Seeking advice for my disastrous debt

EssexHebridean

First up - as others have already said - take a breath. This is just money, at the end of the day, and it's fixable. 

On the trading thing - definitely get some professional help, but in the meantime, and in terms of the urge to trade again to try to fix the current issue, take a step back a moment. Take another breath. Then ask yourself - why are you in this position now? (By your own statement - because of the trading). Has trading ever fixed things before? (No - hence the position you are in now). If you were advising a friend who was telling you that "this time it will be different" would you agree, or would you be gently pointing out to them that no, it won't, and that they need to stop making the same mistakes and expecting a different outcome. You need to start being that friend to yourself, first and foremost, and also being honest with yourself. Some folk do really well at trading, others do really well at growing food to eat, or taking photographs, or selling clothes on vinted, or whatever their "thing" might be - perhaps you're not "good" at trading, and so need to find your "thing" that you are good at? And that "thing" might not make you any money - but that's fine - in spite of what millennials everywhere seem to believe, everyone does NOT need a side hustle!  

Get that SOA sorted - and posted here if you feel you can. We can help you to go through your spending and work out whether there are any savings that you may have missed, and how best to tackle things. Talking to your husband about the situation also needs to be high on your list - better that you tell him the scale of things rather than him finding out. 

DebtFreeWannabe27

Thanks for the advice so far. It sounds like the big one is speaking to my husband. For reasons i'm not at liberty to divulge, now is really not a good time to land this on him as he's currently seeking therapy for his mental health. For now at least, I need to manage this situation on my own. 

I will look at posting a SOA asap, but for now, I have a few follow up questions:

- Do I need to default on ALL debts? This feels scary to me because I've always tried to meet repayments, so i'm naturally inclined to pay those I can and default on only some.
- Is there a priority order over repaying loans versus credit cards?
- If I default on a credit card, won't the balance just increase and increase as interest is added? In addition, will I also face charges for non-payment that add to this?
- It's really the interest on the credit card debts that's killing me. If this didn't exist, I could meet my debt repayments. Is there nothing I can do in terms of asking creditors to help by freezing interest?
- It sounds like a DMP would need to be in place for interest and charges to be frozen. Stepchange had told me that this would not link to my husband and its debt in my own name, but the advice here is on the contrary. Can I check which it is?
- I'd likely opt to do a DMP through StepChange as they'll do everything for me and its less stress. How instant is that?

EssexHebridean

Pay the debts with the highest interest rates first - as that means you pay less overall. 

Defaulting stops the interest accruing - it's another advantage of a straight default over an Arrangement to Pay marker. Asking the creditors to freeze the interest sometimes gets short term results but can also lead to AP markers being put on the file. Then when the interest starts up again you are in just as bad a position as you would have been with defaults, but also with interest still mounting. 

If you were going to do a DMP then your best bet is to stop paying all the unsecured debts immediately, and start saving that money to build a good emergency fund and for future full and final settlements. Then once the defaults are in place begin the DMP. Stepchange would be in favour of you NOT waiting for the defaults - this is just the way they operate, but not what we'd advise as the best route forwards. 

The debts themselves don't link to your husband, but your credit file IS linked to him because you have joint accounts. 

Grumpelstiltskin

Unfortunately Jumping into a DMP instantly is not the way forward, If you do your accounts will be marked with arrangement to pay markers which only disappear 6 years after your final payment date. If you just stop paying and wait for the accounts to default your account is clear 6 years from that date, so much quicker.

With Stepchange you can't pick and choose which debts you want to include.

If you have any joint accounts with your husband then he will be affected.

DebtFreeWannabe27

Thanks for clarifying some things for me. It sounds like my credit file is linked to my husband through joint financial products? The two that we have are our joint current account, and our mortgage. If I was to close the joint current account and use a sole name account for our joint bills, I guess this wouldn't be enough to separate us financially? I just want to protect him as much as possible from the decisions that I've made. 

It sounds like if I manage a DMP myself, I can choose which debts I include, so I don't have to default on everything. If that is the case, I think I might prefer to do that, as I would choose to default on my credit cards in order for the interest to freeze. From what I gather, default means not paying anything at all on these for 3-6 months, or the time it takes for the lender to contact me and tell me I've defaulted - is that right? I guess at that point, I would set up a DMP and start using my fund to repay. Follow up question - would it be wise to try and overpay on my loans during this period, starting with the highest interest ones (assuming I had the cash to do that)? 

And follow up to the follow up - if i'm going to default on my credit cards and have that marker on my credit file, does it make more sense to do this with my loans too so I can really focus on growing my emergency fund instead of just about getting by money wise because I'm still trying to meet loan repayments.

Apologies for all the questions, but i'm finding this forum really helpful and I feel quite nervous about the whole DMP situation. I think what would really help is some more clarity on what that initial period of default would look and feel like i.e. am I going to be receiving loads of calls and letters from my lenders? Will I feel the pressure and think I'm making a terrible mistake? How will I know when its the right time to set up a DMP? 

RAS

Please close the existing joint current account and transfer the essential DDs to a new account with a banking group to which you owe nothing, in your name or hubbie's, into which your salary is paid if appropriate. Do not use the switching service as that moves the DDs to creditors as well.

