Here Goes...Starting Up on a Journey

TheAble

But how? If you're 300 short why would the payment dates make a difference? Unless you have another source of income then you must be effectively borrowing from card A (in some sort of roundabout manner) to pay card B.

I do vaguely grasp the strategy you're using but not convinced it has a happy ending..!

Martico

Superhoop91 said:

Martico said:

Superhoop91 said:

Thank you to everyone that responded, unfortunately I still feel some key questions/points are being missed. So I'll try and ask them again:

1) Is it going to be really difficult in the next six years to get a mortgage if I default on my 10+ creditors instead of paying off balances slowly even if I incur thousands of pounds of interest charges in that time?

2) people ask me to post a second SOR. Let me simplify it:
Income: 3100
Essential spend/emergency fund etc: 900
Interest Payments: 1000

Which means I'm clearing my debt by about 1100 a month.

If you were able to change the terms like that, you'd be clearing the debt by just £100 per month (given that each month the interest increases it by 1000). Which is bad enough. But you can't change the terms like that. 
Reality is:
Income 3100
Essential spend 900
Minimum contracted non priority debt payments 2500
Shortfall 300

Not all the payments come out at the same time of the month. So I can make all payments and reduce total balances.

OK, let's again take your calculation at face value (like others, I can't get my head around your time of month wheeze, but let's ignore that for now):

You say "Income: 3100
Essential spend/emergency fund etc: 900
Interest Payments: 1000

Which means I'm clearing my debt by about 1100 a month."

I say that means that you're clearing your debt by £100 a month, because the £1000 monthly interest you face is added to your debt. And once the bulk of your HSBC (I think it was HSBC) CC comes off its promotional rate in March, things will get even worse. 

Superhoopza

Martico said:

Superhoop91 said:

Martico said:

Superhoop91 said:

Thank you to everyone that responded, unfortunately I still feel some key questions/points are being missed. So I'll try and ask them again:

1) Is it going to be really difficult in the next six years to get a mortgage if I default on my 10+ creditors instead of paying off balances slowly even if I incur thousands of pounds of interest charges in that time?

2) people ask me to post a second SOR. Let me simplify it:
Income: 3100
Essential spend/emergency fund etc: 900
Interest Payments: 1000

Which means I'm clearing my debt by about 1100 a month.

If you were able to change the terms like that, you'd be clearing the debt by just £100 per month (given that each month the interest increases it by 1000). Which is bad enough. But you can't change the terms like that. 
Reality is:
Income 3100
Essential spend 900
Minimum contracted non priority debt payments 2500
Shortfall 300

Not all the payments come out at the same time of the month. So I can make all payments and reduce total balances.

OK, let's again take your calculation at face value (like others, I can't get my head around your time of month wheeze, but let's ignore that for now):

You say "Income: 3100
Essential spend/emergency fund etc: 900
Interest Payments: 1000

Which means I'm clearing my debt by about 1100 a month."

I say that means that you're clearing your debt by £100 a month, because the £1000 monthly interest you face is added to your debt. And once the bulk of your HSBC (I think it was HSBC) CC comes off its promotional rate in March, things will get even worse. 

You may want to relook at those numbers again.

If I'm earning 3100 and paying 900 on monthly commitments, that leaves 2200 left over. 1000 of which is interest (some loans and some credit cards), meaning I'm reducing my balance by 1100/1200 each month.

Superhoopza

TheAble said:

But how? If you're 300 short why would the payment dates make a difference? Unless you have another source of income then you must be effectively borrowing from card A (in some sort of roundabout manner) to pay card B.

I do vaguely grasp the strategy you're using but not convinced it has a happy ending..!

I said in my first first post I can move money between cards. Don't worry about that.

Another judgement call i.e. happy ending. What happened to this being a supportive place.

Martico

Sorry, yes. My apologies. However, I still can't get my head around the fact that you magically seem to be able to get around your minimum contracted spends. If, as you say, it's an entirely legitimate way to pay down debt, I'll be interested to see how it works.  

Superhoopza

It's not magic and again, as I said on my first post, which a lot of contributors on here don't seem to have read in full, I'm not sharing details on that.

Can we gloss over that and go back to the question of whether we believe defaults will be harmful to getting a mortgage whilst having so many defaults, instead of reducing my balances and incurring lots of interest along the way?

