Facing up to the past and thinking about the future

Debtmonkey94

Hi all,

First post on the forum so hello to you all.

Let me introduce myself. I am in my late 20’s and work full time. I have no savings, do not currently drive and live in rented accommodation with my partner who is not involved with my financial mishaps.

Since 18 I have always had credit whether that be loans, credit card etc and always manage to keep up with payments whilst having a reasonable happy life.

Sadly I am in a debt spiral with total debt of £31k over two credit cards, an overdraft and 3 loans. I felt helpless and reached out to stepchange who put my on a DMP which works out to £280 per month. 

I am no having to amend my budget as my orginal figures were too generous towards my debt and I’ve found myself working overtime to get by. So effectively it’s going to take at least 10+ years to clear.

It is time I bite the bullet, admit my only viable option is bankruptcy and take the jump.

If I was to go bankrupt what would be included in reasonable living expenses as I’m very confused. 

Would stuff like dentist, additional travel costs etc be allowable? 

Knowing I’m not alone in this helps a lot.

Thanks 

RAS

Please go back to Stepchange and ask for amendments to your budget on a cost of living basis. It perfectly allowable. You should have had medical and dental, holiday, additional travel, emergency fund etc included anyway.
 
Don't however expect to be able to afford your previous life style on a DMP or in bankruptcy.

Have any of your creditors defaulted accounts? Or did you pitch headlong into the DMP?

MalMonroe

Hi, I do agree about going back to StepChange to ask for amendments. 

Do think very carefully about jumping into a bankruptcy. It's not an easy option out of debt. (I know, I have been in deep debt and had a DRO but that's a story for another day.) You are certainly not alone. I'm aware of how impulsive/hopeless debt can make you feel. You need to just step back and have a breather. And a cup of tea, maybe.

Also, forget about the past, that's not the way you're facing.

Please read the info in the following link - it's from the government so hopefully it is correct. At the moment you have to pay £680 for the privilege of becoming bankrupt.

https://www.gov.uk/bankruptcy

Nothing will be lost if you re-contact StepChange. Tell them everything. 

All the very best to you. Things will get better, I did it and so can you. 

sourcrates

Bankruptcy may not be appealing to you, but then neither is a ten year DMP.

There are those who stick it out, but with a debt of 31k, and no assets to protect, ten years is a very long time.

It’s not a decision to take lightly, but the allowances are actually quite generous in bankruptcy, with a potential £200 income surplus though, you would likely get an IPA for up to 3 years.

Lowering your DMP payments will help your budget, but keep you in debt longer, you need to decide if you can last ten years like this, or bite the bullet and have it all over in 3 years.

RAS

Personally, I'd go back to stepchange, revise your budget. 

IF you started a DMP before your creditors had time to default the debts, I'd stop paying altogether.

Then save the £200 ish I'm no longer paying creditors and try to find some extra into an emergency fund. You'll need that anyway going forward. 

Live with the revised SOA and see how you feel in 6-8 months? 

That way you are making an informed decision based on sustainable expenditure, not going for bankruptcy because your initial budget wasn't fully thought through. And you've got the BR fee in your bank if you want. 

Debtmonkey94

RAS said:

Personally, I'd go back to stepchange, revise your budget. 

IF you started a DMP before your creditors had time to default the debts, I'd stop paying altogether.

Then save the £200 ish I'm no longer paying creditors and try to find some extra into an emergency fund. You'll need that anyway going forward. 

Live with the revised SOA and see how you feel in 6-8 months? 

That way you are making an informed decision based on sustainable expenditure, not going for bankruptcy because your initial budget wasn't fully thought through. And you've got the BR fee in your bank if you want. 

Hi Ras, 

None of my debts defaulted. As soon as I knew I’d start missing payments I panicked, went to step change and set up a DMP.

I have now spoken with step change and in the process of changing my budget.

In regards to getting defaults should I pause the plan with step change?

sourcrates

Debtmonkey94 said:

RAS said:

Personally, I'd go back to stepchange, revise your budget. 

