Debt Advice

Lenners134

Hello All,

Newbie here looking for advice.  So through various idiotic decisions over the years, I have racked up £38000 on 4 personal loans and 2 credit cards.

Although I am not behind on any payments, as soon as I get paid, the loans get paid out, I make the minimum payment on the credit cards then I end up having to use the cards to for food\travel etc. just to get through until payday again.

This is clearly unsustainable and eventually I will hit my credit card limit then I will really be in trouble.

I have done an online review with StepChange and they have recommended a Debt Management Plan paying just over £850 a month to them over the next 3 and a half years. 

Just looking for advice really from anyone who's been on one of these and whether you think this is a good option for me. I don't want to go down the IVA route and Bankrupcy terrifies me but clearly I need to go something.

I look forward to hearing from anyone who can offer any advice as to the best route forward for me.

Many Thanks,

ratrace

Hi welcome to the board post a SOA with all you incoming and outgoing and the folks on here will be able to advise you further as at the moment we dont know all you affairs and where you could make cut backs also if you have any assets to protect etc....

fatbelly

A dmp over 3.5 years sounds reasonable. An IVA is formal insolvency and requires payment for 5 years; likewise bankruptcy with 3 years of payment.

cornwallpauley

If it helps, I am in a similar position, 2 loans, credit cards and robbing Peter to pay Paul......I reached the point where I maxed out everything, and my income only covered minimum repayments, and left me struggling for day to day living costs. So, I spoke to Stepchange and used their budget planner, really thought about my costs of living, food, travel and so forth and worked out that I can only afford to pay 50% of each of my debts. I wrote to all of my creditors, enclosing my budget and making an offer of 50% payments. (Essentially, a "self-managed" DMP). They all agreed to this, and stopped all interest and charges. 

It has damaged my credit report as nearly all of them has reported an "arrangement to pay", however, this damage will be repairable over time, and I am seeing £800 a month reduction in my debt. It will take a few years, and my cards are all blocked (no bad thing). They have all told me they will contact me if I at risk of being defaulted, and expect an update in my situation in 6 months to see if I can either increase payment or revert back to contracted payments. I have a reasonable pay rise in September onto a new scale, so may be able to increase at that point.

If you go down the DMP route, Stepchange will do the leg work, writing to all creditors and making the payments, or you can do this. I am sure many people on here will recommend the Stepchange route, but I thought self managed suited me, if my situation changes, I can still engage with Stepchange.

I guess the important thing is you have had your "light bulb" moment, and are taking steps to rectify the situation. Keep posting, this forum acts as a great sounding board, advice service and motivator!