Starting to face my debts

DebbyInDebt

Hello Everyone,
This is my first post, I've been reading through these forums and finding it comforting to relate to some situations and hopeful to see other people managing to overcome their debts.
I am 30 years old, over the years I have racked up a lot of debt - just through being careless and I am entirely to blame - but it started out small just overdrafts and I kept getting offered more and more credit and it just snowballed really. Mainly shopping, going out - really stupid material things. As it racked up and the minimum payments got bigger I began missing payments and accounts started to go into default. I ended up burying my head in the sand and ignoring it, which again is a really stupid thing to do and I feel angry at myself but I just felt like I couldn't cope of the face the mountain of debt I had accrued.
So it's about three years on, I am turning 30. I just moved home with parents after a horrible break-up - (they don't know about my situation) - and I have finally decided that now I really can't avoid this any longer. So my situation is I have 16K in debt- including 1 CCJ. My credit score is completely F***** and now I find my options for future in terms of renting, let alone buying somewhere are very limited. I am on a good salary - £38K Annually which gives me about £2008 every 4 weeks - so the positive thing at the moment is I have a lot of spare cash - BUT i really want to have moved out by the end of the year.
So here is a breakdown of my debts:
PRA Group(MBNA Credit card) - £2,804
Link Financial (New Day Store Card) - £333.07
Hoist Finance (BarclayCard) -  £5164.27
Halifax Credit Card - £3,320
Lowell (Mobile) - £559
Lowell (Shop Direct) - £2,563.31 **CCJ
Halifax Overdraft - £514.85
Debt Managers - £380
Natwest Overdraft - £451.35

My outgoings really are the £250 rent - no bills
Food Shopping/toiletries/essentials - about £300 a month
Hobbies / Going out - £250 (less so at the moment)

I currenlty have £4K in the bank which I have saved over the past few months. My plan is to immediately pay off the Lowell account which has a CCJ. 
Then, and this bit scares me the most is contacting all the over creditors to setup a payment plan. Is it worth making settlement offers to some of these? It's really important for me to improve my credit score and I know that having a partially settled account will show on my report. Or should I just setup payment plans for each and begin to pay these off? I was thinking of paying the smaller accounts - less than £500 outright and then setting up longer term payment plans for the larger amounts - and pay off as much I can while still trying to save to move out and rent a property.
I'm also really concerned about being able to rent somewhere with a CCJ - and I'm terrified to tell my parents who would act as a guarantor but I just feel too ashamed to have to explain to them my situation and why I need one.

Thanks for whoever read this and for any advice and support - this really is the first time I'm properly acknowledging this and listing out all my debts like that is the scariest thing to overcome.

ryanm8655

What are the interest rates on the different debts? How much are you paying on each at the moment?

Good work on writing it all down, that’s a big step in the right direction.

DebbyInDebt

ryanm8655 said:

What are the interest rates on the different debts? How much are you paying on each at the moment?

Good work on writing it all down, that’s a big step in the right direction.

Thanks Ryan, to be honest these accounts are all in default so I dont think there is any interest on them at the moment. I could be wrong my next step is contacting them all to make payments 

Grumpelstiltskin

Debby are you sure the overdraught is interest free?
I would possibly spend as little as possible in the next few weeks and look at clearing this.
If you are sure the rest are interest free start by clearing the smallest. At the moment you should be able to throw £1000 per month at the debts, don't rush into agreeing anything at the moment.

Andyjflet

Debbie, well done for attacking this problem, which, in my opinion you can smash out quickly and be on the road to your own place again.
Please take a look at Dave Ramsey and the baby steps by podcast or you tube.
Keep £1000 emergency fund
Then start paying down debts and snowballing from smallest to largest, this is so you get quick gains and stay motivated. 
So using £3k of the £4k I would pay off......
Debt Managers
Nat West
Halifax
Lowell
Link   
All in one hit and then make an offer on the CCJ account with the rest, think how great this will feel and physcologically massive. 

DebbyInDebt

Thank you both for the advice.

greensalad

Just wanted to say you are in a similar position to where I was a few years ago. I'm not the best at giving advice re: payment plans to creditors and such but what I can say is that a strict budget will be your friend. You should probably do an SOA to look at how much you have to service debt and if you can reduce outgoings. The thing that saved me was a strict budget with a category for everything... literally everything, from haircuts to clothes to alcohol to bills to medicine!

Fireflyaway

Well done on facing the situation. You are actually in a great position to tackle it with an ok income and small outgoings. I second looking into the Dave Ramsey method. I watch him on youtube every day! 
Paying off smallest to largest is motivational and keeps you going so that's what I'd do. As a single young person, keep a bit of an emergency fund. Just in case you start to rent but then get asked to leave ( it happened to me!) or lose your job etc. 
Try not to worry about your credit score. Mine was the lowest of the low and I managed fine! Even with defaults, a DMP and credit score of 74 ( yep 74!!) I managed to rent. Your ccj might be an issue but you could offer rent up front if you save up a bit. It's worth explaining that the ccj was for a small amount and settled quickly. If your income is good and you are debt free with savings you might be ok if you explain that. Not all properties require a credit check anyway. If you rent directly rather than via an agent it's less likely. I really would consider it you want to ask your parents to be a guarantor. I'm sure you have every intention of being a responsible tenant and see if as a paper exercise but if something went wrong ( you couldn't pay due to illness or redundancy)  your parents will become liable and that could really jeopardize your relationship or at least cause a lot of stress. 
Re handling debts yourself, I've done it via payplan and later on directly and found the latter best. It's easier to change payment amounts if you need and communication isn't delayed going through a third party. You have more control over the amount you agree to repay monthly as most DMP companies set it on a percentage basis. It's pretty easy to do it yourself. I like the idea of offering settlement. You can probably get quite a good reduction if you save up a bit of a lump sum and offer it. 
Try not to be too hard on yourself. It took me until I was 40 to decide I wanted to change financially. My parents have no clue and I will never tell them because I know it would upset them. I've also had some relationship issues I've not told them about. You don't have to tell them everything. Especially if you are protecting them by doing it. Good luck!

fatbelly

DebbyInDebt said:

So here is a breakdown of my debts:
PRA Group(MBNA Credit card) - £2,804
Link Financial (New Day Store Card) - £333.07
Hoist Finance (BarclayCard) -  £5164.27
Halifax Credit Card - £3,320
Lowell (Mobile) - £559
Lowell (Shop Direct) - £2,563.31 **CCJ
Halifax Overdraft - £514.85
Debt Managers - £380
Natwest Overdraft - £451.35

M

As you rightly say, the ccj is the priority so as you're in a position to pay it off then you should do that. There is no harm trying for a settlement but it is less likely than on other defaulted and sold-on debts. Try 50%

As for the following, full & final settlement is the way to go. It's a long process so you can  start making offers while saving into the pot. Start low, say 25%.
PRA Group(MBNA Credit card) - £2,804
Link Financial (New Day Store Card) - £333.07
Hoist Finance (BarclayCard) -  £5164.27
Lowell (Mobile) - £559
Debt Managers - £380

Leaving just
Halifax Credit Card - £3,320
Halifax Overdraft - £514.85
Natwest Overdraft - £451.35
which could have some sort of payment plan. Obvs don't have your banking at Halifax or Natwest

Edit: here's an example of what one pooster achieved by way of settlement deals
https://forums.moneysavingexpert.com/discussion/comment/69978335#Comment_69978335

DebbyInDebt

Thank you so much everyone for your advice and help and just for reading through my story. 
Great advice on the budgeting, tomorrow morning that's the first thing I'm going to do as my next step is create a budget, plan and goals for when to clear each debt