Advice needed - DMP

Spiralling

It's taken a lot to build myself up to do this so hopefully I get everything across ok ..

I've had debt problems for a while, was starting to get a grip on it when I finally started a new job after being unemployed for 8 years, but then...I messed everything up.
I had emergency surgery last January and was told I would die without it, I was left with an open wound for over a month and it took several months to fully heal yet mentally I didn't. My mental health has been up and down ever since, I started antidepressants a year ago and have had them increased gradually since, at christmas the suicidal thoughts started, 4 months ago I couldn't stop the suicidal feelings and completely shut down causing me to have 2 months off work. I've been spiralling mentally and financially for a year now and I've reached rock bottom (ashamed to also admit I've been gambling even though I couldn't afford it because I'm stupid enough to have let someone telling me they'd won trigger me - signed up to gamstop so this can't happen again).
In the last year I've had a new loan approved and 4/5 credit cards on top of the ones I had - including one about 6 weeks ago) and all are almost maxed out.

I've been managing to pay every minimum payment each month but its been a case of borrowing and transferring everything around to try and keep going. I'm a single mum with two children and I'm constantly aware of the fact I'm desperately failing them - I can't even figure out how to get my child school uniform ready to start secondary right now.

My income total each month is £2784 including my salary, universal credit, child benefit and child maintenance when it actually materialises.

My payments to loans are £511, minimum payments to my cards are £1003 and a bumper payment for car repairs is £120 for the next 5 months - £1592 total

I pay £616 - rent
£126 council tax (thats with 25% single discount)
£42 car insurance (after trawling allll the comparison sites)
£9.70 contents insurance 
£15.75 car tax
£15 gmb membership (I've had problems at work around the time my mental health was starting to spiral so needed their help)
£10.81 prescription prepay cert (I have 5 prescriptions per month so needed)
£13.25 tv licence
£20 wifi 
Total - £868.51

Which leaves me with £280.63 to cover food, gas, electric, petrol, anything the kids need, amazon prime and netflix subscriptions (we don't have a tv package as I cancelled it as couldn't afford it and we also don't have a main aerial to be be able to watch tv/freeview - plug in aerials don't seem to help much either), my mobile (sim only) and anything else that crops up - so as you can tell, credit cards have then been coming into play to cover things - I make sure the kids are fed but will often skip meals myself to keep costs down

I'm looking to do a DMP as I understand that I can make a budget to actually cover food, petrol etc but I've seen some posts say about cancelling direct debits etc and waiting until I get defaulted before I do anything, but also seen posts talking about token payments - do I stop paying altogether or am i meant to contact them and pay token amounts? Also, do I send letters to everyone once I get the first default or once a few of them have defaulted?

If they get maxed out by interest charges whilst I'm waiting to be defaulted is that worse for me?

Sorry, just trying to get my head around everything as I don't want to mess this up, I'm determined to be a proper adult and get my life sorted out. I want to face my issues and get my debts paid even though I know this will take a very long time.

RAS

Hi, it is what it is. And solvable.

It would help if you could share the total value of your debts. I'm assuming you don't have a car?

sourcrates

Ok, try and calm yourself down, there isn`t a debt problem that cannot be fixed.

It will be better if you can fill in a statement of affairs (SOA) to include all your income/expenditure/debts etc.

The SOA link is in my signature, take your time, than post it on this thread, and then constructive advice can be given, don`t worry, its all solvable.

Spiralling

Ok, so here goes...

Household Information[/b]

Number of adults in household........... 1

Number of children in household......... 2

Number of cars owned.................... 1

Monthly Income Details

Monthly income after tax................ 1618.14

Partners monthly income after tax....... 0

Benefits................................ 874.6

Other income............................ 290

Total monthly income.................... 2782.74

Monthly Expense Details

Mortgage................................ 0

Secured/HP loan repayments.............. 0

Rent.................................... 616

Management charge (leasehold property).. 0

Council tax............................. 126

Electricity............................. 80

Gas..................................... 50

Oil..................................... 0

Water rates............................. 0  Included with rent

Telephone (land line)................... 0

Mobile phone............................ 15

TV Licence.............................. 13.25

Satellite/Cable TV...................... 0

Internet Services....................... 20

Groceries etc. ......................... 400 I try to spend a lot less - previously budgeted ourselves to £150 but thats not realistic with the price of everything

