140k Unsecured debt - advice

EssexHebridean

Currently, yes, your debt payments are too high to be affordable with your other expenses. That will change if you take the DMP option though as then you will manage what you pay to the debts. Your household outgoings are well under your monthly income once the debt payments are stopped, so this is certainly a very workable route for you. I would certainly not advise trying to continue as you are on the basis that you “might” move in a year though - and if you are considering selling up, for goodness sake don't* spend any more on the house! 

One thing I am a little confused about - you’ve said you are in London, yet you have an expected price you are thinking you might achieve of £500k on your (very recently refurbished and presumably reasonably sized, looking at the energy bills) house. Why such a low price? In most areas of London right now you would struggle to get a 2 bed flat for £500k - and a reasonably sized Victorian Terrace presented to a good level after refurb will be looking at closer to double that amount. 

* edited to correct autocorrect error made by mischievous ipad! 

kimwp

On the food front, check how much you are throwing away and also stockpiling. It's quite easy to keep buying more and have far more than you need piled up. 

KxMx

I second caution about using older family for child care - my cousin (twins) had a plan for MIL and Mum to split childcare 50/50 after maternity leave ended and she returned to work PT. 

MIL died of cancer before she went back to work, and Mum managed a year before developing an auto immune condition which made it impossible to carry on. 

Similarly a friend also working PT, had a plan to use Mum for her 3 work days, and Mum decided in the end she didn't want to do it any more often than 1 day per week. 

ldn83

KxMx said:

I second caution about using older family for child care - my cousin (twins) had a plan for MIL and Mum to split childcare 50/50 after maternity leave ended and she returned to work PT. 

MIL died of cancer before she went back to work, and Mum managed a year before developing an auto immune condition which made it impossible to carry on. 

Similarly a friend also working PT, had a plan to use Mum for her 3 work days, and Mum decided in the end she didn't want to do it any more often than 1 day per week. 

Her family have been begging us to move closer to them so they would happily take her a few days a week and childcare outside of London isn’t near £90 a day.

We live within the M25, not inner London.

MeteredOut

ldn83 said:

KxMx said:

I second caution about using older family for child care - my cousin (twins) had a plan for MIL and Mum to split childcare 50/50 after maternity leave ended and she returned to work PT. 

MIL died of cancer before she went back to work, and Mum managed a year before developing an auto immune condition which made it impossible to carry on. 

Similarly a friend also working PT, had a plan to use Mum for her 3 work days, and Mum decided in the end she didn't want to do it any more often than 1 day per week. 

Her family have been begging us to move closer to them so they would happily take her a few days a week and childcare outside of London isn’t near £90 a day.

We live within the M25, not inner London.

"begging us to be closer" does not mean "happily take <the child> for a few days a week".

Unless you/she have specifically spoken to the family about childcare, do not assume that is the case. Many (most) grandparents obviously want their grandchildren to live close to them, to be a large part of their lives, but that doesn't mean they want to be their regular/planned day care. They are *very* different things. 

Until that conversation happens, I'd recommend planning the move on the reduced childcare costs only, as see any grandparent care as a bonus.

EssexHebridean

It would be sensible to see that any move stacks up even assuming that full 5 day a week childcare is needed anyway, as situations with grandparents can always change even if that is not something that either party wants to happen.

ldn83

Yes all valid considerations and taken on board.

So just to sum up, the general consensus is that a self managed DMP is best for our situation as we can cherry pick who we pay and how much and when. And is it best to simply stop the direct debits and go cold on the creditors that we can’t pay with the hope of the debts defaulting and interest being frozen? 

If I was to simply write to my some of my creditors that I can’t make the payments to them due to various priority debts and can offer only (for example) token 5% of the contracted monthly payments until our childcare bill or cash flow improves (due to future higher earnings etc), would they go for a default or accept the new payment? Would the latter then stay on my credit file longer? 

RAS

If you write to your creditors and offer a limited payment, they will mark your credit record Arrangement to Pay (AP).

AP markers stay on your credit record for 6 years after the debt is paid off. It is possible that fees and interest will still be charged.

Defaults stay on your file for 6 years, regardless of whether you pay a bean. Might take a year to get them but likely to damage your credit record for a shorter time. And once defaulted, fees and interest stop.

Once you've been making reduced payments on defaulted debts for few years, creditors will start offering discounted full and final offers. If you've been building up a fighting fund, then you can gradually pick off the debts at a discounted rate.

EssexHebridean

In terms of unsecured debt, best to stop ALL the payments and let the lot default I would imagine. As RAS says, reduced payment offers will earn you AP markers, which you don't want. It also means that interest can continue accruing which makes it harder to pay down the debt. I can also imagine that creditors may be a little peeved if they realise that some of your debts were still getting even close to a full payment while they are getting nothing! 

ldn83

EssexHebridean said:

In terms of unsecured debt, best to stop ALL the payments and let the lot default I would imagine. As RAS says, reduced payment offers will earn you AP markers, which you don't want. It also means that interest can continue accruing which makes it harder to pay down the debt. I can also imagine that creditors may be a little peeved if they realise that some of your debts were still getting even close to a full payment while they are getting nothing! 

Just out of interest (to wrap my head around how the system works), if for example I enter into a payment arrangement, but then later find that I want to go for a default with token payments in a self DMP, do the AP markers get taken off and default put on or do the AP markers still stay on as well as the default?