Facing up to my debt. What’s my best way forward?

Cherubneddy70

The last thing I want to do is file for bankruptcy.

Cherubneddy70

In terms of outgoings:
Gas
yes I’m paying off debt from winter months. Currently about £400 in debit. It’s an old, draughty, detached house. I have thought about moving but the rent here is very reasonable and even things a lot smaller are the same price or higher

Satellite tv
i cancelled it for ages. Only just restarted it as we really missed it. Plus we never go out and none of us have hobbies/ clubs so I don’t begrudge it. Got a good deal returning too.

phone
i have another 3 years left on my contract unfortunately 

car
id have no problem stopping the car lease and getting an old banger. But I don’t think it would be anymore cheaper due to maintenance etc. I’ve spent nothing on this lease car except services in the last 3 years. And I need a car for my job, it’s in my contract.

food
yes I agree I really need to make some savings here.

c tax
yes I’m claiming single person discount. Band D property. So a move to a smaller property would help this but as I said I’d probably end up paying more rent.

Cherubneddy70

I’m considering writing to my creditors and agreeing payment plans individually with them once I’ve done a detailed budget plan. I’ll see if I can come up with repayment plans that are affordable for me and that creditors will accept. 

If not, I need a Plan B.

what are peoples thoughts in my Plan A?

Cherubneddy70

The detail shows too much debt, too much surplus income.

Would you mind explaining the above to me please, Fatbelly, as it seems contradictory to my small brain.

kimwp

Cherubneddy70 said:

The detail shows too much debt, too much surplus income.

Would you mind explaining the above to me please, Fatbelly, as it seems contradictory to my small brain.

See the eligibility section of:
https://www.gov.uk/guidance/how-to-get-a-debt-relief-order-dro#:~:text=Overview-,A Debt Relief Order (DRO) is a solution to deal,the DRO during that time.

Martico

I'd suggest having a forensic look at your actual spending - your SOA shows money allocated to an emergency fund and holidays, but nothing to show in terms of cash assets. So it's not really a true reflection of your monthly budget. I'd find time to go through your statements for the last few months, and list what you spend and on what. Once you know where your money is going, you'll be in a much better place to work out a plan. Good luck!

Cherubneddy70

that’s a good point Martico, thank you. It’s more an idea of my budget going forward. There’s been very little budgeting for holidays in the past, I’m ashamed to say I used to put them on credit cards. Hence being in so much trouble now. 

fatbelly

I think Plan A should be to get a bank account unconnected to your debts and use this for income and essential expenditure. 

The present overdraft becomes a non-priority debt - and that's why your new bank a  ount needs to be with someone new as you do not want any of your creditors dipping into it.

Then cancel all direct debits etc to the non-priority debts

Build an emergency fund. Wait for the defaults.

Decide whether you want a 5-6 year debt management plan or a bankruptcy (your first post on the bankruptcy board led me to think that was what you were planning) with a 3-year income payments order.

Floss

Cherubneddy70 said:

I’m considering writing to my creditors and agreeing payment plans individually with them once I’ve done a detailed budget plan. I’ll see if I can come up with repayment plans that are affordable for me and that creditors will accept. 

If not, I need a Plan B.

what are peoples thoughts in my Plan A?

DO NOT set up arrangements with the creditors until you have defaulted (and it shows on your credit file) as that will show for 6 years after you pay it off, rather than a default which sits there for 6 years and then disappears.

Have a look at the NEDCAB site and put all your figures into their budget pro-forma - you will need to have your balances to hand, and to list everything you pay out.That will calculate what is available and how that amount can be equitably shared between your creditors.

It is non-committing, so you can adjust those things that are flexible, but the site is an excellent resource for a self-managed DMP.

Re an emergency fund (EF) the advice on here is to stop paying all debt payments, stash that money as your EF until your debts default and then enter into repayment agreements with the debt collection folk. 

Cherubneddy70

thank you Fatbelly and Floss, invaluable advice there.