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

Brie

check with your internet supplier if you can move to a social plan - sorry can't remember the right name for it - you need to be on benefits to qualify and you might get a reduction if you're on UC.  Check the same thing with water rates and your mobile.  

Do you need the TV license?  If you don't watch live TV or iPlayer then it can be cancelled.  You might get chased a bit by Capita who assume that everyone needs a license but you just need to be firm with them.  Lots of people who only watch online or by sat don't need/have one.  

Some will say get rid of the pet(s) - but that doesn't seem to be a big expense unless there's a lot of dog food or whatever in your food bill.  (& pets are good for us)  You might cancel the insurance and then rely on PDSA if something happens - something to look in to.

I think for a DRO you have to have less than £30k in debts so you'd need to hit that and the HP car would be an issue as well.  Something to work towards perhaps?  But also check if there's something in your tenancy T&Cs about being bankrupt or anything as the LL may take action and that's not going to help you much.  You'll know how reasonable your LL is and frankly most won't care what's happening as long as you pay the rent and don't trash the place.

Cherubneddy70

Ok. First things first: to set up a new bank account and arrange for all payments to go into there, and all essential payments to come out. 

Set up a budget plan and STICK to it.

Next: to cancel all payments to non priority debts. So this would be credit cards, overdraft, store card, bank loan?

Then, to build up an emergency fund with as much as I can afford from what I would have paid on debt repayments. 

And wait for the default notices. Is it at this point I set up a DMP? 

I may need hand holding through this. It’s all very scary and I’m clueless.

sourcrates

After reading your SOA, I`m going to throw my hat into the ring with fatbelly and agree that is the best way to tackle this as things stand.

You need a new, safe, basic bank account, unconnected to your current lenders, you then sit on your non priority debts for a good 6 months, maybe more, let them all default you, yes interest and charges will accrue in the meantime, but once defaulted, all of that will stop.

Save up all that money you would have sent in payments, put it into your emergency fund.

When you are in a position to start payments again, its likely some or all of your accounts will have been sold, or assigned to debt collectors, that is normal practice, and makes things even easier as they will be much more flexible than the original creditors tend to be.

Self management would probably suite you, gives you much more control over matters, and, at some point further down the line, the settlement offers will start to appear, debt buyers pay pennies in the pound for old debts you see, so can afford to offer discounts, most of them anyway, what you accrued in interest waiting for accounts to default, can be re-cooped now by settling for anywhere between 30% & 70% of what is owed, its all a matter of negotiation.

Lots to take in at this point, granted, but its important you do things in the right order, safe bank account is first priority, no switching, apply direct to a lender such as COOP or MONZO, stopping non essential credit payments is next, then its a case of just waiting I`m afraid.

You are bound to have lots of questions, go for it......

HampshireH

3 years left on a £60 per month phone contract? That's another £2160 on the contract what did you get for that? It's extortionate is there any wa you could get out of that?

Floss

Monzo are great, I use that for day-to-day spend and have lots of pots that get topped up on payday. I also have Nationwide to receive my salary & pay my direct debits.

Cherubneddy70

Thanks guys. 

Ok I’ve set up a basic Monzo account. Floss can I set up different pots within that account or do I need to set up different savings accounts?

Floss

Cherubneddy70 said:

Thanks guys. 

Ok I’ve set up a basic Monzo account. Floss can I set up different pots within that account or do I need to set up different savings accounts?

You can do it in the app, all within the one account 

ManyWays

In a few months when all this is underway you can also look at affordability complaints about the debts you are making payment arrangements to. Win any and your balance will be reduced and the debts will be cleared much faster. It shouldn't affect the payment arrangements.

enthusiasticsaver

As you do not have assets to  protect bankruptcy would be an option but as you do not want to take that option and the car lease would not be allowed either I think a DMP is probably the way to go. This means that interest is frozen and you will be able to set a monthly payment which is affordable. 

That means stopping using the cards, saving as much as possible and waiting for the debts to default as stage 1.  A clean bank account with a bank you do not owe money to  will be needed and move all essential bills to that.  You will not have access to credit so until the debts default put all spare money into savings for emergencies. In the meantime go through that soa forensically and cut back wherever possible. As others have said the groceries bills are high for 1 adult and 2 children.  I would knock holidays on the head for now and just focus on sorting yourself out financially.  Nothing to stop you setting £50 a month away for a short break or caravan holiday but for now focusing on living within your means is the first step. 

fatbelly

Cherubneddy70 said:

I didn’t have the interest rates to hand at the time but thought the above would at least give an indication of my SOA. 

Just realised my car lease payment of £242 per month isn’t in the above either. I’ll add it all in when I can

With £135 on running costs your car is costing 377 per month, which is very expensive.

Long term, you need to find a cheaper option, and this may help if you do need an insolvency option. A car worth less than £2000 is exempt in a DRO and allowed if needed in bankruptcy