Struggling with debt? Ask a stepchange debt adviser a question

StepChange_Aidan

https://forums.moneysavingexpert.com/discussion/comment/82016221#Comment_82016221

Hi,

Thanks for your post.

To qualify for a DRO, your monthly budget must show that you have less than £75 available for debt payments, after you’ve covered your priority bills and essential living costs. Savings (other than a small amount for emergencies) wouldn’t be accepted as a reasonable expense in a DRO budget.

Some spending above guidelines can be accepted if they're justified (for example, higher food costs due to a dietary requirement or health reasons).

Bus fares for your child can be included under ‘public transport’ instead of ‘pocket money’.

Based on the details you’ve provided, it seems that a DMP could be a better option, as you’d have more flexibility over what you can include in the spending. However, there’s a risk that creditors could reject your offer or take further action if they feel that your budget isn’t reasonable.

I’m not able to share the specific guideline figures with you, but if you contact a debt advisor, they will be able to review your budget and highlight any areas of spending that could be challenged or queried in a debt solution.

As you’re self-employed, I’d recommend getting in touch with Business Debtline, as they can give specialist advice.

Regards,

Aidan

debtfreeme9

Hi, ive accumulated 10,700 in debt (maternity leave and my husband lost his job) - its across 4 credit cards, and a small amount of PayPal and Next.

Ive been spending the last few years moving the debt between the 4 cards, to make use of 0% offers, so I've kept the interest mlvery minimal. Ive recently moved some debt to very low interest offers, over a longer period, to give myself time and reduce stress of moving debt, so some amounts have around £5 / £10 going on interest.

IIm Making minimum payments on everything, but as its very little interest it is reducing. However, my total payments are now around £400 a month.

As I've gone back to work part time. Im finding it really hard to budget. Last month I had to use my credit card again, and im worried about building more debt.

II Have a very good credit rating, I've looked into loans, and I have some offers of 7 - 10% interest, if I took it over 5 years id be paying around 220 - 250 a month, making life easier, But adding about £2000 to my debt.

Im not sure if im better of just paying my debts as I am now, moving them when the 0% runs out, and struggle whilst clearing, or if I should just take a loan, and make repayments manageable, despite adding interest and 5 years feeling long? I don't want to regret a loan, but the stress of multiple payments and moving debt is getting to me.

My house is due to be re mortgaged August 2027, im worried a loan or debt will impact this?

Thank you

StepChange_Aidan

https://forums.moneysavingexpert.com/discussion/comment/82021446#Comment_82021446

Hi,

Thanks for posting. I’m sorry to hear how you’re feeling.

I wouldn’t recommend taking out a consolidation loan, as they can often make things more difficult, and as you’ve said, you’ll be adding to the total debt.

We have a guide to debt consolidation here.

We would typically suggest maintaining the contractual payments to the existing debts if you can afford to, but we would need more details to be able to give you specific advice.

The first step is to put together a budget so we can fully understand your situation. If you’d like to create one with StepChange, you could use our online Debt Advice tool.

Taking out additional debts could affect getting a new mortgage deal, if the lender requires a credit check (this is less common if you’re staying with the same company).

I hope this helps,

Aidan

Charlatans2211

Hi. I’m looking for some advice. I have some really old debt that I’m not sure what it is for (over 10 years ago).one of which I’ve had a letter from capquest today with a default leaflet. I’m not quite sure what this is referring to. It’s only £235. It’s showing on my credit report. I’m just wondering how to deal with it?
I also have one from vanquis bank saying if I pay £31 debt will be partially satisfied. The original amount shows £497.

Thanks for any advice and sorry if it sounds confusing. The brain isn’t quite what it was

Charlatans2211

sorry my question is do I just pay these as they aren’t large amounts?

StepChange_Sylwia

https://forums.moneysavingexpert.com/discussion/comment/82023089#Comment_82023089

Hello and thank you for your message.

We would always recommend paying your debts but this will depend on whether you can afford to do this.

