Need help with c£35k debt

System

This discussion was created from comments split from: DMP mutual support thread part 13 !!.

WhoIsJusticeBeaver

Hi all,

First time poster and after alot of advice.

I have debts of about 35k made up of credit cards, one loan and two catalogues.

I have been servicing these debts for around 15 years but I can't go on. Up until around 5 years ago that was not that case, I always had some debt but was able to manage it, however now I have to borrow to stay afloat.

I am married, have two children and income wise we have a joint income of around 50k

The debts are in my name and my partner is aware of some debts to an extent but not the full picture, to be fair most of it accumulated from when they started a business and made little to no money for 4 years and I was financially supporting us and children but I'm not here for the guilt trip, they tried and it failed and they have moved on since and now have a stable job. We do not have a mortgage and rent. 

I have been reading loads over the past few days about how I can tackle this.

I think I want to go down the self managed DMP route. However I have read that it is best to default first? I have never defaulted on any payments so this fills me with fear obviously.

My first question is, if I was to go down self managed route and just call all my creditors up and offer a reduced payment/some kind of negotiation, would I still end up with a negative mark on my file anyway? Is it better to just go AWOL on them and wait? I assumed that calling them all up/sending letters to them, I could avoid the debt going to debt collectors?

2? Do I need to include my £500 overdraft and do I need a new bank account?

3) What is the likelihood of ending up with CCJs/bailifs? How long does it take to get to this point? Obviously as I am trying to keep partner out the picture because I think they would try and convince me not to do a DMP but I don't see another way out.

4) Do I have to do a DMP for all creditors? For example, I have a couple of small debts under 1k and wasn't going to include these, just keep paying them?

I think that's all the questions I have for now, but will probably end up with more.

Any help and advice would be appreciated - thank you. 

sourcrates

@WhoIsJusticeBeaver

Your post is better suited to a new thread on the general DFW forum, I have asked for it to be moved.

WhoIsJusticeBeaver

Thank you @sourcrates

enthusiasticsaver

I would suggest that you read this thread as a first step.  

In Debt and Wannabe Debt Free? First Steps! - Page 2 — MoneySavingExpert Forum

You want the debts to default so I would not enter any payment arrangements.  The thread explains how the defaults work and when they drop off your file.  Payment arrangements take much longer to clear. 

You do just the one DMP and divide any available income proportionally amongst your creditors.  You  can self manage or get a free debt charity like stepchange to deal with them for you. 

You can include the overdraft but current account providers  often take longer to default you so you might want to let them know your intentions.  You will need a new bank account with a lender you do not owe money to and do not take out any overdraft facility. 

It is extremely unlikely for lenders to go for court action.  Usually they sell the debts on to a debt collection agency. 

Surely if your partners erratic income was part of the reason for the debt and they won't want a DMP you should discuss this with them and maybe sort out a way of dealing with the debts which does not involve defaulting?  If you have a joint income of £50k that should be enough to service debts of £35k.  If you are financially linked through joint accounts your partners credit file will be affected. 

sparks_2023

(4) If you self manage a DMP you don't have to include all debts. But the big question here is why exclude these debts ? If it is just to have less defaults then it makes no odds - 7 defaults is no worse than 2. It is the date of the last default which is the most important factor - ie when all defaults have dropped off your credit history.

WhoIsJusticeBeaver

Thanks for your reply @enthusiasticsaver we are not financially linked in any way. 

My thinking was also that I wanted to keep one of us debt free/little debt so if we were to apply for a mortgage one day, they could just do it in their name. Right now, they earn less than myself but they are training in a new role and would be due to get a pay rise once completed which would put us in a better situation financially. We do actually have a gifted deposit available to us when the time is right but it is from my family member, so I'm not sure if they would be able to apply for a mortgage in just their name with the gifted deposit from my family member anyway and we are married so again, not sure of they would credit check me anyway if I was to be moving into the property even if I was not on the mortgage. 

WhoIsJusticeBeaver

Thanks for advice @sparks_2023. I think I'll have to get a new bank account set up then. Is it best taking action before they get sold on? 

EssexHebridean

So you are aware - a lot of mortgage lenders are reluctant to lend to a couple where the mortgage will only be in one of the names - and they would almost certainly demand if that was to happen that the property only went into that single name too - potentially leaving you in a poor position down the way. 

If the debt was run up due to covering household expenditure at a time when your partner was unable to contribute much, then I'd argue that is a very good reason to be tackling that debt together now. How on earth is your partner going to feel when (and it will be a "will" not an "if") they find out about it? Like they have let you down twice over AND that you didn't trust them enough to be straight with them, at a guess? 

Sit down, have a conversation. No judgement, no blame, but talk things through and make a combined plan to tackle things. 

WhoIsJusticeBeaver

That's interesting to know @EssexHebridean I wouldn't mind them only having the property in their name, however if mortgage companies are reluctant to lend anyway, that's a different issue.

 They know to a certain extent but not the full picture. They offered 10k that they had been gifted by a relative who passed away but then our car ended up having to be scrapped and we had to get a new one. The car is essential for children/commuting to work too. 

Also, I think on their wage it is unlikely that they are going to get offered much in the way of 35k. Although I have never missed a payment, I am not being offered any more credit cards/loans etc now, they obviously know i can't service it as im only making minimum payments. Some have upped the interest too. I just don't see a way out of this, it's awful. 

EssexHebridean

There's always a way out. Honestly - we've seen so many folk come and go over the years - and almost universally the starting emotion is "this is awful - I can't fix it!" but it's pretty much always fixable. 

My suggestion would be to chat with your partner first, cards on the table, then put together your SOA together (Statement of affairs) using the calculator linked in my signature. That will really show you where you money goes, and hopefully spark some discussion around what is needed, what is wanted, and what can be saved on in some areas. You could even post that SOA into this thread and we can cast an eye over it to see what savings might be possible that you have missed. 

The other thing an SOA will make you do is to discover whether in fact you really are spending all your current income on necessary stuff, or whether some money is getting frittered along the way (very common - in fact it's rare to see an SOA without frittering in the first place!).