First Steps

bon007

Hi I had a light bulb moment 3 months ago and realised like we all do that my credit was extortionately out of control & had no idea how I had got to being 50k in debt . I have now begun the process and I stopped my payments 3 months ago but these are yet to default as I have just set up an account with clear score . I am in the process of creating a realistic SOA and I have decided I would like to self manage but I have no idea where to begin . I have started creating an emergency fund as advised on these amazing forums . My credit report shows I have 3 months of arrears so I take it these are not defaulted yet . I am being hounded by loads of phone calls even though I sent a letter requesting no phone calls . Over the Christmas period I want to create a realistic budget of what I could afford to pay on a payment plan but that’s where I would like some advice ? I would appreciate any advice on going forward from here . I feel ashamed by the whole situation but I understand this is common and you just need to move forward . I would be grateful if any reply .

BabyStepper

Hi there

Well done taking all of this in hand. It's not easy, but you're doing it. Great! I know how stressy debt can be and the relief once you're managing it all better is unbelievable. Keep going, you're making progress. 

I think you've been advised before to create a Statement of Affairs, a document showing all of your income and all of your outgoings. You need to do one. The CC/loan companies will want to see it when you start negotiating payments. Once you post your SOA up here, you will get some advice about which categories have too much or too little, etc. Also, the DMP board on here will provide loads of help for you too.  

How's the emergency fund doing?

enthusiasticsaver

Well done on taking the first step. Things look better when you have a plan. Saving for emergencies is good and an statement of affairs mean we can advise appropriately. Link is below.

http://www.stoozing.com/soa.php

EssexHebridean

You realise it was 6 months, not 3 months, that you had the LBM that lead you to post on here first?  I’m guessing that the picture looked rather better then, than now, yes?  Hopefully your light bulb really IS on this time, because you MUST start taking action if you’ve already started the process of entering into a DMP - otherwise you’re simply going to be defaulting with no plan for moving forward from there. 

As above - SOA is the first step. 

bon007

Yes your right I did have my light bulb moment then as you stated but have struggled with my mental health and have been so overwhelmed with it all struggling to understand how I ended up in this mess . This is why now I am getting a plan in place to go forward & try & turn this sorry mess around . I am determined to get out of this situation & begin a new life living within my means as I have relied on credit for so long . My situation is quite complexed as my wife is self employed and I do not want to have any damage to her credit rating to protect her business . I have one joint loan where this has been paid fully each month as this is paid by my wife . I have started an emergency fund as advised and I am planning to go self managed so I can pay what I can realistically afford . I know beating yourself up about doesn’t help your mindset but after reading many stories on here you don’t feel so alone .

bon007

I am just looking at the SOA Template you kindly added . Would I still include the joint loan as this is not being paid by myself ? I will then have this set up today . I have got to get moving so I am prepared for the next few months ahead . 

EssexHebridean

If you work as a household for financial purposes then the SOA needs to include all income and all outgoings. You need to make sure that whatever you put in the SOA reflects the real situation as it stands right now - so for example if you put that you save £X per month for car maintenance, then that amount saved needs to be reflected in cash assets that you actually have saved. (Just make clear that the cash is saved for budgeted annual spends plus EF). 

It sounds like you’re now in the right place to really set to and sort the situation out - well done in that, and to an extent the hardest bit - realising there is an issue, and asking for help - is now done. 

BabyStepper

Your wife's self-employment is a different thing and the accounts for her business need to be done separately from your household SOA. If the joint loan was for her business then it needs to be included with her accounts, if it was for your household then include it in the SOA.

Talking of which, how's the SOA coming along?

enthusiasticsaver

bon007 said:

I am just looking at the SOA Template you kindly added . Would I still include the joint loan as this is not being paid by myself ? I will then have this set up today . I have got to get moving so I am prepared for the next few months ahead . 

