Please help me get debt free

debtfreedreamer23

Firstly, I know I’ve made a mess for myself but I need to make this right so please no negative comments. 

I recently reached rock bottom, I’m not a bad person but for reasons I’m not proud of I’ve got myself in a terrible debt situation and need help to get out of this and get my life back on track.

My credit card debt is listed below;
Halifax 1 £12,029
Halifax 2 £3244
MBNA 1 £12,094
MBNA 2 £400
Tesco £4662

I currently pay £400 on payments across these cards and that’s realistically the most I can afford. 

I currently have a mortgage, have no missed payments and my credit score is good. 

What can I do to fix this is the quickest time possible? 

Do I just continue to make my current payments? I read about making offers to the credit card companies but I don’t know much about that. 

Any advice would be massively helpful. 

I’ve had a massive wake up call and know that I need to sort this mess out.

backinbusiness

Didn't want to read and run, but pushed for time just now.  The forumites will be along soon with some very good ideas and suggestions, but well done for realising you're in a bit of a hole and looking to fix it.  Good luck OP.  BiB x 

RAS

Hi

Along the way, you may want to put up a full Statement of Affairs, but in the short-term can you clarify:

What's the minimum contracted monthly repayment on those cards? In other words are you already you unable to pay the minimum?

What are the APRs and maximum amounts of credit on each card?

You'll find most folk here have been there and done that, sometime more than once. So relax.

You will be able to re-mortgage, just stick to your existing provider who won't do a credit check.

Also got to go.

Keep your chin up mean-time.

sourcrates

As a homeowner, you have 3 options.

Option (1)
Earn more money, cut back on your other spending, make better budgeting decisions, stop frivolous spending.

Option (2) 
The nuclear option, IVA (Individual voluntary Arrangement) a formal debt solution, where your house will be legally protected from your creditors, but you must make at least 60 monthly repayments, keep to a strict budget, have a steady income for those 5/6 years, re-mortgage option in year 5, fee`s are high, but come out of your monthly payment, can only be arranged by an IP, not recommended for everyone, but ideal for homeowners with large debts, recommend you do some research.

Option (3)
The informal approach, DMP (Debt Management Plan) an informal, unregulated way to repay what you owe, at a reduced rate, over a longer period of time, most creditors will stop adding interest, but its never guaranteed, this kind of plan can be organised yourself, or by a debt charity, either way there is no charge, some commercial companies will charge you, they should be avoided.
Again, recommend you do some research.

If you would care to fill in a statement of affairs, that will tell us (and you) what may suit you best, calculator available here -

SOA Calculator (stoozing.com)

Format for MSE, and post on this thread.

debtfreedreamer23

The £400 covers the minimum payments at the minute but all cards apart from Halifax 2 are on balance transfer offers currently so no interest. 

All cards pretty close to the limits but these are all just for paying, I won’t be using them. I do have a nationwide and Barclaycard that have no balance on.

Since I got myself in to this mess I have done a budget/spreadsheet for myself. 

Unfortunately I already had a holiday booked so I am having to pay for the each month but once that’s over in July I could pay some more towards debts.

I filled out the stepchange form and that took what was left and paid it out over my debts but didn’t seem to reduce any of them, I think it would just be no interest? 

Does anyone know anything more about offering settlements to the credit companies? Is that something I could look at? 

RAS

At this stage, you won't get a settlement for these debts. The providers will be looking to recoup the whole amount.

Don't get pulled in by those " reduce your debts by 79/85/91% with one affordable monthly payment" ads. These are referral companies who get their income from advising people to do an IVA. 

IF you decided to do an IVA, it would be better to use Stepchange as they charge lower fees, and will make sure it is a good option for you. For example if you are a sole owner with lots of equity, or receive an inheritance, or have a High income you could end up releasing money to cover the whole debt and £9kish fees. 

What can happen is that if you default on the debt, the buyer may well decide to offer you a discount in a few year's time. You then offer less. So you can settle for less in time. That more likely with a DMP.

You also need to deal with whatever has led you to accrue that sort of debt. 

Are you still able to get 0% deals to go forward. And are you able to pay a very small amount extra each month, as paying the minimum tends to increase your chances of a new deal.

debtfreedreamer23

Do you think I am best paying as I am for now then rather than looking at debt management? 

This relies on me not spending again I’m aware but I cannot take feeling like this any longer, I have every intention of paying these debts off and getting my life back on track. 

Martico

It's a tough thing to face up to, and this is a great first step. You'll find good advice here.

That advice would be better if you're willing to share your SOA, as linked by sourcrates above. That would give a clear picture of your budget, what you're able to afford, where savings could be made or resources directed. Or if a DMP or similar is the best solution for you. And some additional info such as expiry dates of any 0% deals would also help.
Good luck 

debtfreedreamer23

That form is a little difficult for me as I have my own account and pay into a joint for all the house bills but embarrassing this debt is my own so I have to pay it myself. 

I also put money away each month for Christmas and birthdays which varies as the year goes on but I’ll put March outgoings below;

Income £1775
Money for household bills and weekly shops £880
Mobile £36
Petrol £50
Dentist £13
Savings for birthdays £45
Holiday £200
Payments on cards £400

Leaves me with £151 a month

RAS

Ok, really good thing that you save for Christmas and birthdays. Do you do the same for insurances, car costs etc?

there's a couple of issues.

How does your income compare with the other householder? Are you earning a third and paying a half, or the other way round.

How much flexibility do you have to negotiate savings on the household bills? Like eating less expensive food, using fewer, lower prices cleaning kit etc? And particularly holidays.

What's covered by bills and weekly shops?

You need something for clothes, even if only knickers and shoes.

debtfreedreamer23

So money put across to the joint covers all the household bills, car, life and pet insurance and some money that goes in to a joint savings as an emergency fund such as car service, MOT or if the washer breaks etc - We go 50/50 on everything to do with the house. 

If we wanted a take away at the weekend that would come out of our own money. 

I’m trying to be better with spending money on coffees or buying lunch when I have stuff at home. 

I was thinking about putting any money I have left at the end of the money in to an emergency fund, or should I pay this off the debt straight away?