Clothing................................ 0

Petrol/diesel........................... 80 this is just to work/back and essential journeys, doesn't include being able to take the kids anywhere for the day (forest etc)

Road tax................................ 15.75

Car Insurance........................... 42

Car maintenance (including MOT)......... 0

Car parking............................. 0

Other travel............................ 0

Childcare/nursery....................... 0

Other child related expenses............ 0

Medical (prescriptions, dentist etc).... 10.81

Pet insurance/vet bills................. 0  

Buildings insurance..................... 0

Contents insurance...................... 9.7

Life assurance ......................... 0

Other insurance......................... 0

Presents (birthday, christmas etc)...... 0

Haircuts................................ 0

Entertainment........................... 0

Holiday................................. 0

Emergency fund.......................... 0

Ring Subscription....................... 3.49

Amazon Prime & Discovery Plus........... 13

GMB Membership.......................... 15

Total monthly expenses.................. 1510

Assets

Cash.................................... 0

House value (Gross)..................... 0

Shares and bonds........................ 0

Car(s).................................. 2000  - 2006 Kia Rio, probably not even worth this with the dents, scrapes and rust

Other assets............................ 0[b]

Total Assets............................ 2000

No Secured nor Hire Purchase Debts

Unsecured Debts

Description....................Debt......Monthly...APR

Ratesetter - Loan..............2367.97...101.......0

Better Borrow - Loan...........8385......286.......0

Vanquis - Loan.................3059......124.......0

Littlewoods....................497.67....42.72.....0

Family Loan....................5100......100.......0

Klarna.........................0.........0.........0      **See note below

Bumper.........................588.3.....117.6.....0

AO - New Day...................146.......8.64......27.99

Monzo - Overdraft..............997.......30........0

Zopa...........................2280.33...0.........29.9  - Says 0 minimum payment but this is because I'm yet to get a statement

Zopa...........................396.42....21.91.....39.2

Fluid..........................2581.44...102.......38.33

Zable..........................848.09....37.5......32.65

Asda...........................631.14....14........39.37

Aqua...........................1821.26...54.19.....31.85

Tesco..........................632.92....25........28.94

Capital One....................448.88....25........30.34

Capital One....................1734.03...106.......30.34

118 ...........................3333.01...223.......41.2

Vanquis........................3412.81...202.......44.9[b]

Total unsecured debts..........39261.27..1620.56... This figure will be more once Zopa is included

Monthly Budget Summary

Total monthly income.................... 2,782.74

Expenses (including HP & secured debts). 1,510

Available for debt repayments........... 1,272.74

Monthly UNsecured debt repayments....... 1,620.56

Amount short for making debt repayments. -347.82  will be more once Zopa as above is included

Anything not included in the list and showing as 0 (gifts, clothes, etc) isn't budgeted for at all and comes from credit cards or more often gets ignored or alternative options explored - see if i can get second hand/free/do it myself even if incredibly badly.

Klarna - 30 day payment card - total killer. When I was off work with my mental health breakdown I was paid half pay, my ex didn't bother with the maintenance payment, I wasn't functioning and resorted to getting the kids takeaway just to make sure they were fed before going back to being useless and staring at my bedroom wall...obviously the other cards took a hit due to this but the klarna card was used to pay my rent and some other things and as such I'm now in a cycle of paying it off every 30 days with my wages using the current month's rent money and bill money so I'm effectively a month behind on things due to this.

If i weren't such a psycho and constantly feeling so awful I wouldn't have let it spiral so badly but I'm now at the point that all of this is making everything feel worse and I know it can't continue.

Spiralling

Is anyone able to help?

WYSPECIAL

Spiralling said:

Is anyone able to help?

The experts on here will be up soon and answer you later but from what you have posted you have plenty of income to cover all the things you need it’s just you’re paying too much out to unsecured creditors.

That’s good news because it is much easier to sort. 

The experts will be along along soon to guide you through what to do.

RAS

I think the first things to recognise is that you haven't been making the move minimum payments, you've just been increasing your debt by shifting them onto newer more expensive credit lines.

And that your mental health issues are not the cause of your debt, but perhaps the response to isolation and loss of income?

You also need to budget for the things in life that happen, like car maintenance and replacement, holidays, family emergencies and annual events. And please look at life insurance.

