Starting point advice (Scotland based)

mowglimangan

Hi everyone,

I'm new here, nice to meet you

I'll try and keep things brief but in short I have gotten myself into quite the pickle (which, I guess, is how most people end up on this forum). Years of mismanagement, overspending and, over the last year, supporting my partner and me through a life overhaul which involved a huge decrease in pay, have led me to about £34000 of debt over credit cards, overdrafts and an unsecured loan.

Until recently, although I always feel like I'm drowning in it and am constantly stressed and worried, I have always made the payments.

Two months ago, we moved house and job (we work together) in order to earn more money although it's seasonal work and is taking time for the hours to kick in, summer will be very busy (40+ hours a week) but winter is quiet (15-20 hours a week). I have a freelance job which I do in the mornings/evenings before work which usually helps to make up the deficit and although I don't like the work and it leaves me exhausted to work those hours and leaves me with hardly any time to do fun things for me or with my partner, at least it's keeping us fed and the payments up.

To make matters worse, the freelance work I do is also unusually quiet at the moment. I can normally easily increase those hours and make between £1000 and £2000 a month but last month I barely made £500 and this month is not looking much better. Income from regular job is around £1000-1200.

Virgin have frozen my credit card and removed promotional interest rates because I've missed a payment. My Nationwide credit card is over its limit because I couldn't make a payment and the interest from the last two months have taken it over. Both of my overdrafts are at the max limits and my Nationwide loan hasn't been paid the last two months either.

I've put a rough SOA below. The numbers are pretty accurate but rounded up as I'm just looking for some rough, initial guidance. I have a very accurate personal budget on Excel that I can pull into a proper SOA if the time comes. I also found it difficult to put a number on income as it fluctuates quite a bit so I put my approximate earnings of the last two months seeing as that's why I've started missing payments.

I guess I'm looking for advice from a few angles:

• Should I just sit tight and miss the payments and let the phone calls and letters come and go and get back to the payments as usual when the work picks up? I'm worried that because Virgin have removed my 0% interest, it's only going to get harder to keep up with the payments and I'm going to make less head way.
  
• Should I contact the banks and make a payment plan with them?
• Should I be looking into some sort of DMP? Or DAS seeing as I'm in Scotland? Would this option relieve some of the stress of working like buggery just to stay afloat?
  
• I'd rather avoid any sort of legal record or long term affect but I guess it might be too late now that I've already missed payments?

Despite having long term debt, I've at least always been able to manage—just. Now I'm wondering if there's a different way to do it that might mean paying things off in a way that would maybe mean a little bit spare each month and me not breaking down in tears all the time because I'm so tired!!

Haha sorry, that turned out rather long in the end... Thanks for your time and any advice would be gratefully received.

Mowgli

[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......... 0
Number of cars owned.................... 1[b]

Monthly Income Details[/b]
Monthly income after tax................ 1500
Partners monthly income after tax....... 0
Benefits................................ 0
Other income............................ 0[b]
Total monthly income.................... 1500[/b][b]

Monthly Expense Details[/b]
Mortgage................................ 0
Secured/HP loan repayments.............. 0
Rent.................................... 200
Management charge (leasehold property).. 0
Council tax............................. 0
Electricity............................. 0
Gas..................................... 0
Oil..................................... 0
Water rates............................. 0
Telephone (land line)................... 0
Mobile phone............................ 25
TV Licence.............................. 0
Satellite/Cable TV...................... 0
Internet Services....................... 35
Groceries etc. ......................... 150
Clothing................................ 0
Petrol/diesel........................... 100
Road tax................................ 25
Car Insurance........................... 30
Car maintenance (including MOT)......... 50
Car parking............................. 0
Other travel............................ 0
Childcare/nursery....................... 0
Other child related expenses............ 0
Medical (prescriptions, dentist etc).... 0
Pet insurance/vet bills................. 60
Buildings insurance..................... 0
Contents insurance...................... 0
Life assurance ......................... 0
Other insurance......................... 0
Presents (birthday, christmas etc)...... 20
Haircuts................................ 0
Entertainment........................... 20
Holiday................................. 15
Emergency fund.......................... 50
Self storage............................ 140
Mum mortgage............................ 500[b]
Total monthly expenses.................. 1420[/b]
[b]

Assets[/b]
Cash.................................... 0
House value (Gross)..................... 0
Shares and bonds........................ 0
Car(s).................................. 4000
Other assets............................ 0[b]
Total Assets............................ 4000[/b]
[b]
No Secured nor Hire Purchase Debts[/b]

