Champagne supernova’s debt free to savaholic diary

Lonelygambler

Congratulations on debt free! 

ChampagneSupernova36

Lonelygambler said:

Congratulations on debt free! 

Thank you , I am following your diary also , best of luck with it all 

ChampagneSupernova36

It’s official, as of 08.36 this morning my debt management plan is complete. My stepchange dashboard is zero across the board & it is all gone !

I have some final thoughts and some tips and tricks I’ve learnt along the way. I want to preface this by saying I am not a financial expert , I would just like to share my experience & things that I would do differently looking back.   

 First of all , I wish I had found this forum sooner. I was well into my DMP when I came here. My DMP was with stepchange who really are brilliant, I wouldn’t be out of debt without them. I would say though , to read this forum before you start: 

https://forums.moneysavingexpert.com/discussion/6496941/in-debt-and-wannabe-debt-free-first-steps#latest

And this :

https://debtcamel.co.uk/dmp-credit-rating/

As brilliant as step change were , I was on a DMP immediately with them , when in hindsight I should have waited for everything to default before I began. The threatening letters from creditors frightened me and I thought if I ignored the problem anymore, something terrible might happen.  (It won’t)

Take a deep breath and take your time whilst you establish the best repayment plan for you. A couple of my accounts did default just by virtue of being on a DMP. They were then sold on to other companies.

I have managed to get a full and final settlement on my largest debt because it was sold on to a debt purchasing company, had my loan not defaulted, the original creditor was unlikely to accept such an offer. Had I let everything default , I could have got even better reductions.

I used some templates to help me draft my F&F letter : 

https://nationaldebtline.org/sample-letters/full-and-final-settlement-offer/

https://www.stepchange.org/Portals/0/documents/sample-letters/stepchange-settlement-letter.docx

My starting offer was 30% of the full amount , I worked this out by using national debt lines formula found here:  

https://nationaldebtline.org/fact-sheet-library/full-and-final-settlement-offers-ew/

Lump sum available x each debt

÷ the total amount you owe to your creditors

= offer to the creditor. 

I had £600 available on a £2196 balance, this formula actually calculates about £560 but I offered £600 which was accepted. It is definitely worth negotiating with these companies, from reading forums on here , I learnt that they buy debt for peanut amounts. So my £2000 odd balance is probably worth about £200, so a 30% offer is a nice profit for them. 

These two links also helped me a lot:

https://debtcamel.co.uk/sold-to-dca/

https://forums.moneysavingexpert.com/discussion/6522686/dmp-and-lump-sum-payment-advice#latest

I think it’s also important to note that I contacted the debt company directly, JCIA in my case, to make my offer. Reading about the company , they really do haggle to buy debts at the lowest price possible, so any there is a lot of room for negotiation with F&F. Source: https://moneyadvisor.co.uk/jcia-debt/

Another note on the defaulting process , the accounts that did not default still added interest onto their balance (there is no obligation to freeze any interest).

 I was replaying a Zable (formally level owned by lendable) credit card, when checking my final balances, I realised I owed about £100 more than I thought. With capital one also , my balance was £30 or so more than I had expected, this was all because of interest and could have been avoided letting accounts default. It’s not a massive amount of money but it makes the point. There is more about this interest here: https://nationaldebtline.org/fact-sheet-library/debt-management-plans-ew/

I was also successful in an unaffordable lending claim with one of my creditors vanquis, my other lenders are investigating, with 2 at the financial ombudsman currently. I was able to get the remaining balance cleared through this but do note that it is a very slow and long process & not to rely of this method to get a quick few quid. It takes months and months to resolve but it certainly something to look into if you think it could apply to you. I had 7 creditors at one point and really struggled to juggle it all, and still was accepted to credit. There is more in these links to see if you could apply: 

https://www.financial-ombudsman.org.uk/businesses/complaints-deal/consumer-credit/unaffordable-lending

https://debtcamel.co.uk/refunds-catalogue-credit-card/

For vanquis , I used charter house claims. I WOULD NOT recommend a third party do this for you as they take a big cut. It’s really easy to contact your creditors directly, I did so for other creditors using this template: https://www.citizensadvice.org.uk/template-letters/letter-to-complain-about-a-loan/edit/?button= and they have 8 weeks to respond  (like I say, it’s very slow). Once with the financial ombudsman , it can take even longer, not quick fix. 