With that lot included, your monthly budget is likely to be the top side of £2k. 

You owe too much and have too much excess to do a DRO.
Do not even consider an IVA as you don't have the stable income required for the next 6 years and you'd pay nearly as much as on a DMP.

It's really down to a DMP or bankruptcy. Is there an employment reason why you wouldn't go bankrupt? How secure is your housing?

Whatever, I'd advise you set up a new basic bank account with a group with whom you have no debt, transfer your income and stop paying immediately. Do not switch as that moves all the DDs for the debts over as well.

I don't have the experience of Klarna but hopefully @fatbelly or @sourcrates can advise you.

Meantime cancel 118 or both Vanquis debts even if you've not sorted the bank account, to give you a bit of leeway get school uniform?

kimwp

The advice used to (seem to) be to stop making any payments in order to get a default, but token payments was advised recently, so hopefully @fatbelly or @sourcrates can advise on that. For a dmp, you'll need to arrange for your income to go into a bank account that isn't associated with any of your debts (which may already be the case) to avoid the risk that they just take the money and you need build up an emergency fund while you reduce/stop money to your debts as you won't have access to credit once you start defaulting. If going self managed for a dmp, you'll communicate with each lender individually - they won't know what you've said to the others.

But you also need to make sure your SOA reflects reality - there's nothing in there for life assurance, presents, haircuts, entertainment - is this realistic?

NeverendingDMP

I mean this in the nicest way possible but your debts are spread across a few people and that can make it really complicated to make and follow a budget and "see the wood for the trees' as they say.  This is going to make it feel impossible but it's not. It can all be figured out you just need a bit of help on the way whilst you decide on what to do xxx

If you move your income across to a fresh bank account not associated with any of the debts and start a spending diary it will help get an idea of what you need for living costs.

If your bank account is already separate you can if you wish just go on and click cancel cancel cancel on the all direct debits. It will scare you senseless whilst your doing it but nothing bad will happen.  

Also you can ask people on here what they spend/how they work it out.You will need to work these out for whichever option you choose going forwards. An MOT for example might cost about 45 pounds plus 0-300 on a normal fail. A service once a year might be 200. A tyre going might be another 50.  So for all that you need to save 50 a month. 


If you stop paying the debts you can buy the school uniform and maybe pay your rent in the right month which is some of the things you are worried about at the moment.
Council tax rent, utility bills etc still need to be paid but the rest can wait.

Have a look locally though on f book to see if anyone is giving away/selling any uniform. Even if that then becomes your spare or wash day item.  Despite govt encouragement a lot of highschools are still insisting on branded items even down to socks. Our local council has organised a pop up shop where people can donate/go in and take items. I went to ours and got a pair of pe shorts. Not a massive amount as they didn't have much of that highschool in the donations pile but it has saved me 17 pounds so it's a very good start.  Worth seeing if there is anything similar.

Good luck in whatever plan you decide x

sourcrates

Your SOA is missing quite a lot of things, so I suspect you have even less money available for debt repayments than you have actually think you have.

You have 20 separate accounts/creditors, likely the result of many years of trying to keep up with the jones, well, we have all experienced that in some form, so don`t beat yourself up about it, it`s happened, now you need to deal with it.

Just a note on Klarna, they actually have excellent customer care, if a payment is unaffordable, they will put accounts on hold for periods extending well over 6 months, you just need to tell them your struggling, and they will hold your account, no questions asked.

However, not all creditors are so accommodating, some will put a hold on collection activity once payments start to be missed, and there is also the formal breathing space program, which gives you 60 days free from any collection activity, you may want to look into that, once payments start to be missed, as they likely will be shortly.

Longer term you have a choice, you can go into debt management, either with one of the debt charities, or you can go self managed, but with 20 creditors, and the family loan not been a recognisable debt officially, you might also want to look at bankruptcy, that would likely see you pay an IPA for 3 years, but dis-charged after 12 months, all would be forgiven another 5 years down the line.

Debt management would take a lot longer to complete, smaller payments over a longer period of time, your looking at maybe 10 years here, depending on how much you can muster on a monthly basis.

So in the end it all boils down to time, the quick solution is bankruptcy, the long haul is debt management, so unless you can suddenly find the 40k under a bush to pay off your debts, those are your choices.