Advice on debt/DMP

Angury

Hi all,

It's taken me a long time to get the confidence to post here. I am incredibly embarrassed about the situation I have gotten myself into. Below is my SoA (please, no judgement, I am aware of how stupid I am and that it is entirely my responsibility).

Statement of Affairs & Personal Balance Sheet

Summary

Monthly Budget Summary	Amount(£)
Total monthly income	3,410
Monthly expenses (incl. HP & secured loans)	2,530.24
Available for debt repayments	879.76
UNsecured debt repayments	1,236.82
Amount short for making debt repayments	-357.06

Personal Balance Sheet Summary	Amount(£)
Total Assets (things you own)	0
Total Secured & HP Debt	-0
Total Unsecured Debt	-48,043.38
Net Assets	-48,043.38

Household Information

Number of adults in household	1
Number of children in household	0
Number of cars owned	0

Income, Expense, Debt & Asset Details

Income	Amount(£)
Monthly income after tax	3100
Partners monthly income	0
Benefits	0
Other income	310
Total monthly income	3410

Expenses	Amount(£)
Mortgage	0
Secured/HP loan payments	0
Rent	1195
Management charge (leasehold property)	0
Council tax	111
Electricity	41
Gas	43
Oil	0
Water Rates	15.72
Telephone (land line)	0
Mobile phone	25.53
TV Licence	0
Satellite/Cable TV	0
Internet services	17.99
Groceries etc.	80
Clothing	20
Petrol/diesel	0
Road tax	0
Car Insurance	0
Car maintenance (including MOT)	0
Car Parking	0
Other travel	50
Childcare/nursery	0
Other child related expenses	0
Medical (prescriptions, dentists, opticians etc.)	0
Pet Insurance/Vet bills	0
Buildings Insurance	0
Contents Insurance	0
Life Assurance	0
Other Insurance	0
Presents (birthday, christmas etc.)	0
Haircuts	0
Entertainment	25
Holiday	0
Emergency Fund	0
Tuition	528
Professional Subscriptions	378
Total monthly expenses	2530.24

Secured & HP Debt Description	Debt(£)	Monthly(£)	APR(%)
Mortgage	0	(0)	0
Secured & HP Debt totals	0	-	-

Unsecured Debt Description	Debt(£)	Monthly(£)	APR(%)
Halifax	3851.36	96.28	0
Aqua	5018	220.8	44.68
Capital One	1678.82	83.94	22.47
Zopa	21987.7	366.3	21.23
Zopa	15507.5	469.5	24
Unsecured Debt totals	48043.38	1236.8200000000002	-

Asset Description	Value (£)
Cash	0
House Value (Gross)	0
Shares and bonds	0
Car(s)	0
Other assets (e.g. endowments, jewellery etc)	0
Total Assets	0

Some points:

1. I will likely have to stop my postgraduate studies to pay my debt which should mean my tuition fees (listed as £528) will stop, as well my student loan (£310 a month).

2. I've managed to find a reduced phone contract for £17 a month (currently £25 a month) to start from next month.

3. Unfortunately there is no way to reduce my professional subscriptions as these are mandatory for my job. I am aware that it is a large amount (£378 a month) which is frustrating.

4. I will be cancelling my subscriptions for most entertainment services so my upcoming payment for entertainment should reduce to £10 a month.

5. I am planning to move to another rental property in June/July this year with hopefully less rent (aiming for maximum £850 a month) but that will very much depend on what is available in the area. In July I will also be getting a car (second-hand, kindly given to me by a family member) so will have the additional burden of paying for road tax, insurance, MOT etc. However, unfortunately having a car is necessary for my job. I'm hoping to reduce the cost by moving to a property with less rent and hopefully undertaking extra work with the use of a car. This should result in approximately an extra £500 every month (not guaranteed however).

I used the Stepchange website to create a budget and it advised me that I would not be able to meet my monthly debt payments and a DMP was advised. To be honest I am not that bothered about my credit score (it is clear to me that I should not have access to credit) and have no plans to get a mortgage in the future. Obviously if I could avoid it that would be better, but this has caused a lot of stress over the last seven years so am open to any and all advice.

Thanks everyone in advance - I am a clear example that consolidation loans do not work and that you need to get to the heart of the matter which is needing to manage your finances in the first place!

kimwp

Hiya, don't beat yourself up, everyone makes mistakes, one way or another.

It will be a fairly small impact, but you should be able to find a perfectly adequate (for most people at least) SIM only contract for under £10.

I'd personally try to keep in with your PhD if you can, investing in yourself is important.

When you move, will you be moving into a house-share?

Brie

Have you talked to the card companies to let them know you are struggling?  Will any of them give you an interest free period?  Aqua is obviously the worst having the highest interest so anything extra you do find (eventually) should go on that while paying the minimum you can agree with the others.  

