Debt has finally caught up with me

andy26599

Don't even know how to start this tbh, so I'll just summarise for now. I'm about £56k in debt over a number of loans and 3 credit cards.

Until around 12 months ago, I was easily able to manage these debt repayments, and just about get by. 

A bit of history...It all started around 10 years ago with my divorce, when I ended up liable for about £20k of debt in my name. I was owed £15k as my share of the equity in the Consent Order, so not overly worrying at the time. 

However, in expecting my ex wife to buy me out and for that £15k to drop pretty quickly, and having to set myself up in a new home, I used more credit to finance this (approx £10k) taking my liability up to about £30k.

Then my ex wife entered an IVA which obviously meant that she couldn't then refinance the marital home to take me off the mortgage, an pay me off, so I'm still on this mortgage to this day and I'm still awaiting my £15k 10 years later.

As a consequence of not getting this money, on top of child maintenance payments to my ex, I started getting to the point where I was using credit to pay off credit at marginally better rates, and that's where the cycle began. I was taking out loans to pay credit cards off, and then using the credit cards to fund my lifestyle (stupidly), and then repeating this pattern.

Up until 18 months or so ago, this was manageable and I was still able to put money aside into investments. And that's when it all crashed down around me.

At this point I was planning a wedding and looking to buy a house with my wife (new one, not the old one lol) and we had everything in place,mortgage offer (despite still being named on the old one) and the wedding all booked and needing to be paid for. My plan was to use my investment to pay for the wedding (around £10k) and my wife would pay the house deposit. Then Teresa May and Kwasi got involved meaning our mortgage offer was pulled and the interest rate rocketed, and on top of this, my investment in a company tanked dramatically at around the same time without warning, taking my investment from around £10k to about £1k overnight. 

So I used existing credit cards to pay for the wedding (without telling my wife as she was stressing enough at that point), and a new loan to do home improvements (Boiler, carpets, etc. and that takes me to today, where I'm now in the position that I'm in that pretty much all of my wage now goes out of my bank before I even see it, and I'm using credit to get by.

To my eternal shame, I have hidden this debt from my wife (it wasn't an issue when we first got together in terms of being able to afford stuff or even be an issue and I was embarrassed by it so I never mentioned it to her and now it's just too late to say anything as I've left it far too long). she is aware of some of it as it was for home related purposes, but nothing to the extent that it's actually at, but I'm too embarrassed/scared to confess as I fear the consequences.

We have completely separate finances, and the only joint thing is the mortgage. She pays the council tax, water, gas and electricity, majority of the food, a loan for the garden in her name, while I pay the mortgage..

Full list of my outgoings and incoming below.

Income

Wages - £3,894 per month (£70k per year gross wage)

Monthly Direct Debit Debt Payment Outgoings

Mortgage - £1223 (fixed until Jan 2028)

£2,958 Balance Barclaycard CC (0% until December) - £124

£4,409 Balance First Direct CC - £132

£3,000 Balance Capital One CC - £203

£4,065 Balance Loan (21.64%) - £122 - Ends Oct 2027

£16,512 Balance Loan (8.3%) - £467 - Ends July 2027

£6,295 Balance Loan (15.9%) - £242 - Ends Nov 2026

£7,195 Balance Loan (16.9%) - £198 - Ends June 2028

£6,798 Balance Loan (20.9%) - £189 - End Dec 2028

£1,557 Balance Boiler Loan (0%) - £130 -  Ends March 2025

£3,220 Balance Carpet Loan (0%) - £92 - Ends July 2027

Total Monthly Debt Outgoings = £3,122 per month

On top of this, there are child maintenance payments to my ex of £557, and the usual associated home/life insurance, fuel, parking at work, so as you can see I'm struggling as I'm having to use the credit cards for my monthly expenses, which is only increasing the monthly payments for these as these were at £0 until recently. I don't spend frivolously, I don't really go anywhere, I don't drink or smoke, and anything I do spend money on is when I see my kids and its a trip to mcdonalds, so nothing outrageous.