From experience, I also wouldn’t recommend a consolidation loan. With my financial situation at the time , I could only get a high APR loan but this was still inviting as it would clear my credit card balances and have a smaller monthly repayment amount. 

However , I quickly built up the balances on all of my cards again and was in three times as much debt as before! My loan from 118118 money had almost £4000 in interest alone , it made my finances so much worse and not better. Again, defaulting can stop any more spending but unless you can trust yourself it’s best to just avoid. You have to be disciplined to make it work… weigh up and pros and cons. This MSE article is definitely worth a read: https://www.moneysavingexpert.com/loans/debt-consolidation-loans/

Finally , I have posted before that this is actually my second DMP.  I never dealt with the root cause of my spending, unhappiness & depression. I know a lot of people can relate and I know that there’s incredible practical advice on this website and beyond about our debt but it was dealing with my mental health  that really helped me combat my debt. I had to learn to be open and honest about everything I was going through , I had to learn to talk about my problems and not bottle everything up inside. I have utilised Samaritans and the shout texting service , just for a chat when necessary. Talking therapies really helped me as well, I have linked all 3 below. It is a safe space so reach out if necessary.

https://www.samaritans.org

https://giveusashout.org

https://www.nhs.uk/service-search/mental-health/find-an-NHS-talking-therapies-service/

Now, I also like to journal. I think if you don’t particularly like talking out loud , just writing things down really gets stuff off my chest. 

https://pinkpapermail.co.uk/products/let-it-go-journal-around-30-pages-a4-double-sided-hole-punched

All in all , a debt management plan was the best course of action for me. It is , however, a slow process and it feels like a mountain to climb when you first begin. 

Being in a DMP has taught me some valuable lessons, though, firstly how to stick to a budget. I have not been able to get credit , so once my money is gone it’s gone. 

It has taught me to be more careful and to be patient, when I was shopping on credit card and loans it was that instant gratification I was accustomed to… it was gone , I couldn’t shop to make myself feel better and had to learn to appreciate everything I already have. I have enough and I am enough. I now get my gratitude elsewhere, from my friends and family and my job. A DMP is not an overnight solution , it takes time to clear your debts but seeing the progress is the motivation.

It has also taught me to be kinder to myself , pat yourself on the back when you see this progress and don’t dwell on the past because you can’t change it. Finally, I know what I am responsible for my self , this is the consequences of my own actions. No one is going to swoop in and save me & I certainly wouldn’t have learnt so much if they did. 

It’s a tough but necessary lesson but a worthwhile one. Thank you for everyone who has followed my diary for the last few weeks , I am going to continue now with some savings goals (first step emergency fund). I am looking for some budgeting recommendations and some savings challenges to hopefully become a savaholic !

Thanks for reading if you’re still here, all of this may be obvious to some but I was totally ill informed (embarrassingly so). If anyone sees some misinformation or something that is incorrect or out of date , please correct me. I’m open to learn even more !

Hope everyone has a lovely weekend, 

Sincerely (a debt free!!!!!) E

ChampagneSupernova36

Good afternoon , everyone !

happy Sunday.

had a great night out last night with my friends ,
I’m teetotal and had what i thought was an alcohol free cider but it was 0.5% and I definitely felt it this morning (how SAD is that haha I really do have a zero tolerance now after stopping drinking 2022)! Had a boogie and a laugh , just what I needed.

well , the dust has settled on my debt free journey. I have finished my DMP but a have a couple of next steps. I want to keep chasing up my unaffordable lending claims , I don’t know how successful I will but my success with vanquis and the financial ombudsman makes me think that it’s definitely worth a punt. 

