Debt problems on maternity leave

headinsand_Jo

I'm looking for advice regarding my debt worries. In a nutshell I have over £16k debt (that was really hard to write) on five credit cards, and having been on maternity leave since summer, I am running out of money for minimum payments, which now amount to over £400 per month. Two of these cards are still on 0% and the rest is not.

I looked at StepChange and their advice after seeing my budget is getting a DMP.

I have a few questions please. My biggest worry is bad credit rating that can screw us over when in July 2025 we will be remortgaging.

How does that work with a DMP when in 9 months time I'm back at work and can meet minimum payments? Will the DMP stop then? Will my credit score get better after I'm back at work and DMP is finished? Will we still be able to get good deals on remortgaging?

Any advice appreciated... Please. I am really at my wit's end and stressed, can't sleep at night worrying about my situation and the worst thing is I am totally to blame for this. I tried to manage my debt by taking out 0% balance credit cards but without proper budgeting it just didn't work, as I can see in retrospective.

Is there anything else i could do?

I contacted Barclaycard directly and they agreed to lower my minimum payments to £25 pcm and scrap the interest charges for a year. I was not that lucky with MBNA who said there is nothing they can do. At that point I contacted Step Change.

Thank you in advance

Penguin_

If you aren't moving or seeking to borrow more money in 2025 then your lender may not run a full credit check, Natwest didn't with me & I was balls deep in a DMP at the time.

RAS

You are referring to my debt and us re-mortgaging.

You need to talk to your partner about the debt and whether they can help you meet the minimum payments for the next few months.

Realistically, you jointly have the additional costs of a child, and future childcare to budget for going forward. And that need to be part of our budget not just your responsibility.

Do a Statement of Affairs, jointly, for now, and for when you return to work.

And mean-time both rein in your spending until you've got a realistic budget that works for you.

Do you know Barclaycard are going to put an AP marker on your credit record?

headinsand_Jo

Penguin_ said:

If you aren't moving or seeking to borrow more money in 2025 then your lender may not run a full credit check, Natwest didn't with me & I was balls deep in a DMP at the time.

Thank you for your reply.

I will definitely not be seeking to borrow more money. I don't want to be in the same situation again...

I read somewhere if we don't change lenders for mortgage (Santander) we won't necessarily be credit checked. But will we still have access to good rates of credit as anybody else? I was wondering if there was anybody in the same boat.

RAS

There are LOTs of people in the same boat.

You won't have access to the whole of the market but you can choose the best deal from your current provider, unless it's limited to FTBs etc.

What you need to do is try to protect your credit ratings, and if you default it will affect your partner because of the financial link. Which is why you need to work as a team?

Do you pay your CT over 10 months or 12? If 10, you've two free months coming up that might give you some space. And pay over 12 next year?

So do check if Barclays will issue an AP marker. Ring them.

headinsand_Jo

RAS said:

You are referring to my debt and us re-mortgaging.

You need to talk to your partner about the debt and whether they can help you meet the minimum payments for the next few months.

Realistically, you jointly have the additional costs of a child, and future childcare to budget for going forward. And that need to be part of our budget not just your responsibility.

Do a Statement of Affairs, jointly, for now, and for when you return to work.

And mean-time both reign in your spending until you've got a realistic budget that works for you.

Do you know Barclaycard are going to put an AP marker on your credit record?

Can I ask what is an AP maker, please.

I feel like such a fool because my husband paid off all my debts those few years ago when we bought a house so we would get a good mortgage deal (he had some inheritance money, now we are not in the same situation to do the same). Then I didn't manage my finances too well and I'm in the same boat again. I think that is the worst part of all this for me. He also pays majority of bills and mortgage so I'm left to pay for my CC and contribute a little bit towards food. So he's already doing a lot. And realistically he can't afford to pay my CC bills too. It is just very depressing that I get just over £600 pcm for SMP and over £400 has to go towards my debts. I just don't know where to start to improve the situation.

RAS

Arrangement to Pay.

A default comes off your credit record 6 years after it is issued.

AP markers stay on your credit record for 6 years after the debt is paid off. 

So you'd need to pay off the debt quite quickly to make it come off as soon as a default.

