Seeking advice for my disastrous debt

DebtFreeWannabe27

I started a thread elsewhere on MSE and somebody recommended I come and post on here for advice. 

In short, I have c£60k in credit cards and loan debt - I know, it's a lot. This is personal debt that I've accrued through what I've realised is a trading addiction (if anyone can recommend a charity who can help with this kind of thing, I'm all ears).

All of my priority debts, such as my mortgage and bills are paid for fine and are protected. My husband and I put a proportion of our wage into a joint account each month which all of these are taken from. None of these are linked to my own personal account where my salary is paid, so that's one positive I think.

Another positive is that I am on a good salary of c.£60k. Unfortunately though, I'm left with a shortfall for my personal account each month because now have debt repayments equating to more than my income each month. And this is where the danger lies - that shortfall, I've previously convinced myself I need to try and cover by trading and making a profit. As you might expect, that hasn't ended well and has got my debt situation to where it is today. In trying to recoup my losses and make the situation better, I've made it worse. To add to this, my husband is completely unaware of my situation. (Again, if anyone can recommend a charity, please do - I know I need help.)

The situation at present is really starting to impact my mental health. I feel incredible shame and guilt about the debts I've amassed, how careless I've been, and for hiding it from my husband.

Last week, I took a big step for me and phoned StepChange. They told me they could help me with a DMP. Since then, I've read on here that rushing into a DMP might not be the best thing for me, so I'm after some advice on how to go about steadying the ship and getting on top on things. I arrange for StepChange to call me back on Thursday to discuss my options, so I have until then to get my thoughts in order.

My questions:
1. I can't afford to meet my debt repayments this month. I've simply run out of cash. Should I cancel my direct debits as a first step? From what I've read on this forum, I should then start to create an emergency fund and allow my creditors to contact me. Am I missing anything?
2. How will a missed payment impact my credit rating? For example, what if I missed payments in March, but then met all my payments in April? 
3. If I was to opt for a DMP, would this impact getting a new fixed mortgage deal when mine expires in a couple of years?
4. I've heard of something called "breathing space". Is this something that might be able to help me get on top of things?
5. How does a DMP impact your credit file and ability to borrow going forward? i.e. what kind of score would you see on Clearscore
6. Can you choose to repay a DMP sooner than initially anticipated? I should have my student loan fully paid off within the next 2 years, so I can then attribute that extra cash to reduce my debts.

Thank you in advance for any advice. I honestly don't know where to turn, and its a bit crazy that an online forum seeking advice from strangers is the one I've opted for over talking to my family and friends.

lillypoo

I'm not in a position to realky advise but will say : Deep slow breath. There's no rush. There will be a solution.  Read as much as you can on this dfwb forum. Someone with knowledge will be here soon to help.

DebtFreeWannabe27

@lillypoo Your comment has made me tear up. I needed to hear that. Thank you.

DullGreyGuy

£68k is just personal loans and credit cards or includes student loan and mortgage?
What is your arrangement with your spouse on monies?

Others here will be better at helping with dealing with creditors and probably will be more compassionate but you ask a lot of questions about "credit rating" which would suggest you are hoping for more future debt... clarification of this would probably help.

DebtFreeWannabe27

Yes, c£60k is just personal loans and credit cards. It doesn't include our joint secured debts such as our mortgage. 

I think I'm asking about credit rating because I'm worried about whether these things might impact my husbands credit rating with us being married. I should add that by "personal" debts, I mean that they're in my name only. I also worry that these debts will impact the next fixed rate offer we receive for our mortgage when our existing rate comes to an end in a couple of years time. 

2021rdsunshine

Hi! I commented on your thread (diary) previously and I’m glad you just posted on here. Definitely hang on and a lot of knowledgeable people will advise you! And definitely you will find a solution x

lillypoo

Try and sleep. I promise you tomorrow you'll get help and advice

Try and complete the soa on lemon fool abd format it to post here 

https://www.lemonfool.co.uk/financecalculators/soa.php

turbocat2024

Hey DFW27 I'm in the same boat, your not alone and there are loads of sound people on here that will guide you.

The one post that gave me the light bulb moment is this and it has some good step by step stuff to read before the real help comes along like Sourcrates and Fatbelly to name just a few

https://forums.moneysavingexpert.com/discussion/6441624/6-years-later-an-update-on-100k-debt

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

MrRichTea

You could either try & cut down all excess spending & try to budget depending on what your SOA looks like.

Or go down the DMP route of cancelling all credit card / loan direct debits, then letting accounts default (this can take 3-6 months, but stops the interest & the likelyhood of dreaded "Arrangement to pay" "AP" markers)

Open a new basic bank account (clean away from any banks you owe money too to stop off-sets)

start building a emergencies savings fund with all the money you would have used for cards / loans, as you wouldn't then have access to cards) 

Start DMP with stepchange, payplan etc, or ideally go self-managed, also if you do decide this, write to the companys saying you only want to be contacted by post / letter (the constant phone calls / texts cause the most stress!)