The other party needs a SD set up to pay half the sum, or their portion of the sum pro rata. If it's in hubbie's name you also need a bank account in your own name, also not associated with your creditors into which to pay your salary. That will minimise the damage to OH's credit record.

2021rdsunshine

Doing a self managed DMP gives you the freedom to do it the way you feel more appropriate for your situation. Bear in mind that having 2 defaults on your credit file is exactly the same of having 4 or 5.  When I stopped paying my creditors I had 2 store cards with a very little debt ( less than £200 each) in it. I decided to pay them off and close the accounts just because the amounts were minimal and there is 2 less creditors to deal with and the associated letters and phone calls. Stepchange would not approve that but I’m doing this myself so that’s the way I want. Regarding communication from creditors: stopped paying in November 2023, December and January they rang quite often. My phone is on silent and I just ignore it . Received quite a few letters to start with. Since January both phone calls and letters have reduced. Debts have been passed to debt collectors but not sold and still waiting for defaults. Plan is to start DMP when defaults happen. It doesn’t matter if they do not default at the same time. I will start payment with any of them that defaults first and will be a small payment, hopefully after a while they will start writing with offers for reduced full and final payment. I was feeling pressure when I was actually paying the debts and a enormous amount of interest leaving me with next to nothing to live on and not getting anywhere near of clearing the debts. If you are anything like me you will feel empowered that you are actually doing something about your situation. 

enthusiasticsaver

DebtFreeWannabe27 said:

Thanks for clarifying some things for me. It sounds like my credit file is linked to my husband through joint financial products? The two that we have are our joint current account, and our mortgage. If I was to close the joint current account and use a sole name account for our joint bills, I guess this wouldn't be enough to separate us financially? I just want to protect him as much as possible from the decisions that I've made. 

It sounds like if I manage a DMP myself, I can choose which debts I include, so I don't have to default on everything. If that is the case, I think I might prefer to do that, as I would choose to default on my credit cards in order for the interest to freeze. From what I gather, default means not paying anything at all on these for 3-6 months, or the time it takes for the lender to contact me and tell me I've defaulted - is that right? I guess at that point, I would set up a DMP and start using my fund to repay. Follow up question - would it be wise to try and overpay on my loans during this period, starting with the highest interest ones (assuming I had the cash to do that)? 

And follow up to the follow up - if i'm going to default on my credit cards and have that marker on my credit file, does it make more sense to do this with my loans too so I can really focus on growing my emergency fund instead of just about getting by money wise because I'm still trying to meet loan repayments.

Apologies for all the questions, but i'm finding this forum really helpful and I feel quite nervous about the whole DMP situation. I think what would really help is some more clarity on what that initial period of default would look and feel like i.e. am I going to be receiving loads of calls and letters from my lenders? Will I feel the pressure and think I'm making a terrible mistake? How will I know when its the right time to set up a DMP? 

Yes your credit file will be linked to your husband through joint products.  Closing the joint account won't stop this as you still have the mortgage. Protecting him is one thing but I am not sure keeping him in the dark completely is wise.  He will find out if he applies for a BT card or a new bank account or even searches his own credit record. 

You can manage a DMP  yourself but your credit record will be shot whether you  default on all or just some of the debts.  Presumably the intention is to stop interest being charged and you coming to an affordable monthly repayment figure. I cannot see any advantage to defaulting on some and paying others. 

Focus on saving for emergencies and letting the debt process work its way through. You won't have access to credit so you will need emergency cash.  Many people are like you and get anxious about just stopping paying and there are lots of threads on here about this early stage.  You want the defaults to happen and then some of the companies will sell the debts on or just appoint a DCA. They will send letters and may phone and some may sound quite aggressive but it really is just a process they all have to go through before getting to defaults and yes that can take time. You can check your credit record from time to time to see if the defaults are showing. 

I would write to them asking them to communicate in writing only and remove phone numbers if you are anxious about that. 

As I see it you do not have much choice unless you speak to your husband and arrange a different  split of household finances to allow you to make minimum repayments. 

DebtFreeWannabe27

I do think a DMP is the best solution in my circumstance, and I realise I'll be linked to my husband through our mortgage - I'm not about to drop off of that. So my question then is, does anyone have experience of being on the other side? My credit file is going to be trashed, but will his credit file be just as damaged - would he still be able to apply for financial products? I ask this because I think he'd like to get a new car within the next year and would therefore need to apply for finance through the dealership. If this is solely in his name, is he likely to be refused just because he's linked to me? If that's the case, it feels like the sensible thing to do would be share the situation sooner and to cut financial ties from each other (if we can).

I don't really like the idea of loads of letters either, because I know this would be panic me. My preference in terms of communication would be email for everything, but is that an option?

Grumpelstiltskin

I still think you are trying to avoid telling your husband the full extent of your problem, you must realize that it won't work.
You should be a partnership working together, does he really have to buy an expensive car on finance next year?

If and it is very rare but if a creditor decided to apply for a CCJ they have by law to contact you by snail mail.

You can ask your creditors to contact you by E Mail only but remember they have to abide by the law.