EssexHebridean

Superhoop91 said:

Thank you to everyone that responded, unfortunately I still feel some key questions/points are being missed. So I'll try and ask them again:

1) Is it going to be really difficult in the next six years to get a mortgage if I default on my 10+ creditors instead of paying off balances slowly even if I incur thousands of pounds of interest charges in that time? Yes - but it will be very difficult to get a mortgage for a lot longer with AP markers in place - and I personally suspect there is a decent chance that asking for permanent halts to interest charges are likely to end up being classed as an arrangement. "Breathing Space" does not attract such markers, but it also has a finite lifespan after which the interest continue again. That is not what you are asking for. It will also be incredibly difficult to get a mortgage without any deposit to put down - and while you are paying off the debts in a far more expensive way than allowing defaults to happen, you're not going to be saving for a deposit, are you

2) people ask me to post a second SOR. Let me simplify it:
Income: 3100
Essential spend/emergency fund etc: 900
Interest Payments: 1000
Simplifying things doesn't really help - income can be very simple, but outgoings aren't. 

Which means I'm clearing my debt by about 1100 a month.

3) I get people saying I need to build an emergency fund but IF I don't default, isn't using most excess money to pay off interest a far better use of it, whilst still having access to credit/overdraft for emergencies? The idea of an Emergency fund is that it means you stop needing to rely on credit and certainly overdraft for what are essentially routine expenses - and yes, a degree of "emergency spending" does fall in to that Category - you can expect appliances to fail from time to time, you just don't know whether that will be a kettle at £20 or a boiler at £2000, and you can't necessarily predict when. You can be fairly sure it's going to happen though, hence paying into the EF.

4) @backinbusiness I set if I set up a repayment plan where the payments allow me to make the contractual payments with the interest frozen, would that still be a breach?  As above, I think you would be very lucky to set up such a payment plan and not have your file marked. 

Yes thanks to everyone who have said I haven't got the hang of it or am not understanding, if I was, I wouldn't still answer questions. Being condescending isn't useful. Being defensive isn't useful either - the reason people are saying you haven't got the hang or it and aren't understanding the process is that you are saying things that to us - with a lot of years experience of seeing people in this situation - indicate that you don't yet really understand the process, and why things work as they do. That's why I'm asking for advice and asking questions.

Responses in bold above.

There is a strong difference between people being judgemental, and people giving you answers that you don't want to hear. We could all just say "Oh wow, yes, certainly Superhoop - your plan is fantastic, no idea why we'd never thought of it before - go for it!" - but that WOULD be condescending as it would not be true, it would just be telling you what you want to hear. We're not calling your plan into doubt through malice, or for some kind of twisted fun - we're spending time and effort to try to help you to learn the most efficient and effective way of dealing with your situation - not only for your sake, but for your partner's sake too - as the sooner you dig your way out of your current situation, the faster you can both get on with the rest of your lives together. 

Superhoopza

Hi Essex,

Thank you for the responses. Especially around how reducing interest could be deemed an arrangement on my credit file. Now that is useful information to have and may readjust me thinking. I'm trying to speak to creditors at the moment and will ask them exactly what they will be posting on my credit file as a result of any action we take together to fully understand impacts.

I don't agree with the last point that everyone is trying to be supportive, some, like yourself are so we'll focus on those positives and I'm thankful for that.

I suppose the next question, if I did perdue a self created DMP and stopped paying creditors, how would my change of address impact that? As im changing addresses in 3 months. Presumably I should get my address changed ASAP when I do move?

EssexHebridean

It wouldn't impact at all. A DMP is simply an informal arrangement between you and your creditors. Just notify them that your address has changed. As long as you still have the agreed amounts to pay them, things just continue as they were set up. 

backinbusiness

4) @backinbusiness I set if I set up a repayment plan where the payments allow me to make the contractual payments with the interest frozen, would that still be a breach? 

Hi Superhoop,

Any variation of the contracted terms (those you signed when you applied for the credit cards) WILL breach your contractual agreement and be reflected as such on your credit file - whether negotiated or not. 

Defaults, (1 or 10), will affect your ability to obtain a mortgage although there are specialist brokers.

If it were me, I'd allow everything to default, pay nothing meantime, build an emergency fund to avoid the need for credit and enter a DMP. You may not currently qualify for a decent mortgage anyway due to affordability concerns. 

I'd put the mortgage to the back of your mind right now and get on top of your current financial situation. It makes no sense to continue struggling like this when a DMP could alleviate things AND save you a whole whack of interest.

Hope that helps.  BiB x