If you have a joint account / mortgage with your husband, you will be financially linked, so if you did decide to default on your accounts (which stay on for your file for a period of 6 years) he'd be affected too (more so if he applys for any type of credit) so before that point I'd advise you'd talk to him about the the situation - it helps to work as a team in regards to cutting down, budgets etc.

The good news is you can stay with your same mortgage provider, without credit check, but you'll be limited to what they offer you, I/E you couldn't shop around for a better deal elsewhere.

Salary wise you seem to have decent income to throw at your debt, so could be room to clear it at £1200 PCM x 57 months without the added intrest each month, helping chip away at it faster.

Sourcrates, Fatbelly & others on here are amazing at giving advice to others, SOA will help greatly in terms of infomation needed to fully advise you on where to go from here.

enthusiasticsaver

DebtFreeWannabe27 said:

I started a thread elsewhere on MSE and somebody recommended I come and post on here for advice. 

In short, I have £68,000 in credit cards and loan debt - I know, it's a lot. This is personal debt that I've accrued through what I've realised is a trading addiction (if anyone can recommend a charity who can help with this kind of thing, I'm all ears).

All of my priority debts, such as my mortgage and bills are paid for fine and are protected. My husband and I put a proportion of our wage into a joint account each month which all of these are taken from. None of these are linked to my own personal account where my salary is paid, so that's one positive I think.

Another positive is that I am on a good salary of c.£60k. Unfortunately though, I'm left with c£1200 for my personal account each month but now have debt repayments equating to c£1700 each month. And this is where the danger lies - that shortfall, I've previously convinced myself I need to try and cover by trading and making a profit. As you might expect, that hasn't ended well and has got my debt situation to where it is today. In trying to recoup my losses and make the situation better, I've made it worse. To add to this, my husband is completely unaware of my situation. (Again, if anyone can recommend a charity, please do - I know I need help.)

The situation at present is really starting to impact my mental health. I feel incredible shame and guilt about the debts I've amassed, how careless I've been, and for hiding it from my husband.

Last week, I took a big step for me and phoned StepChange. They told me they could help me with a DMP. Since then, I've read on here that rushing into a DMP might not be the best thing for me, so I'm after some advice on how to go about steadying the ship and getting on top on things. I arrange for StepChange to call me back on Thursday to discuss my options, so I have until then to get my thoughts in order.

My questions:
1. I can't afford to meet my debt repayments this month. I've simply run out of cash. Should I cancel my direct debits as a first step? From what I've read on this forum, I should then start to create an emergency fund and allow my creditors to contact me. Am I missing anything?
2. How will a missed payment impact my credit rating? For example, what if I missed payments in March, but then met all my payments in April? 
3. If I was to opt for a DMP, would this impact getting a new fixed mortgage deal when mine expires in a couple of years?
4. I've heard of something called "breathing space". Is this something that might be able to help me get on top of things?
5. How does a DMP impact your credit file and ability to borrow going forward? i.e. what kind of score would you see on Clearscore
6. Can you choose to repay a DMP sooner than initially anticipated? I should have my student loan fully paid off within the next 2 years, so I can then attribute that extra cash to reduce my debts.

Thank you in advance for any advice. I honestly don't know where to turn, and it’s a bit crazy that an online forum seeking advice from strangers is the one I've opted for over talking to my family and friends.

Gambling Aware will help you with the trading addiction and it is an addiction which you need to break to move on. You need to tell your husband as he is financially linked with you so any credit searches made on him will show your defaults. 

Yes I would cancel the direct debits as a first step and default. Read the first steps sticky on this board. You are correct that you should save into an emergency fund. Do not rush into arrangements to pay. @sourcrates on another thread this morning also suggested invoking GDPR to see what data your creditors hold is a good idea and removing phone numbers so they don’t phone you at work etc. Any missed payments will impact so if you cannot meet them every month there is no point delaying taking action now. 

You can get a new mortgage deal but only with your existing lender as the defaults will impact on your credit record and take 6 years to drop off. Your current lender won’t search your credit history so it shouldn’t impact on you getting a deal with them. 

You cannot borrow more whilst on a DMP. Or at least you shouldn’t. 

If you have spare money I suggest you save in a full and final payments pot to get it cleared earlier but even if you do repay earlier than that the defaults will stay until 2030. 

I don’t think invoking breathing space will help. It just delays defaulting. You will get through this but the Gambling Addiction is the biggest thing you have to deal with. The debt is just a symptom of that. 

Andyjflet

Morning and try not to panic, you can get a hold of this and pay it down.
Because you are financially linked through the mortgage then any DRO or non payments is going to affect what you do going forward with your husband, on the mortgage and any financially linked searches. 

I would advise, as difficult as it is, to sit down and discuss this with your husband, it will be a weight off your mind and he will then know what situation he could be in as well as yourself.