Is there any impact to your chosen career if you go on any kind of debt plan?  Would a DRO be suitable?  

Can you say no to the car?  You say you'll need it for work but the costs can be crippling. (they were for me)

Well done for facing the problem - that's the worst bit in my opinion. 

Sncjw

What profession do you have to pay the high fees. 

Also how long left on your PhD? 

Rob5342

Don't be embarrassed, lots of us have been in similar situations but after facing up to it have found ways to deal with it. I got into £42k of credit card debt over a period of 10 years, but after being on a DMP for two years I've got it down to £19,000.

Do you have to stop your studies? It looks like your situation would be managable on a DMP and you could clear the debts in 4.5 years as you stand. If you finished the studies before that 4.5 years is up you could clear it in less time. Defaults will stay on your credit report for 6 years after they are applied. so even if you stop your studies and clear it sooner you aren't going to be that much better off from a credit report point of view. 

JCS1

Brie said:

Have you talked to the card companies to let them know you are struggling?  Will any of them give you an interest free period?  Aqua is obviously the worst having the highest interest so anything extra you do find (eventually) should go on that while paying the minimum you can agree with the others.  

Is there any impact to your chosen career if you go on any kind of debt plan?  Would a DRO be suitable?  

Can you say no to the car?  You say you'll need it for work but the costs can be crippling. (they were for me)

Well done for facing the problem - that's the worst bit in my opinion. 

DRO is for debts of under £30k so would not be an option

Angury

Thanks everyone for the very kind replies.

kimwp said:

Hiya, don't beat yourself up, everyone makes mistakes, one way or another.

It will be a fairly small impact, but you should be able to find a perfectly adequate (for most people at least) SIM only contract for under £10.

I'd personally try to keep in with your PhD if you can, investing in yourself is important.

When you move, will you be moving into a house-share?

Thanks for the advice re a SIM only contract. I won't be moving into a house-share but hopefully a studio - I have a lot of furniture which I am trying to sell although there doesn't seem to be a lot of demand (and it's mostly cheap IKEA stuff anyway). If I do manage to get rid of all of my furniture then a house-share would definitely be an option.

Brie said:

Have you talked to the card companies to let them know you are struggling?  Will any of them give you an interest free period?  Aqua is obviously the worst having the highest interest so anything extra you do find (eventually) should go on that while paying the minimum you can agree with the others.  

Is there any impact to your chosen career if you go on any kind of debt plan?  Would a DRO be suitable?  

Can you say no to the car?  You say you'll need it for work but the costs can be crippling. (they were for me)

Well done for facing the problem - that's the worst bit in my opinion. 

I haven't spoken to the card companies myself but one of the suggestions from Stepchange was to apply for a Breathing Space for up to 60 days. I was initially going to go down this route until I read the following:

"Once you choose to apply for Breathing Space, we’ll start the application process and the following will happen:

• Your personal details, details of your debts and any additional creditor information you’ve told us about will be sent to the Insolvency Service
   
• You’ll then be automatically registered by the Insolvency Service onto the Breathing Space scheme, and we’ll contact you to confirm your registration details and start date
   
• The Insolvency Service will use this information to contact all creditors that qualify. This could include private landlords, service providers and jointly-owned debts. You may want to consider how this could impact you before submitting your application."

The bit in bold concerned me as I am planning to look for another rental property and was worried that the possibility of landlords being aware of this while I am looking for property might go against me. I am up to date with my rent and have never been in arrears, but the bit in bold did concern me.

Unfortunately the car is necessary for my work. I live in a rural area with little public transport and am required to be in several locations at multiple times during the day. I am hoping that having a car will give me access to more income opportunities outside of my day job though. Which costs were crippling for you? Thankfully as I'm receiving the car for free from a very kind family member, I've hopefully avoided one of the biggest costs (paying for the car itself).

I don't think there would be an impact on my career if I were to go on a debt plan - my understanding is that it's mainly if you work in finance or accountancy or run your own business(?). I work in healthcare and the criminal justice system so don't think it would have an impact. My understanding is that a DMP is an informal agreement between yourself and your creditors as well (not sure if this is right?). When I've applied to my job in the past, they've only asked for bankruptcy/CCJs.

Thanks for your help and kind words.

Sncjw said:

What profession do you have to pay the high fees. 

Also how long left on your PhD? 

I work as a doctor. 

The final instalment for my tuition fee is August 2024, so not very far to go. Given that I've come so far, it would be a real shame to stop now, but on the other hand I do appreciate the need to cut back as much as possible with the current financial situation that I am in. 

Rob5342 said:

Don't be embarrassed, lots of us have been in similar situations but after facing up to it have found ways to deal with it. I got into £42k of credit card debt over a period of 10 years, but after being on a DMP for two years I've got it down to £19,000.

