Arrangement to pay help

Newmum92

Hi everyone

I have got myself into a terrible position, an in around £50,000 worth of unsecured debts including a loan, credit cards and overdraft. 

The creditors are-
Barclays
barclaycard
AA loans
virgin
MBNA
Lloyds
Very
Starling bank 

I am considering making payment arrangements with them as I want to avoid CCJs in the long run and would rather remain amicable with creditors to avoid legal action. 

Question is… what is a reasonable amount to offer? Currently the are all costing me £1000 a month due to interest 😵‍💫 and I have budgeting for around £300-350. Do I have any hope in hell that they would agree considering how much less it would be? 

And does anyone know if any of the above creditors are likely to be difficult to deal with? 

Thank you 😊 

enthusiasticsaver

If these are unsecured debts they are very unlikely to instigate court action so I don't think you should worry about CCJs.  Keeping them informed is good but arrangements to pay will show on your file.  Have you considered a DMP? I would recommend you phone stepchange and do an soa (statement of account) http://www.stoozing.com/soa.php  to work out a proper budget so you know how much you can afford to pay.  You really need the debts to default so they stop charging interest. 

Newmum92

Hi thanks for the advice that’s helpful 😊 

so I did do a SOA with step change. But then after reading forums it seemed like step chance don’t get involved if creditors don’t accept the offer, and I’m a bit anxious that I don’t know how they are dividing money the creditors if that makes sense? I wasn’t sure whether they’d be more open if I approached them directly , or do you not think that’s the case? 

I am also a bit skeptical about letting them default because of my profession. They want to check you are managing your finances and I’m worried that leaving accounts to default would show poor management on my part. Rather than being proactive, if that makes sense?

sourcrates

Its a pretty simple scenario debt management, if a creditor doesn't accept your payment offer, you still pay them that anyway, it just hastens up the process of the creditor offloading the debt and selling it onwards.

It makes no difference one way or the other if a creditor accepts the payment amount you are offering, or not, if they are not happy with it, they simply sell the debt on, that doesn't affect you in the slightest, you just pay whoever is writing to you.

Ideally you want all your accounts to default, this benefits you in two ways, first all interest and charges stop, forever, second, you have a clear 6 year window for your credit file to recover, that is what`s called good debt management on your part my freind.

Toddy2

I agree with all the above.  I was in a similar situation 2 years ago £65k unsecured debt, went straight in to DMP with Stepchange.  In hindsight I should have waited a few months to let them default.  After researching I took the step to self manage my DMP most creditors have been really good.  I’m slowly knocking off smaller debts as and when I can afford F&F offers.  Good luck you’ll get there!

fatbelly

Newmum92 said:

Hi thanks for the advice that’s helpful 😊 

so I did do a SOA with step change. But then after reading forums it seemed like step chance don’t get involved if creditors don’t accept the offer, and I’m a bit anxious that I don’t know how they are dividing money the creditors if that makes sense? I wasn’t sure whether they’d be more open if I approached them directly , or do you not think that’s the case? 

I am also a bit skeptical about letting them default because of my profession. They want to check you are managing your finances and I’m worried that leaving accounts to default would show poor management on my part. Rather than being proactive, if that makes sense?

A default means that you are not meeting the contractual payments. I don't think you have another option unless you are going to continue to borrow money to service debt interest.

Stepchange will continue to divide up your surplus income amongst your creditors and pay them whether they've formally accepted or not. The normal way of determining how much is to do it pro-rata but I understand that stepchange do this relative to the contractual payment.

As you want to be proactive and are in finance, why not set up your own dmp using national debtline resources?

Newmum92

fatbelly said:

Newmum92 said:

Hi thanks for the advice that’s helpful 😊 

so I did do a SOA with step change. But then after reading forums it seemed like step chance don’t get involved if creditors don’t accept the offer, and I’m a bit anxious that I don’t know how they are dividing money the creditors if that makes sense? I wasn’t sure whether they’d be more open if I approached them directly , or do you not think that’s the case? 

I am also a bit skeptical about letting them default because of my profession. They want to check you are managing your finances and I’m worried that leaving accounts to default would show poor management on my part. Rather than being proactive, if that makes sense?

A default means that you are not meeting the contractual payments. I don't think you have another option unless you are going to continue to borrow money to service debt interest.

Stepchange will continue to divide up your surplus income amongst your creditors and pay them whether they've formally accepted or not. The normal way of determining how much is to do it pro-rata but I understand that stepchange do this relative to the contractual payment.