I just don't know what to do. I've read up on DMP's and I think that's the best option for me, but its just how I go about it, and the stress that will cause in the first few months. I've read about just stopping paying and waiting for defaults to happen and pocketing the money as an emergency fund and THEN starting the DMP, and this would allow me to "save" about £1,700 a month to put away that I'd normally be using to pay debts. But then there's the associated hassle/stress of dealing with all these different providers and telling the same story to each of them and it just sounds overwhelming. But then if I go down the Stepchange route, I take away all that stress, but I don't have the emergency fund. So I just don't know what to do for the best.

Also, as my wife doesn't know about the extent of all of this, I'm also trying to deal with this on my own and sort it out myself. So any advice would be welcomed. (I know I should just confess and deal with the consequences, but I'm worried about the consequences of that, especially as I've been burned badly by divorce in the past)

 

andy26599

I'm also fully aware that this is entirely my own fault, and I'm utterly embarrassed that I've let it get this far.

andy26599

My credit rating is still good enough to get consolidation loans up to £17k, but the rates are so high that it doesn't actually save me any money monthly, and would mean I'd be paying more, and I don't want to continue robbing Peter to pay Paul as I need to break the cycle.

Without any debt I'd be so comfortable month to month as my income is pretty high, and just looking at what I've got going out each month is so depressing when they're written down in black and white.

prettyandfluffy

andy26599 said:

I'm also fully aware that this is entirely my own fault, and I'm utterly embarrassed that I've let it get this far.

Don't be embarrassed, you've taken the first difficult step to address this.  There are some very knowledgeable and helpful people on this Forum who will doubtless be along soon to give you advice.

2021rdsunshine

andy26599 hang on in here, more experienced members will come to help I’m sure. As a newbie myself I feel that a DMP is definitely your way forward. It goes without saying that you will be advised to come clean with your wife about your debt but only you can take that step and only you know if that’s the way to go. That would definitely take way some of the stress of the situation and would get you more mentally prepared to deal with the debt. Every debt problem has a solution and nothing to be ashamed of. You just have to make a decision and start: stop paying unsecured debts, open a bank account not related to any of your creditors ( unless you already have one) ,build an emergency fund and when debts default start your DMP. In the meantime there will be phone calls that you can completely ignore ( I put my phone on silent) , letters that you can read and file and not much else really. Wish you good luck. Like I said I’m sure more experienced people will come along to advise and support you.

fatbelly

The debt juggling has to stop.

You are right that the first move is to cancel the payments to those nonpriority debts.

You will get used to blocking creditors. It is actually easier than having long conversations with 10 different lenders.

You have explained your situation very well. I don't feel I need a soa to be able to say that your self-managed dmp idea is the way forward.

sourcrates

I agree with the above, put aside all thought of any more consolidation loans, they don`t work.

You seem quite switched on to the DMP process, and its just a case of which path to go down.

Self managed DMP would be my choice as well, ideally you would like all accounts defaulted first, in reality this is becoming harder to get, due to various guidance updates given out by the FCA.

I would start with non payment for say 6 months and see how the land lies, if the majority have defaulted, then starting the DMP at that point would hopefully see the rest default as well, when you resume payment, you must make them less than the original contractual minimum in order to achieve this.

Its not as difficult as you may think.

andy26599

sourcrates said:

I agree with the above, put aside all thought of any more consolidation loans, they don`t work.

You seem quite switched on to the DMP process, and its just a case of which path to go down.

Self managed DMP would be my choice as well, ideally you would like all accounts defaulted first, in reality this is becoming harder to get, due to various guidance updates given out by the FCA.

I would start with non payment for say 6 months and see how the land lies, if the majority have defaulted, then starting the DMP at that point would hopefully see the rest default as well, when you resume payment, you must make them less than the original contractual minimum in order to achieve this.

Its not as difficult as you may think.

I think my problem is that I've never missed a payment before, never thought I'd get into this mess, and the stigma (from myself) of being in this mess. So while I've researched DMP's in detail, I have no idea how it works from my side and what I need to do to avoid people knocking on my door, etc.

