Just some general advice to get me started greatly appreciated


So I’m in a heap of debt, a bunch of credit card and loans. Although all my payments are up to date and i make at least minimum payments on the cards every month it feels i am at a point where i just can’t go on spending valuable income servicing debts every month. It is making other aspects of my life extremely difficult as pretty much everything that goes in flies straight out!

 i could really use those funds elsewhere. I am a self-employed consultant, last year was very tough, as was the pandemic (which has really caused this problem), this year looks better but still I’m going to get nowhere near earning enough to start making a genuine dent, i should be able to commit some funds every month though, to a payment plan or similar, if such a thing exists

 i appreciate there is a lot of work for me to do researching options, and there is very little detail here, so i would really just like a broad overview of where to start and what my options, very roughly, might look like? If anyone out there can face giving me a couple of pointers?

i would like to avoid bankruptcy as i have some interesting projects launching this year, and have been there before once, about 8 years ago. 

we are talking around 40k and i don’t have any assets so to speak. I live with my life partner in her owned home - thanks so much in advance


  • Brie
    Brie Posts: 9,305
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    First - well done for admitting there's a problem to be sorted.  That's a crucial step.  Second - does your partner know?  It's better to be open about these things rather than trying to juggle and make excuses like pretending there's a reason other than debt that you can't use your credit card for that holiday etc.

    Next step is to go back to the top sticky and put together a statement of accounts.  With that you can see the whole situation.  For simplicity sake you can either include your partner's income plus all the household bills or you can just report on your own situation noting that your portion of the bills is X%.

    Once that done you can post it here so people can look to help you with ways of coping.  Alternatively it's a good starting point to talk to an official debt advice agency - StepChange, NationalDebtLine, CMA, Citizen's advice.  These can help advise on further solutions like IVA (which many people hate), DMPs, DROs etc instead of looking at bankruptcy.
    "Never retract, never explain, never apologise; get things done and let them howl.”
  • kimwp
    kimwp Posts: 1,642
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    Be careful that you talk to a debt charity rather than debt company as they make money from selling you debt solutions so will recommend the one that will make them the most money. A debt management plan might be the best option, in which case defaulting the debts before making any payments on the dmp would be better as it will counterintuitively affect your credit history for a shorter time. A debt charity will push you to start the dmp as soon as possible (before defaulting) as they can't take you on their books and then let you do nothing about paying the debt for months.

    Likely the best course is to stop paying the debts, then arrange a dmp once they have defaulted, but seeing your statement of affairs will enable the most informed advice.
    Statement of Affairs (SOA) link: https://www.lemonfool.co.uk/financecalculators/soa.php

    For free, non-judgemental debt advice, try: Stepchange or National Debtline. Beware fee charging companies with similar names.
  • london1973
    london1973 Posts: 441
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    These are very helpful responses so thanks

    Are the charities much of a muchness or can one be recommended as the best?

    also can you explain the point around waiting to default as being better re credit history, i don’t really understand
  • EssexHebridean
    EssexHebridean Posts: 20,875
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    The charities all have their pros and cons. A lot of folk here like Stepchange but they will try to push you to get things moving with a DMP straight away. 

    As for the waiting for defaults advice - it's as straightforward as limiting the longer term damage to your file. Let's say you have debts with Barclays, Natwest and HSBC - the Barclays and Natwest ones default next month, and 6 years from the date of that default, those debts disappear from your credit file. HSBC meanwhile, you continue to pay a token amount each month - they will attach an arrangement to pay marker against the debt on your file. that market stays there until 6 years after the debt is cleared - so let's assume that you take until 2028 to clear the debt - that means it stays on your file until 2034 - while the two that defaulted this year will be gone before the end of 2030. 

    As Brie suggested - an SOA would be a good next step for you as it really helps you to see your actual financial position right now. It's important to fill it in as completely and accurately as possible, and it should reflect your current position, not what you think you ought to be paying or budgeting for things, or what you imagine people "expect" to see. It might help to get a years worth of card and bank statements together before you start to help you with getting all the figures in place. 
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