As you want to be proactive and are in finance, why not set up your own dmp using national debtline resources?

Hiya

Thanks for commenting. I did consider setting it up myself, I am a real control freak though and I’m starting to get obsessed constantly checking forums haha so I’m worried that I’ll become a bit obsessed. Wasn’t sure whether 8 creditors would also be rather stressful. 

I was also worried that the creditors would be less likely to accept the offers of reduced payment, if I hadn’t gone through a well known charity such as SC? Do you think it matters or not? 

Chris_English

Have you addressed the cause of your debts, and organised a budget that you are going to be able to stick with?

You have quite a lot of debt with quite a few companies. When this debt started you must have been spending more than you were earning even before interest payments. Are you now spending enough less than you earn that you aren't going to be needing to rack up more debts even as you default on these.

Sncjw

Could you post your soa on here we could see where you could make chnaged to help you or suggest other things. 

Newmum92

Hi everyone 

thanks for the replies so far it’s good to have some honest advice. For what it’s worth I’m very ashamed about the debt I have racked up. In terms of reasons behind the debt, as !!!!!! poor as this sounds, it has been pure stupidness, ignorance and just spending what I don’t have. Over the past 10 years since leaving uni on severs occasions I have consolidated, and a huge mistake was the AA loan which was supposed to my breakthrough moment by consolidating everything, and within the space of a year I’d racked up more debt. I have had a light bulb moment and I am going to watch each penny I spend, budget for luxuries that I want and a positive is that I have a decent income. 

Here is my SOA 

[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......... 1

Number of cars owned.................... 1[b]

Monthly Income Details[/b]

Monthly income after tax................ 1900

Partners monthly income after tax....... 670

Benefits................................ 84

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

Total monthly income.................... 2654[/b][b]

Monthly Expense Details[/b]

Mortgage................................ 866

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

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

Management charge (leasehold property).. 0

Council tax............................. 0

Electricity............................. 70

Gas..................................... 60

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

Water rates............................. 37

Telephone (land line)................... 0

Mobile phone............................ 38

TV Licence.............................. 10

Satellite/Cable TV...................... 10

Internet Services....................... 0

Groceries etc. ......................... 300

Clothing................................ 5

Petrol/diesel........................... 70

Road tax................................ 0

Car Insurance........................... 42

Car maintenance (including MOT)......... 10

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

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

Childcare/nursery....................... 435

Other child related expenses............ 20

Medical (prescriptions, dentist etc).... 0

Pet insurance/vet bills................. 23.5

Buildings insurance..................... 5

Contents insurance...................... 5

Life assurance ......................... 0

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

Presents (birthday, christmas etc)...... 10

Haircuts................................ 20

Entertainment........................... 10

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

Emergency fund.......................... 50[b]

Total monthly expenses.................. 2096.5[/b]

[b]

Assets[/b]

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

House value (Gross)..................... 285000

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

Car(s).................................. 0

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

Total Assets............................ 285000[/b]

[b]

Secured & HP Debts[/b]

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

Mortgage...................... 204000...(866)......1.99[b]

Total secured & HP debts...... 204000....-.........-   [/b]

[b]Unsecured Debts[/b]

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

AA loans.......................20100.....354.......10.9

Lloyds credit card ............10400.....145.......38

Virgin credit card.............5400......112.......30

Very ..........................1100......50........40

Starling overdraft ............5000......58........15

Barclays overdraft ............5000......130.......45

Mbna CC........................1380......51........38

Barclaycard ...................4400......147.......45[b]

Total unsecured debts..........52780.....1047......-  [/b]

[b]

Monthly Budget Summary[/b]

Total monthly income.................... 2,654

Expenses (including HP & secured debts). 2,096.5

Available for debt repayments........... 557.5

Monthly UNsecured debt repayments....... 1,047[b]

Amount short for making debt repayments. -489.5[/b]

[b]Personal Balance Sheet Summary[/b]

Total assets (things you own)........... 285,000

Total HP & Secured debt................. -204,000

Total Unsecured debt.................... -52,780[b]

Net Assets.............................. 28,220[/b]

FYI- council tax comes out my partners account and is all paid up. 

Grumpelstiltskin

I don't think your SOA is accurate, one small thing TV licience is more than £10 monthly.

Multiply that inaccuracy up by other bills and you will be way out.