Normally you would include all income and expenditure so that would include your joint loan but if your wife is self employed then this muddies the water somewhat.  Does she pay herself a salary from a business account?  You need to keep business and household finances separate.  

bon007

Hi Happy New Year to you all! I have been away for while weighing everything up . I have now written down everything in writing so a new year and a new start and I don't want to feel weighed down with all this burden anymore. I constantly read the stories on a daily basis and the realisation with all the debt becomes overwhelming some times which does affect you mentally each day like probably so many of you are experiencing so this is why I had some time out to gather everything together . I am constantly being phoned by creditor's and I really hope this becomes easier . I am 3 months in the arrears and get constant letters each month . How long does it normally take to be defaulted ? I have created a Clearscore account so I can monitor the situation . I have my SOA written down on paper and ready to post this but I am unsure what link to use?. After writing this all down and gathering all my paperwork I find it so embarrassing I have let this get out of hand . I am determined to go self managed so I can control the situation . My New Years resolution is to tackle this head on and not look back . My wife is self employed and due to the sector she is in the work is very hit and miss  so I know I need to set a budget where as all the priority bills are accounted for in which these are always paid on time . When you begin the self managed DMP does this begin when all accounts are defaulted but what if some default quicker than others ?

I do appreciate all your advice and support  so much more than you know , because some times you feel like  you have the weight of the world on your shoulders and the sleepless nights and constant worry and this feeling is holding you back from enjoying the smaller things in life .

I am so focused but I would really like any help . 

bon007

[font=courier new][b]Statement of Affairs and Personal Balance Sheet[/b][b]

Household Information[/b]

Number of adults in household........... 2

Number of children in household......... 2

Number of cars owned.................... 2[b]

Monthly Income Details[/b]

Monthly income after tax................ 2333

Partners monthly income after tax....... 0

Benefits................................ 0

Other income............................ 0[b]

Total monthly income.................... 2333[/b][b]

Monthly Expense Details[/b]

Mortgage................................ 997

Secured/HP loan repayments.............. 0

Rent.................................... 0

Management charge (leasehold property).. 0

Council tax............................. 238

Electricity............................. 100

Gas..................................... 85

Oil..................................... 0

Water rates............................. 43

Telephone (land line)................... 20

Mobile phone............................ 60

TV Licence.............................. 15

Satellite/Cable TV...................... 45

Internet Services....................... 30

Groceries etc. ......................... 400

Clothing................................ 50

Petrol/diesel........................... 140

Road tax................................ 29.75

Car Insurance........................... 15.42

Car maintenance (including MOT)......... 18.33

Car parking............................. 0

Other travel............................ 0

Childcare/nursery....................... 0

Other child related expenses............ 160

Medical (prescriptions, dentist etc).... 11

Pet insurance/vet bills................. 0

Buildings insurance..................... 9.33

Contents insurance...................... 9

Life assurance ......................... 56.08

Other insurance......................... 0

Presents (birthday, christmas etc)...... 50

Haircuts................................ 15

Entertainment........................... 50

Holiday................................. 0

Emergency fund.......................... 25[b]

Total monthly expenses.................. 2671.91[/b]

[b]

Assets[/b]

Cash.................................... 0

House value (Gross)..................... 485000

Shares and bonds........................ 0

Car(s).................................. 700

Other assets............................ 0[b]

Total Assets............................ 485700[/b]

[b]

Secured & HP Debts[/b]

Description....................Debt......Monthly...APR

Mortgage...................... 205......(997)......1.15[b]

Total secured & HP debts...... 205.......-.........-   [/b]

[b]Unsecured Debts[/b]

Description....................Debt......Monthly...APR

POSTOFFICE.....................8779......210.......3

JA JA..........................5965......140.......17.9

MBNA...........................8569......85........17.9

VIRGIN.........................700.......25........0

NATIONWIDE.....................2453......70........15.9

HSBC...........................1877......90........19.9

TESCO..........................5322......100.......17.9

BARCLAYCARD....................7528......100.......17.9[b]

Total unsecured debts..........41193.....820.......-  [/b]

[b]

Monthly Budget Summary[/b]

Total monthly income.................... 2,333

Expenses (including HP & secured debts). 2,671.91

Available for debt repayments........... -338.91

Monthly UNsecured debt repayments....... 820[b]

Amount short for making debt repayments. -1,158.91[/b]

[b]Personal Balance Sheet Summary[/b]

Total assets (things you own)........... 485,700

Total HP & Secured debt................. -205

Total Unsecured debt.................... -41,193[b]

Net Assets.............................. 444,302[/b]

[i]Created using the SOA calculator at www.LemonFool.co.uk.

Reproduced on Moneysavingexpert with permission, using other browser.[/i][/font]

As you can see this is a real problem and do not know where to begin.