I appreciate it's depressing and pretty hard when you have a small baby to cope with, but you really do need to talk to your partner before you do anything else. Express your remorse and work out how to work together to keep track of your money in future.

And work out how you are going to manage your money better using a joint SOA. You have choices. 


Do you use your SMP to fund the debt payments until you get back to work?

How much of what you earn is going to be taken back out of the budget by childcare?

Are you as a family entitled to any benefits, now or when you return to work?

Can you use your time at home to review your outgoings and find better deals? Do you have stuff that might sell?
Can you restrict your buying of clothes to baby bundles and essentials (undies and footwear).

That'll give you some idea of how much leeway there is to tackle your debt.

headinsand_Jo

RAS said:

Do you use your SMP to fund the debt payments until you get back to work?

How much of what you earn is going to be taken back out of the budget by childcare?

Are you as a family entitled to any benefits, now or when you return to work?

Can you use your time at home to review your outgoings and find better deals? Do you have stuff that might sell?
Can you restrict your buying of clothes to baby bundles and essentials (undies and footwear).

That'll give you some idea of how much leeway there is to tackle your debt.

These are all very good questions. 

To answer some: this is our second child so we did minimum purchasing as they are both girls born around the same time of year so clothes fit. I started selling some bits and bobs on Vinted already so I'm going to continue doing that.

And yes that's exactly that, I'm using my SMP to pay my debts off as I've never missed a payment.

So an AP marker on an account is probably the worst idea ever?

We're only entitled to child benefit because our combine earnings were too high to claim anything. 

I'll get 60% off childcare as a staff discount so that doesn't worry me too much... And the older girl is in school so free.

In the light of all this is a DMP a good option at all?

Thank you for your time

theoretica

pmoon said:

RAS said:

You are referring to my debt and us re-mortgaging.

You need to talk to your partner about the debt and whether they can help you meet the minimum payments for the next few months.

Realistically, you jointly have the additional costs of a child, and future childcare to budget for going forward. And that need to be part of our budget not just your responsibility.

Do a Statement of Affairs, jointly, for now, and for when you return to work.

And mean-time both reign in your spending until you've got a realistic budget that works for you.

Do you know Barclaycard are going to put an AP marker on your credit record?

Can I ask what is an AP maker, please.

I feel like such a fool because my husband paid off all my debts those few years ago when we bought a house so we would get a good mortgage deal (he had some inheritance money, now we are not in the same situation to do the same). Then I didn't manage my finances too well and I'm in the same boat again. I think that is the worst part of all this for me. He also pays majority of bills and mortgage so I'm left to pay for my CC and contribute a little bit towards food. So he's already doing a lot. And realistically he can't afford to pay my CC bills too. It is just very depressing that I get just over £600 pcm for SMP and over £400 has to go towards my debts. I just don't know where to start to improve the situation.

The obvious answer is that to improve the situation you need to manage your finances well.  And that probably means more thinking about them - not in a worrying about them way, but in an adding everything up way and knowing exactly where every penny goes.  You have somewhere around £200 per month after paying debts - do you know the exact figure?  What does that need to cover other than 'a bit towards food'?

How much of the 400 is interest and how much debt repayment? 

RAS

You really need to talk to your partner because any action you take will affect their credit rating.

Default is a worse than an AP short-term but damages your credit ratings for less time.

And you do need to worry about nursery, as you still have to pay 40 percent of the fees.

You've been running up £3k roughly debt each year, and weren't faced with the debt repayment costs and 40 % nursery fees.

So you have to get a very clear handle on your finances going forward.

PandaGirl6

Here's what I'd do...

I'd sit down with my husband, admitt that the finances got out of control (probably a good idea to identify the issue - retail therapy, boredom, inadequate budgeting, gambling, eating out etc) and... give up control of the credit cards.

As drastic as it sounds, you might have a budgeting/spending problem and you need to work it out together. If that means your husband taking control for now, then it is only fair, since he would be contributing more financially.

You wouldn't wave a chocolate bar in front of someone on a diet. Would you?

He might be upset, but hiding the situation would be worse.
You might find it drastic to get pocket money, but hey.. that's what I'd do.