisor.

I hope this helps,

Aidan

HillBilly14

Hi, I have a personal loan and credit card debt totalling £34k. I have put all my details into SC and at the point of selecting a solution. The best one is a DMP. I have been in a debt cycle of borrowing off credit card to pay loan - both with Tesco. The surplus available is approx £164 per month to pay off this debt under the DMP. I am not in arrears with them. I'm really worried that if I do the DMP, I will loose my home or have court action, it's mortgaged. I really don't know what to do, I want to pay my debts and not looking to get out of anything as it's my fault. But I'm worried that, by doing the DMP I will start a process that I will regret. I can't afford to pay the direct debit for these in 10 days time but I'm scared of what is going to happen to me. Appreciate your help