Do you have to stop your studies? It looks like your situation would be managable on a DMP and you could clear the debts in 4.5 years as you stand. If you finished the studies before that 4.5 years is up you could clear it in less time. Defaults will stay on your credit report for 6 years after they are applied. so even if you stop your studies and clear it sooner you aren't going to be that much better off from a credit report point of view. 

Thanks, and congrats on reducing your debt by so much already. It's so reassuring to know that I am not alone in this horrible situation. 

My final instalment for my postgraduate tuition fees is in August 2024. So I don't have that far to go and it would be a real shame to quit now as I've come so far. If I can continue my studies like you said, that would be very refreshing and a real boost both to my self-esteem and my future career.

I appreciate the time that everyone has taken to reply. I just have four questions:
1. If I do apply for a Breathing Space, is it likely that my landlord/future landlords will be made aware? Will it impact my current search for a rental property and application process?
2. If I were to go ahead with a DMP, should I wait until I have been accepted for a new rental property and signed a tenancy? Would being on a DMP beforehand have an impact on being accepted, particularly given the current high demands for rental properties at the moment?
3. Aside from applying for future mortgages, are there any other implications of being on a DMP in terms of your credit report? I don't plan to apply for further credit cards in the future anyway, but just wanted to make sure I hadn't missed anything that I might need in the future. 
4. I've noticed some advice on this forum about defaulting on your debts first before applying for a DMP as this is cleared off  your credit report faster. Does an arrangement to pay marker look better on your credit report than a default, or do creditors take both just as seriously? As someone who has no interest in getting a mortgage or new credit card in the future, is there any advantage to me signing up for a DMP straight away rather than defaulting on the debt first? The idea of receiving lots of phone calls and letters from debtors for several months does not sound appealing to me!

RAS

1. No-one is going to know about Breathing Space, except your creditors, but why? see 4.

2. EAs will look at salary, job contract, affordability and CCJs and insolvency, and landlord references. Might be better not to have a payment to a debt charity showing up, IF they ask for bank statements. 

3. An DMP is an informal agreement and doesn't appear on your credit record.

4. Arrangement to Pay and defaults both affect your credit record. Defaults fall off your credit record 6 years after they are issued. AP markers stay on for 6 years after the debt is paid off. So AP markers damage your credit rating for longer, at least 6 years after you got sorted financially.

Given the sort of costs you need to cover to support and enhance your career/income potential, stop paying now.

Save everything into emergency and education funds. By the time your accounts get defaulted, you should have covered your educational costs and have some savings. 

You'll need to factor in the car and running costs as well. When it comes to the DMP, allowances for the car, professional fees and any essential education costs will need to be written into your SOA. It can happen, one OP include therapy without which she would not have been able to work, for example. Obviously, Once you've qualified, you can adjust the payments to creditors, but make sure you build good emergency fund to cover car replacement, as you need it sometime.

kimwp

Angury said:

Thanks everyone for the very kind replies.

kimwp said:

Hiya, don't beat yourself up, everyone makes mistakes, one way or another.

It will be a fairly small impact, but you should be able to find a perfectly adequate (for most people at least) SIM only contract for under £10.

I'd personally try to keep in with your PhD if you can, investing in yourself is important.

When you move, will you be moving into a house-share?

Thanks for the advice re a SIM only contract. I won't be moving into a house-share but hopefully a studio - I have a lot of furniture which I am trying to sell although there doesn't seem to be a lot of demand (and it's mostly cheap IKEA stuff anyway). If I do manage to get rid of all of my furniture then a house-share would definitely be an option.

Sncjw said:

What profession do you have to pay the high fees. 

Also how long left on your PhD? 

I work as a doctor. 

The final instalment for my tuition fee is August 2024, so not very far to go. Given that I've come so far, it would be a real shame to stop now, but on the other hand I do appreciate the need to cut back as much as possible with the current financial situation that I am in. 

If you are happy house sharing and it's only getting rid of the furniture that is stopping you (and it makes sense in terms of the money you'd save vs the money to get furniture again), then take a look at olio or Freecycle.

Given how far you've come and actually how little your PhD adds to your outgoings, I would try to keep this up. 

NeverendingDMP

Another vote for sticking with the PhD and studies. As you say you've come so far and Aug 24 will be here in a flash.
Just to ask if you are considering a dmp or breathing space. Do you bank with Halifax or just owe them? If you bank and owe it might be as well to have a different bank account for your waes to go into. Or if you are gonna plough on as you are do you know how much longer you have the 0% for?

ManyWays

Those are 2 dramatically large and expensive loans from Zopa and I wondered if you have looked at making affordability complaints about them, there is information on the Debt Camel website.