Posted on behalf of Madhatter20 : Help needed with debt.

sourcrates

Originally posted by Madhatter20 :

Hi 

I am struggling now financially as I have previously relied on my overdraft facility to get by having been on low income. Anyway bottom line is my situation is affecting my health and mental health.
My outgoings are more than my income which I have done my best to reduce. Plus I have various credit cards and 0% purchases. I relied on the fact that I had overdraft facility and borrowing capacity so I could continue credit card shuffling. With the changes in bank overdraft interests equating credit card interest and the covid 19 and reduced availability of 0%credit cards.... I am now stuck with absolutely no wriggle room.
I would really appreciate some advice please 
I contacted what I thought was CAB (turns out they are some company that keen on IVAs) and they were very quick to jump to an IVA. They asked for I'd bank statements payslips finance agreement etc and suggested 115 per month for 5 years which would pay off approximately 7k of a 22k debt. It sounded doable. I wasn't sure so I did a few checks and realised IVA is not the best outcome 
So then I  contacted step change they advised me to contact all my creditors and offer £1 payment per month and ask them to freeze interest or give me a few months holiday. I'm not convinced this is gonna help.
Happy to complete a SOA on here shorty
Thanks

sourcrates

Please post your SOA , then we can advise best course of action.

Madhatter20

Hi
I have finally done the budget planner using the MSE template, attached.  Bottom Line is that  my outgoings are above what I earn.  My overdrafts are still there 2.5k and no sign of being able to get out of it.  Currently I am past the OD limit on one account.  Step change suggested I go to my creditors and offer a £1 a month.  Not sure how that works.  I have called my bank ad completed a income/expenditure form and they will get back to me possibly with a consolidation of my 2 bank acc overdrafts and credit card and converting it into a personal loan.  not sure I wan to go down that route.  I have even considered getting a 3rd job on weekend. I have managed to get a payment holiday on 2 main credit cards.  turn2us seem to think I maybe entitled to a lot more.  that's another 2 hour phone call conversation.
any help and advice is very much in need.
thanks

[Deleted User]

Bump. To be honest many times I've thought abut going into my bank with so many years' account info now behind me, but I can't because they are for the very main part open when I am at work.  I wouldn't dismiss or leave any stone untouched. 
£1 payments work if you are happy to risk a CCJ.
Personally I got tied into 1 credit card's pay down plan early and just fortunate enough to remember there was a period when I paid more then the minimums so which I've bitterly complained about, that and the way treated by a subprime lender and been awarded at least £80 back so there is some satisfaction in raising dissatisfaction (still awaiting any explanation but I've seen credits appear to this amount thankfully) if I had gone down the £1 a month route last summer I would have no real fight.

BabyStepper

Hi there Madhatter20

Welcome to the boards and sorry to hear things are such a struggle just now. You've come to the right place and while I can't advise on IVAs vs DMPs and all the other options available, I have had a look at your budget and have some thoughts. 

A consolidation loan will not help you. You need to live within your means, whatever that looks like, and a loan will increase your debt not reduce it. We need to know a little about your living situation, how many kids you have, etc, to work out if your food budget and other items are realistic. Most of your bills look reasonable, water and electricity, etc. The three that stand out are your car, eating out and your mobile phones. 

You have £231.59 to find every month to make you solvent. At a glance, £126 on mobile phones is too much, however many phones this is for. Are you in contract and when does it end? Sim only would help. £50 eating out (or takeaways just now while restaurants are shut?) needs to stop, you can't afford it. Your car is costing you £588.60 per month, that's just too much and more than a quarter of your income. Anyone would struggle with an outlay like this, £222 car payment, £200 maintenance and insurance, etc. 

We need your debt totals, interest rates, when they're changing, etc. 

Have you tried to get a rent payment holiday? Car payment holiday? Are you still driving to work during the virus or can you use that petrol money elsewhere?  

You sound overwhelmed and that's where we come in. Keep posting, we can help you figure this out. As much cleverer people than me on here say 'there is a solution to every debt problem'. We'll help you find it. 

fatbelly

I think we need a soa from you
https://www.lemonfool.co.uk/financecalculators/soa.php
For now

• don't jump into an IVA
• don't take out a consolidation loan
• stop paying the non-priority creditors - that's card and loans
• open a new bank account that is not connected to your debts and get your income and all essential direct debits transferred to that.
• claim all the benefits that you can - UC maybe, plus council tax support 

I noticed last night that Quidco is offering £50 for a new TSB classic account (hopefully their service glitches are finished)

As for that budget plan there's not enough information to say anything  for definite, though I agree with the above comments. I wonder if your car maintenance figure should be £200 per year rather than month, or that's a mighty unreliable car.

I think £1 offers are a waste of time - they just acknowledge the debt without paying it off and slow the default process down.

I'm assuming for now that there is no surplus income (because of what stepchange advised). If there is, after all this,then you are probably looking  at a debt management plan.

Galloglass

I think £1 offers are a waste of time - they just acknowledge the debt without paying it off and slow the default process down.

I thought the current thinking was the opposite of that? 

Madhatter20

Thank you for the advise and yes the 200 is cost for poss the year although recently had a few issues that have cost me 500 in the past 3 months but some of it is due back.
I have opened a new account well known High Street store but turns out its parent company is my original bank. Should I still use it?
A more recent arrangement with my bank is that they have freezed interest and charges for 6 months on my 2 bank account and credit card as long as I keep the OD below a certain point and do not use my credit card.
I have 6 month grace period to sort things out.
I will call and check on benefits and fill in the soa. I did try and fill it in but couldn't find it. 
I dint drive to work but rely on my car for my family. 
Agree eating out can be reduced. 
I ll get a more upto date figures on amounts and interests on credit cards. 
Mobile phone I haven't paid for a couple of months.... That was their advice when I called them to stop the payments then they chase then we set up payment plan. 
I have phone plan and handset for myself and my teenagers.
My contract is due to end this winter, theirs next winter. 
Thanks 
Look forward to the day when I ll be worry free

enthusiasticsaver

The budget template shows you are overspending by around £231 but it does not give a comprehensive view of the debts so the key thing there is the interest rates and the minimum payments.  This soa will give a fuller picture. 
https://www.lemonfool.co.uk/financecalculators/soa.php

Your budget shows a car loan and credit card repayments and you say you also have an overdraft.  You have to stop using the overdraft and credit card but there are several issues that I can see.  

The mobile phones are way overpriced so you need to sort those out.  Your teenagers will need to get cheaper phones. A DMP may be the way you need to go but without seeing the full picture of the debts it is hard to say that for definite.  The £300 groceries is not too bad for presumably a family of 4 adults or near adults? On the other hand £200 a month on car maintenance is much too high. You may need to let the car go.     A spending diary is a necessity to start sorting out debt issues so I would start with that to make sure the budget is correct. 

I would not go down the personal loan route.  You have an issue of overspending and consolidating debt will not help that, in fact it usually makes things worse.  Is it just you earning or do you have a partner? 

Madhatter20

Hi 
I'm a one woman band running a big fat show! 😂
Just me n my income and 2 teenagers 
Not sure how to reduce cost of mobile phones as I'm tied into contracts. For now the kids are looking if ways to earn money, so hopefully they can start paying for their own mobiles.

Will follow through on my actions listed above and feedback 
Thank you again 

Madhatter20

Sorry just need to ask k again....
I have opened up a new account with another bank... But turns out my current bank is the parent owner of the new bank account
So shoukd I still move all my income to the new account 
Or do I find another bank to open a new account