If you are not sure what the debt is for or if this is your debt, we'd recommend that you contact the creditor for more information.

You also mentioned that the debt or debts are over 10 years old. Have you made any payments to these debts during these 10 years?

If you have not paid or "acknowledged" the debt for over 6 years, the debt may be "statute barred" or not enforceable through the court. This does not mean the debt is written off and the creditor can still take other actions to recover the debt.

The debt can still appear on your credit file in some cases. This means lenders can see it and it may be harder to get future credit.

You can find out more about Statute Barred debts here:

Statute Barred Debt & Debt Recovery. StepChange

There is also a template letter that you can send to the creditor if you believe the debt is statute barred to say you don't think you should have to pay it back.

Hope this helps.

Sylwia

Anemone_Range

Hello!

I’m 33 years old and took out my first credit card at 18 years old. I have been in a level of debt ever since. Sometimes being close to paying things off, and then before I know it I’m deep in again.

I have just under £10k of debt in credit cards, an overdraft and on Monzo flex. Currently I’ve maxed out my overdraft in my current account, and the interest is costing me around £40 a month when it’s maxed out. I’ve always used balance transfers for my credit cards to remain in interest free periods, but I know these still come with a transfer cost. With my Monzo flex I always spread the cost over 3 months, meaning I pay no interest. However, my next payment due will be £1130.

My monthly income is around £2500, and my overdraft amount is exactly that, so I barely come out of my overdraft at the moment.

I missed one of my credit card payments this month meaning the interest free period has been cancelled and I will now pay 22% interest on a £5400 credit card.

I have £18600 in a lifetime ISA. I set it up a long time ago and have been paying very little in for the last 2 years (around £20 a month). Do you think it’s worth me withdrawing this money and losing 25% of it, to pay off my current debt? Will I be able to use a LISA again? Or do I do another balance transfer to another 0% offer? Are there any other solutions?

StepChange_Aidan

https://forums.moneysavingexpert.com/discussion/comment/82035430#Comment_82035430

Hi,

Thanks for posting.

If you’re living in your overdraft, you could contact your bank to discuss your options. They may be able to help you to gradually reduce the overdraft over time, or separate the debt from your day-to-day banking. Another option could be to set up a new basic account with a bank that you don’t have any debts with, then arrange to have your income paid there. The overdraft could then be treated as a simple debt which can be repaid in instalments.

There’s a guide to dealing with overdraft debts here.

It usually makes sense to use your savings to repay existing debts, but may not be worth it if you will lose 25% of the funds in your Lifetime ISA. If you did, you could still open another one before you reach the age of 40.

It could be a better option to set up a Debt Management Plan (DMP) to repay the overdraft, credit cards and Monzo Flex at a more affordable rate, or there could be other debt solutions that are more appropriate for your situation. If you’d like to review your options with StepChange, you could use the Debt Advice tool on our website.

I hope this helps,

Aidan

SwanSong78

Hi there,

I’m a single mum, who lost her job 14 months ago. I started my own business as well as having a part-time job and tutoring. My income from the business has been inconsistent, but due to stabilise soon. My problem is, I have accrued £54k debt in credit cards and loans and currently can’t sustain the repayments. Until recently I have never defaulted, but have started to not meet the payments. I privately rent. I’m just not sure what to do. I need breathing space because it’s starting to take its toll on me mentally, but I can’t afford to let everything crumble. Please can you offer advice?

StepChange_Aidan

https://forums.moneysavingexpert.com/discussion/comment/82041926#Comment_82041926

Hi,

Thanks for your post. I’m sorry to hear about your situation and how you’re feeling.

There will be a solution to manage your debts, but more details will be needed to be able to give specific advice.

Unfortunately, as you run your own business, StepChange won’t be able to support you. Instead, we would recommend getting in touch with Business Debtline, who will be able to give specialist debt advice.

They will also be able to check if you are eligible for the Breathing Space scheme and help you to apply if it's suitable for your situation.

https://businessdebtline.org/

I hope this helps,

Aidan