I am at the 8 week mark for my original complaints with new day (fluid), 118 118 and lendable (Zable). I haven’t actually had a response from new day yet , I expect something in the next couple of days, 118118 determined that is was affordable…

 which is fair enough but would I have been on a DMP if it was ? I do take responsibility for myself because I was truly desperate for any credit to consolidate but to give someone with 6 maxed out , high interest credit cards with a near 50% APR seems insane (and dare I say predatory) now I am of sound mind and debt free.  Half of me is glad the debt was sold on and settled at 30% because I hate the thought of giving 118118 any more money. Again, I must reiterate, this is the consequence of my own actions but I hope you get my point.

I have referred my 118 credit card and loan to the ombudsman and if they find it to affordable, then so be it, it’s no longer a burden as it’s settled. Lendable haven’t come to a decision yet but because it’s after 8 weeks I can refer to the ombudsman, I’m not sure whether to wait it out and see what they say first.

new day , I have no response as of yet. They deal with complaints by post (according to their acknowledgement email) so I guess I can give them the benefit of the doubt for a week or so, check if the postman pops anything in and if not, take it further.

im still waiting for any word from the ombudsman about capital one, we all know it’s a slow process so just gotta exercise all that patience that I learnt and not expect too much.

next is building up my emergency fund, realistically I need 6-9 months worth of outgoings saved up for if I get hit by a bus. Without my DMP payment, I have a good amount of ‘disposable’ income to put away into a pot. My £745 DMP payment was extremely tight and (as you can see in my diary) it was fairly unpleasant cutting back that much. Unpleasant but necessary. 

I want to strike that fine balance between enjoying life again but being sensible and thinking about the future. I want to invite some security back into my life , live within my means but also save for a rainy day. I don’t want to be living simply for the ‘what ifs’ in life but I also don’t want to be living so much in the moment as I was and not thinking about the consequences. 

I was not even considering my future, but that’s just not realistic (and look where it got me).This will be the next chapter of my diary. 

All the best 
E x

Lonelygambler

Massive congratulations on your journey! Well done

enthusiasticsaver

Congratulations on getting a F and F for that last debt. Good luck with unaffordable lending complaints. 

dawnybabes

Congratulations 🥳 

stu12345_2

I owe about the same as when you started your dmp. I'm doing things differently, almost all my debts have defaulted. I'm not giving them anything, I'm living on beans and rice as they say and will offer full and final offers in 7 to 9 months of around 35%

if I carried on via a dmp, I would be never be able to accumulate a good amount to use in f and f offers.( and probably pay back almost every penny, which I don't want to do)

I'm holding out as long as possible, maybe until letter before action, then I come in with my low offers, if they refuse, I will come to some repayment plan as low as possible  with creditor, then I will hit them again with fresh full and final offers at some point in the repayment.

ChampagneSupernova36

stu12345_2 said:

if I carried on via a dmp, I would be never be able to accumulate a good amount to use in f and f offers.( and probably pay back almost every penny, which I don't want to do)

This is a good plan , it was actually your thread that made me look into offer a F&F to CARS. I wish I’d stopped paying and saved up to do this sooner but I did finish 3 month earlier and shave of 2k this way. It’s also another example of why to default before hand because a couple Of my debts were still with the original creditors and I’d never have got a decent F&F with them !

good luck on your journey x

stu12345_2

ChampagneSupernova36 said:

stu12345_2 said:

if I carried on via a dmp, I would be never be able to accumulate a good amount to use in f and f offers.( and probably pay back almost every penny, which I don't want to do)

This is a good plan , it was actually your thread that made me look into offer a F&F to CARS. I wish I’d stopped paying and saved up to do this sooner but I did finish 3 month earlier and shave of 2k this way. It’s also another example of why to default before hand because a couple Of my debts were still with the original creditors and I’d never have got a decent F&F with them !

good luck on your journey x

yes, I just posted my method and my situation in this diary section. thinking outside the box.i hope to make it work, if it does , it should be used more often imo