IF you started a DMP before your creditors had time to default the debts, I'd stop paying altogether.

Then save the £200 ish I'm no longer paying creditors and try to find some extra into an emergency fund. You'll need that anyway going forward. 

Live with the revised SOA and see how you feel in 6-8 months? 

That way you are making an informed decision based on sustainable expenditure, not going for bankruptcy because your initial budget wasn't fully thought through. And you've got the BR fee in your bank if you want. 

Hi Ras, 

None of my debts defaulted. As soon as I knew I’d start missing payments I panicked, went to step change and set up a DMP.

I have now spoken with step change and in the process of changing my budget.

In regards to getting defaults should I pause the plan with step change?

Most people do this imagining one or two missed payments will bring down all kinds of hellfire upon them, when in reality, no one bats an eyelid, the process of collecting bad debts is quite a long and laborious one, nothing happens quickly.

If your debts don`t default, then interest can still be charged, and your credit file gets marked as "AP" arrangement to pay, this marker stays on file for 6 years after you make your final payment, so potentially quite a long time.

Just two reasons why defaulting on your debts works in your favour, so you should think about that, and ask yourself if it bothers you.

RAS

Defaulted debts fall off your credit record 6 years after they are issued.

AP markers stay for 6 years after the debt is paid off, so potentially much longer.

fatbelly

Debtmonkey94 said:

Hi all,

First post on the forum so hello to you all.

Let me introduce myself. I am in my late 20’s and work full time. I have no savings, do not currently drive and live in rented accommodation with my partner who is not involved with my financial mishaps.

Since 18 I have always had credit whether that be loans, credit card etc and always manage to keep up with payments whilst having a reasonable happy life.

Sadly I am in a debt spiral with total debt of £31k over two credit cards, an overdraft and 3 loans. I felt helpless and reached out to stepchange who put my on a DMP which works out to £280 per month. 

I am no having to amend my budget as my orginal figures were too generous towards my debt and I’ve found myself working overtime to get by. So effectively it’s going to take at least 10+ years to clear.

It is time I bite the bullet, admit my only viable option is bankruptcy and take the jump.

If I was to go bankrupt what would be included in reasonable living expenses as I’m very confused. 

Would stuff like dentist, additional travel costs etc be allowable? 

Knowing I’m not alone in this helps a lot.

Thanks 

Ten years is a long time getting out of debt unless you have no option other than a long dmp.- and you do have another option

In your case bankruptcy will probably mean three years of payments from your income.

It stays as a mark on your credit file for 6 years, like most marks. After that it's a clean start.

I've no idea why stepchange didn't suggest that at the start

Debtmonkey94

Hi all,

somehow managed to log myself out of my account but here I am!

i have had a review with step change and amended my budget. Ultimately my debt free debt is over 13 years away.

Step change have emailed and recommended me an IVA.

Below is my SOA if anyone can give me some help.

SOA

Household Information

Number of adults in household - 2

Number of children in household - 0

Number of cars owned - 0

Monthly Income Details

Monthly income after tax - £1,620.00

Monthly Expense Details

Rent - £325 

Council tax - £174 

Electric - £43

Gas - £43

Water - £27

Mobile phone - £60

WiFi - £31

Groceries - £280

Travel - £232

Emergency fund - £25 

Laundrette - £100

Entertainment- £50

Phone insurance - £5.07

Total monthly expenses - £1,395.07

Assets

NONE 

Unsecured Debts 

Aqua credit card - £7,622.46

Capital one credit card - £1,979.86

Lendable personal loan - £6,050.55

Plata personal loan - £4,645.80

Zopa personal loan - £ 9,472.27

Nationwide overdraft - £2,359.72

Thanks 

RAS

Are these your share (half?) of the household costs? Do you actually earn half the household income?

And any reason you are considering an IVA for 6 years (it will be extended with no equity to release) rather than bankruptcy over 3 years, which would be funded by 2 months IVA payments?