How I got out of crippling debt
RadNickC
Forumite 
TL:DR - I was in so much debt every time I got paid every penny auto left my account. I opened up a new bank account, diverted my wages there and paid everyone back one by one. It took years.
HOW BAD WAS IT?
Payday would come and the money would be taken out immediately by my overdrawn overdraft and whichever debt collector could get in first
I was hungry.
How am I going to survive another month?
Another payday loan?
I already owe all the ones I can think of already
The worst day was when I found a new payday loan for £50. As soon as the money went in my account it came straight back out again towards another payday loan I was behind on.
Debt collectors calling every hour
Council tax man knocking on the door every week (benefits of living in a flat, harder for them to know that you're actually home!)
I stopped opening my letters. They just went straight in the recycling.
Phone cut off...that was bad, I had to pretend my phone was broke. Thankful that I had unlimited internet at work.
Constantly behind on rent....I'm very lucky I didn't get evicted
I didn't know how much I owed, or who to.
I was too embarrassed to ask for help.
How did it get this bad so fast?
But I was in full time employment - if you're not....I don't know what to suggest. I couldn't have done this without a steady income.
WHAT DID I DO?
I opened a new bank account!
100% the best thing I ever did.
You can open a basic bank account with no credit checks. You don't get an overdraft or any interest paid on your money, but it's yours, with your money in it, only accessible by you!
I changed my bank details with work and my next salary went straight in and stayed there!
I felt rich!
I immediately went out and bought food, a bus pass, and wasted a load on booze and some records.... because why not? .....well actually because I'm clearly irresponsible with money. But we're all allowed to indulge....it's mentally important!
At lunchtime I got 2 texts and an email from my "former bank" - they weren't happy!
But honestly...screw them! They can't get hold of my money. I finally have control! I'll pay them back, but they've got to wait.
Even though I'd upset another major creditor and was still getting dozens of calls a day (always unanswered) I had a good night's sleep for the first time in a year.
No more loans.
And I stuck to that. To be fair I'd had a fair few loan applications rejected so no one was going to lend me anything anyway!
My initial priority was food and rent. And in a couple of months, I was back on top of rent.
I felt that this was a good plan....just knock each debt off one by one! I can do this!
But how? Answer my phone and see how much I owe and to who?
I tried it.
It was horrible.
BW Legal, I owed them nearly £2000 and they wanted at least half today. I asked for a smaller payment plan but they wouldn't accept instalments I could afford. They wanted over £400 per month.
They said the debt will rise if I don't make the payments they wanted.
I hung up. I wasn't prepared for that.
The important thing was I could eat and had a roof over my head and nobody could get hold of my money in the nice new bank account!
Seriously, the best thing I ever did!
2nd best thing I did was sign up for Noddle (now Credit Carma).
The credit score was depressing as ever, and 7 years on it's not much better, but it did list every single debt I had and how much it was.
Also, very depressing. Thousands of pounds, to dozens of companies. Most debt collectors. I didn't know who they were to be honest, but they all knew me.
At least now I knew what I owed.
But hang on....not everything, council tax was missing. Well, they pass outstanding payments on to debt collectors at some point, but I knew I owed them money cos I hadn't paid them a thing in....I didn't even know how long.
I finally bought the bullet and called them up.
"We've called, we've sent letters"
- yeah no good mate, I don't answer the phone and my post goes in the bin.
I set up a payment plan with them which was just affordable on top of new payments.
This didn't really leave me any spare money to start paying off anything else though.
So I didn't start paying off other debts. Even though I knew those debts were increasing.
I needed my spare money to live, buy Xmas and birthday presents and hang out with my friends.
I don't care how much debt anyone is in. We all have the right to enjoy ourselves!
Nearly a year later and I was on top of council tax, on top of rent, phone permenantly back on and ready to pay off another debt.
I decided to start small. Who did I owe the least?
Noddle found me that waste of a time £50 payday loan I took out which had escalated to £200. I gave them a call and got a pleasent suprise....they said if I paid them £50 right now, they'd call it off! DONE.
With my new found confidence I decided to tackle BW Legal (!!!!!!!) again.
The fact that I called them definitely helped. I had to be stern and clear about exactly what I can afford. This includes lying to them about how much my rent was, I inflated this by about £400....but really it's none of thier business and ensured that I wasn't left penniless.
I got a reduction in the total and a 10 month payment plan in place.
X this approach by 7 years and every single debt is gone.
I am 100% debt free.
It's great.
It took ages, and I have a poor credit rating, but worth it.
The credit rating will repair its self over time.
I've no idea if this was the best way to do it, but it felt like the only way for me and it worked.
SUMMARY
1. Open a new bank account for your salary to go into (if all your money goes straight back out of your current one)
2. Rent and food are most important - then council tax and utilities
3. Use some sort of credit tracker where you can establish exactly what you owe and to who
4. Pay back what you can afford. It's going to take ages so don't try and do it all at once
5. Lie to the debt collectors. Tell them your expenses are higher than they are. Tell them you owe more than you do. This means they will have to give you a more affordable payback plan
6. Make sure you have money leftover to enjoy
7. Haggle with the debt collectors. They might settle for less.
9. It will take ages....years. But you've got to do it, so make a start.
10. Don't ever take out a payday loan again. Don't get in debt again if you can avoid it. Only 2 reasons I can think of getting in debt again are Mortgage or car finance.
11. Look after your mental health. Don't let those debt collectors damage that.
UPDATE
A few years on from writing this I have a mortgage, and about £17,000 worth of loans for a car and a new kitchen. Excellent interest rates (0% on the kitchen!) because I have a bloody excellent credit score!
I'm overpaying the car loan at the moment because I can afford to and am trying to get that paid off before baby comes in 6 months time.....GULP!