What happens if one creditor defaults me much earlier than the others, do I then need to start talking to them immediately, or do I continue to ignore anything from everyone until most of them have defaulted? How do I know I've been defaulted? Do they tell you in black and white? What if they don't default me?

Also, in 6 months I reckon I could easily put away £6-£8k if I'm not paying these creditors, do I then use some/all of that to clear the low hanging fruit and get it out of the way? Do I keep paying the 0% ones in full? Is there any benefit at all to paying some in full but not others? I assume as my credit file will be destroyed for 6 years regardless then there isn't really much use in paying any of them I suppose as 1 default or 10 will have the same effect I assume?

In terms of self managing a DMP, do I just literally ring up and say "look, I am supposed to pay you £466 a month, but I can only afford to pay £100" and they have to agree, or at that point would I be better getting on to StepChange and letting them do it?

Brie

I agree with the others on you doing well to face up to the problem and to consider a DMP

I also think you need to talk to your wife so she knows what's going on.  She might have ideas about fancy holidays or home reno or whatever and realistically you need to be able to work together on this to get it sorted.  Even if that means that you are using your wages to pay all the debt and she's using hers for the day to day things.  There may be some shouting but there always is in marriages (well in my experience anyways!) and then you move on.  

sourcrates

Its a familiar story, don`t worry, my own story would be a similar tale 20 odd years ago now.

Basically you stop making your unsecured debt repayments, then you do nothing, you save up what you would have spent on your debts, and you get on with your life, that`s it, nothing more.

Once your creditors realise you haven`t paid on time, an automated process then kicks in, computer generated letters, emails/calls, maybe texts, all wondering why you haven`t paid, and asking you to get in touch.

This may continue for some time, as time goes on, your accounts may be sent to debt collectors, they may be sold to 3rd parties, or the original creditor may continue to chase for payment, various things can happen.

When you have missed between 3/6 contractual repayments, guidance states you can be defaulted, that means the agreement is terminated, and you will receive a default notice in the post, this will give you 14 days to rectify the breach in the terms and conditions, or the account will default.

This is good, this is what you want, you don`t do anything, you simply allow the process to complete.

Now there can be a lot of variables in the above scenario, things don`t often move that fast in the world of debt collection, you have to keep your eye on the ball and decide when the time is right to start with the DMP.

Just a word of warning, by far the majority of high street lenders operate this way, any peer to peer lenders you may have will most likely go for legal action as a first response, so if you have any borrowing of that nature, you may want to prioritise payments to them.

Anything you don`t understand just ask on here.

andy26599

sourcrates said:

Its a familiar story, don`t worry, my own story would be a similar tale 20 odd years ago now.

Basically you stop making your unsecured debt repayments, then you do nothing, you save up what you would have spent on your debts, and you get on with your life, that`s it, nothing more.

Once your creditors realise you haven`t paid on time, an automated process then kicks in, computer generated letters, emails/calls, maybe texts, all wondering why you haven`t paid, and asking you to get in touch.

This may continue for some time, as time goes on, your accounts may be sent to debt collectors, they may be sold to 3rd parties, or the original creditor may continue to chase for payment, various things can happen.

When you have missed between 3/6 contractual repayments, guidance states you can be defaulted, that means the agreement is terminated, and you will receive a default notice in the post, this will give you 14 days to rectify the breach in the terms and conditions, or the account will default.

This is good, this is what you want, you don`t do anything, you simply allow the process to complete.

Now there can be a lot of variables in the above scenario, things don`t often move that fast in the world of debt collection, you have to keep your eye on the ball and decide when the time is right to start with the DMP.

Just a word of warning, by far the majority of high street lenders operate this way, any peer to peer lenders you may have will most likely go for legal action as a first response, so if you have any borrowing of that nature, you may want to prioritise payments to them.

Anything you don`t understand just ask on here.

So my lenders for loans are as follows. 

Admiral
3 x Updraft
2 x Novuna (0% ones)
1 x Community finance

Any of them classed as peer to peer?