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

Cherubneddy70

Thanks all, I’m taking all the above comments on board. I am considering letting go of the lease car and buying a second hand car/ but that would have to be using credit. Any thoughts on that?

Cherubneddy70

I have my brand new Monzo account ready to go. I’ve booked a day’s leave to redirect my income and priority payments into this account. 

I’m feeling nervous though. How stressful will it be with people chasing me for payment all the time? Also, when the debts are sold to private companies, how unpleasant will they be? I’m a single parent in my own with two young children 😳

RAS

You will get letters, possibly texts, phone calls and emails. Some might even use BIG RED letters. Commonly they will refer to consequences that may happen, once in a while. They will pretty much all tell you that you may be referred for further debt collection activity.

Which means that their computer is programmed to send another letter in 2/3 weeks. 

You have the right to insist that they write to you and delete phone numbers and email addresses. 

Once in a while, generally if you are close to the debt being statute barred, they might suggest Resolvecall will visit. They have as much right to be on your property as next door's cat.

If you've got the default and started making a nominal payment, they'll be happy. If you ignore them after you've got the default they might threaten a CCJ. If court papers arrive, come back here for advice.

Most of the time, if you are paying anything, they know they will have to pay out fees and still get the nominal payment, so it's not worth the effort.

enthusiasticsaver

Cherubneddy70 said:

Thanks all, I’m taking all the above comments on board. I am considering letting go of the lease car and buying a second hand car/ but that would have to be using credit. Any thoughts on that?

You won’t get credit to buy a car with that much unsecured debt and defaults. I suggest you buy a cheap runaround when you have saved up enough. 

Cherubneddy70

@ras thank you so much. 

stymied

Do keep opening the letters though just to make sure you catch any court papers if they do arrive (much later down the line).

MrFrugalFever

Hi Cherubneddy. 

Firstly, I just wanted to say that it’s great you’ve plucked up the courage to come on here and acknowledge/discuss your financial situation. It means you’ve taken the first step towards being on the right path to being debt free.

As a single parent of 2 young children it can’t be easy, please know that whatever situation (financially) you’re in, there is ALWAYS a way out and light at the end of the tunnel. It will be a bumpy ride and your children will need to be brought on that difficult journey but with patience and perseverance you’ll come out the other side in a far better situation.

Now that you’ve posted your SOA it has got you to focus somewhat on your finances, but as suggested previously, I would deep dive and get in to the nitty gritty of what you’re spending day in day out.

I entered in to an IVA 6 years ago and I had to LITERALLY
 account for every penny in and out as there was NO option of credit at any point. It taught me a few lessons….. a) it CAN be done, b) when you think it’s not possible, you find a way that makes it possible, c) you really do change your attitude and ask yourself ‘do I need’ or ‘do I want’. If it’s the former, go ahead, if it’s the latter….STOP.

I know you’ve only just opened a monzo account but I’d actually recommend a fintech which only conducts soft credit searches as you don’t want monzo to get wind that it’s all gone Pete Tong and potentially consider closure of account. I’d also consider where your savings are kept and how easily accessible they are (my advice would be keep the EF in an instant access account which is completely separate to any other bank/financial institution you have a relationship with).

Plan everything from now on and ask yourself DO I NEED or WANT, what happens if I don’t buy it, what is the alternative. Sit and contemplate purchases well before going to shop or online shopping etc.

I tried multiple methods of trying to budget and some worked for a while and some didn’t, hang around these forums (especially the DFW boards) and you’ll pick up all sorts of tips and tricks. Make it an obsession to NOT spend money and you’ll be home dry before you know it.

lillypoo

MrFrugalFever said:

Hi Cherubneddy. 

Firstly, I just wanted to say that it’s great you’ve plucked up the courage to come on here and acknowledge/discuss your financial situation. It means you’ve taken the first step towards being on the right path to being debt free.

As a single parent of 2 young children it can’t be easy, please know that whatever situation (financially) you’re in, there is ALWAYS a way out and light at the end of the tunnel. It will be a bumpy ride and your children will need to be brought on that difficult journey but with patience and perseverance you’ll come out the other side in a far better situation.

Now that you’ve posted your SOA it has got you to focus somewhat on your finances, but as suggested previously, I would deep dive and get in to the nitty gritty of what you’re spending day in day out.

I entered in to an IVA 6 years ago and I had to LITERALLY
 account for every penny in and out as there was NO option of credit at any point. It taught me a few lessons….. a) it CAN be done, b) when you think it’s not possible, you find a way that makes it possible, c) you really do change your attitude and ask yourself ‘do I need’ or ‘do I want’. If it’s the former, go ahead, if it’s the latter….STOP.

I know you’ve only just opened a monzo account but I’d actually recommend a fintech which only conducts soft credit searches as you don’t want monzo to get wind that it’s all gone Pete Tong and potentially consider closure of account. I’d also consider where your savings are kept and how easily accessible they are (my advice would be keep the EF in an instant access account which is completely separate to any other bank/financial institution you have a relationship with).

Plan everything from now on and ask yourself DO I NEED or WANT, what happens if I don’t buy it, what is the alternative. Sit and contemplate purchases well before going to shop or online shopping etc.

I tried multiple methods of trying to budget and some worked for a while and some didn’t, hang around these forums (especially the DFW boards) and you’ll pick up all sorts of tips and tricks. Make it an obsession to NOT spend money and you’ll be home dry before you know it.

Hi. @MrFrugalFever apologies for jumping on someone else's thread. But could you explain more about monzo closing accounts please and about fintech?

Floss

@MrFrugalFever I would also be quite interested to hear why you believe Monzo might decide to close an account?

MrFrugalFever

Monzo, like most banks (fully licensed), pull data from one or all CRA’s and as Monzo’s relationship with the customer was based on current circumstances not future circumstances the data they receive several months down the line may NOT fit their appetite for type of customer.

When I entered in to an IVA, my bank (NatWest), whom I owed nothing to so they weren’t part of the process per se, almost immediately downgraded my accounts from Advantage Gold/Reward Platinum to Foundation Basic, this was to remove any potential credit facility such as overdraft. They have refused point blank to allow me to change my account until all negative data has dropped off the CRA reports (so 6 years from start date of IVA/defaults).
The foundation account cannot be applied for, the bank have it as like a reserve for people who either have bad credit or no credit history.

I cannot say for certain but I don’t believe Monzo have such a facility and therefore MAY decide the banking relationship should come to an end. I’m not suggesting that it would but rather it could.

There are plenty of fintech banks trying to compete in the market, along with some pre-paid debit cards (be wary of fees). It’s a matter of doing your own homework as some aren’t licensed yet and don’t offer FSCS protection. 

I immediately diversified when I entered my IVA as it was an extreme change in circumstances no less than 30 days after signing a legally binding contract. A monthly figure was set and agreed between the IP and creditors and I had to stick to it no matter what. My salary came in and priority bills, IVA payment and food monies went out, I was left with a few hundred per month to live on and zero access to any form of credit.
I opened a pre-paid debit card account, along with some fintechs (Revolut, Tred etc) to diversify a bit of money and help me with budgeting - after all, it was my inability to budget that landed me in the mess in the first place. 

Trial and error with all manner of methods got me through and as I came out the other side I felt money confident and finance savvy.

Today, I have 5 credit cards, 2 bank accounts (NatWest & Kroo fintech), 2 pre-paid debit cards BA & Pockit and multiple savings facilities.