[b]Unsecured Debts[/b]
Description....................Debt......Monthly...APR
Nationwide Loan................10800.....280.......2.8
Nationwide CC..................5200......300.......39
Nationwide Overdraft...........1400......0.........39
HMRC Self Assessment...........1800......200.......11
MBNA...........................6000......200.......39
Virgin CC......................9000......300.......39
Natwest Overdraft..............1600......0.........39[b]
Total unsecured debts..........35800.....1280......-  [/b]

[b]
Monthly Budget Summary[/b]
Total monthly income.................... 1,500
Expenses (including HP & secured debts). 1,420
Available for debt repayments........... 80
Monthly UNsecured debt repayments....... 1,280[b]
Amount short for making debt repayments. -1,200[/b]

[b]Personal Balance Sheet Summary[/b]
Total assets (things you own)........... 4,000
Total HP & Secured debt................. -0
Total Unsecured debt.................... -35,800[b]
Net Assets.............................. -31,800[/b]

[i]Created using the SOA calculator at www.LemonFool.co.uk.
Reproduced on Moneysavingexpert with permission, using Firefox browser.[/i][/font]

kimwp

Hiya, I think you'll probably be looking at a dmp. Two points though...
1. Have you considered contents insurance? If you lost everything eg in a fire or due to water ingress, how much it cost to replace?
2. How come you are paying for your mum's mortgage? (I'm not sure how that would go on a dmp)

mowglimangan

Hi Kim, thanks for replying. Do you know if there is a significant difference/adv/disadv to a DMP vs a DAS? Or even a self managed DMP?

1. I haven't actually considered contents insurance, it's a good point. It feels like an extra expense but I can see where you are coming from with it potentially becoming a large expense in one go if something went wrong.

2. I'm paying the mortgage as a buy in to the property. A few years ago we wanted to buy a house together but I didn't have any savings so mum paid the deposit and I pay the mortgage until we are equally invested and then we'll halve it.

sourcrates

The OP is in Scotland, so it would be a DAS, its similar to a DMP but is a regulated arrangement which comes with added legal protection from creditors, I expect you can do either, as you would have the choice there, the rest of the UK do not.

kimwp

mowglimangan said:

Hi Kim, thanks for replying. Do you know if there is a significant difference/adv/disadv to a DMP vs a DAS? Or even a self managed DMP?

1. I haven't actually considered contents insurance, it's a good point. It feels like an extra expense but I can see where you are coming from with it potentially becoming a large expense in one go if something went wrong.

2. I'm paying the mortgage as a buy in to the property. A few years ago we wanted to buy a house together but I didn't have any savings so mum paid the deposit and I pay the mortgage until we are equally invested and then we'll halve it.

I don't, sorry, I meant more that a dmp (or some other solution along the dmp line like the DAS) seems advisable rather than trying to carry on as you currently are, based on your income not covering your minimum debt payments. I was trying to give a response so you weren't left hanging, but should have put more thought into it. Others will be along to advise on the specifics - different people pop on here at different times.

Note that when you agree a payment plan, the idea is that you you budget enough for essentials (IE you have enough to eat, you are warm and reasonably entertained etc) and the rest is paid to your debt -   paying £500 to an investment probably isn't considered an essential expense, so you'll have to think through how to manage that.

TheAble

I'm struggling to follow this a bit...

• You have a partner but you're buying a house with your mum? Do you both live with your mum or are you planning to?
• Your partner has no income?
• You're paying 200/month rent? Presumably not a market rent - do you pay that to your mum, as well as the mortgage?
• No gas/elec/water/council tax?
• There's a lot of debts @ 39% APR - is that the actual interest rate? If not (and I'm guessing not) it would be useful to see the actual rates on each debt.

Sorry for all the questions, just trying to understand the context.

mowglimangan

All responses appreciated, thanks very much, Kim! I'll have to have a think about the mortgage then.

TheAble, questions are welcome, I did brain splurge a bit so may not have been too clear.

Mum and I bought the house in 2019 when I was living with her and single. We have had fairly unstable lives and decided it would be good to team up to get something stable. Mum and the house are on the east coast of Scotland. My partner and I live and work on the west coast now, since last year.

We work as live-in housekeepers/site managers for holiday cottages so his income is the same as mine (minus the freelance work). He has offered to take over the groceries from now on but has his own debts to sort so can't do much more than that which is why I put zero.

The £200 a month is for the accommodation that comes with our job, all bills are included in that. The broadband is for the contract for our old house which they can't move and said I'd have to buy out of the contract to cancel...

I'm just popping out to work now but I can look up the actual aprs when I get back.

Thank you so much for responding. Any outside perspective is helping me feel a bit calmer.

kimwp

Hiya! Have you spoken to one of the debt charities? Make sure it's a charity and not a business that will charge you money.

On the mortgage front, I think it will make a difference if you are named on the mortgage.