Seeking advice for my disastrous debt

EssexHebridean

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? 

The bit in bold - once you start the DMP the payments should be budgeted from your income - NOT using savings or any "fighting fund" you might have set aside during the months you have not been paying. The point of the fighting fund is that a while down the line, when debts have been sold on - there is a good chance that creditors will accept "full and final settlement" offers - so basically paying a fraction of the original debt but them accepting that is all they are getting, and agreeing that the debt is now settled.

I don't have any answers to give on the subject of what affects the DMP will have on your husband's credit file directly, but I do have experience of being the person who found out about debt "by accident" rather than my then partner telling me about it themselves. Someone they owed money to managed to get hold of my phone number and called to speak with him. It felt like they didn't trust me enough to tell me - and I also felt really stupid myself because all the time we'd been going out and they'd been spending money, I found myself thinking "but that wasn't their money to spend" - I also felt as though I should have realised, although there was no way I could have done. It left me questioning the whole relationship for a while, and questioning everything they told me, and I'd be lying if I didn't tell you that yes, I did genuinely question whether we should stay together. (We had literally just moved into our first home together, at the time). We did come out of the other side, but it took a heck of a long while to rebuild the trust, and for me to trust him with money at all. Had he told me himself? Well I would probably still have been cross with him for spending money going out etc when he was in debt, but having been in debt myself previously I could certainly understand how the situation arose, and knew what needed to be done to deal with it. 

In terms of the defaulting process - yes there will be letters, probably calls, and maybe things like texts too. However - you are quite within your rights to stipulate how you can be contacted - so you could for example state that all contact  must come by letter, in the mail. If creditors then phone you, you can remind them that is not the approved contact  method, and tell them that further telephone calls will be considered as harrassment, and treated according.  A lot of people find this far easier to cope with as they can then just collect all letters up and once a week go through them, check the details are correct, and file them away. Better by a long way than feeling that nasty fluttering panicky feeling every time your phone vibrates, or you go into your emails! There's not reason why you couldn't state email for general contact, but bear in mind that there are some things that they do HAVE to send by post, so you'd need to weigh up whether you'd do better just taking a breath and accepting that as things move on, you will get more used to letters, rathe than leaving two methods of communication open which could mean you end up getting bothered more. 

DebtFreeWannabe27

@EssexHebridean thank you for sharing your experience. I absolutely plan on sharing the situation with my husband, but I need to be mindful of the timing as he's going through a lot right now. It sounds like defaults won't kick in for a couple of months so I think that's ample time for me to think about how best to share this with him.

EssexHebridean

Completely understand your reluctance to poleaxe him with something when he's already struggling with stuff. Bear in mind that the contact from creditors will start as soon as you reach the point of missing payments - so that might give you a timeline for sitting down with him and explaining the situation, and the solution. (and that is key, to my mind - saying "I have this problem, and this is how I'm going to deal with it" is far easier for the other party to hear than just raw panic).

In terms of the situation with his car - it might be a good time to start thinking about solutions to that which don't involve further credit in the household. Although it's not necessarily the case that he will struggle to get finance, you do need to question whether the household as a whole being any further in debt at this point is really a good idea. Can he consider keeping his current car or is it literally on its last legs?  if it IS on its last legs, can he look at a lower amount of borrowing via a bank loan and buy something 3 - 6 years old, perhaps?  If he is looking to do this in the next year, how much money can be set aside between now and then to make sure that he's not borrowing more than he needs to? As a nation, we have very much normalised the idea of debt for things like purchasing cars being "just what people do" but it doesn't have to be that way, and there are alternatives. 

DebtFreeWannabe27

@grumplestiltskins thanks for your comment. I absolutely intend on sharing this situation with my husband but need to be mindful of timing. When I do, I will absolutely be bringing his personal finances into the picture too (I don't know what they look like either) and we'll be tackling our finances together going forward. I've wanted to do that for ages but have been put off because of the debts I have. My future self wants us to be open about our money and make spending decisions together, so this is the first step.

Your comment about a CCJ has me panicked. I work in finance and sign annual good repute declarations. Whilst a DMP shouldn't impact this, a CCJ would. I want to avoid that at all costs if possible. Can you tell me more about lenders that might do this and why they would? 

DebtFreeWannabe27

@EssexHebridean Absolutely. I want to go into this DMP process with my eyes wide open, and a plan in place so that I can reduce anxiety for myself and also share this with my husband. I hope to put that together this week and I think i'll probably post it on here to get some feedback. Can you help me understand how I would manage a DMP myself please, and how best to establish the amount I pay to each lender?

Regarding the car, we have a car that's 4 years old at the moment and this September, will be looking to pay the loan off on that so we own it outright. We could do with getting a bigger car for our family, and my preference would be to buy a used car by using the funds from the sale of our current car, plus any savings. I am with you on what you said about the nation's perspective on car purchases. My husband will want to buy a new/used car on finance, so we'll need to discuss that when it happens. Alternatively, if the defaults won't start to show on my credit report for a couple months yet, could we look at sorting the car before that happens? I'm just trying to think creatively. We're due to renew our car insurance in April so that feels like a good opportunity to change car. For clarification, the car finance we have is a very low interest rate and is in my husband's name only. 

Sea_Shell

DebtFreeWannabe27 said:

@grumplestiltskins thanks for your comment. I absolutely intend on sharing this situation with my husband but need to be mindful of timing. When I do, I will absolutely be bringing his personal finances into the picture too (I don't know what they look like either) and we'll be tackling our finances together going forward. I've wanted to do that for ages but have been put off because of the debts I have. My future self wants us to be open about our money and make spending decisions together, so this is the first step.

Your comment about a CCJ has me panicked. I work in finance and sign annual good repute declarations. Whilst a DMP shouldn't impact this, a CCJ would. I want to avoid that at all costs if possible. Can you tell me more about lenders that might do this and why they would? 

I understand you are mindful of the "timing", but when is going to be a "good" time to talk about all this?  

A week, a month, longer?

Especially if he is making plans for new cars etc.   

Isn't the stress of dealing with all this alone, and keeping it all secret for longer, just going to make things harder for you both?  

Grumpelstiltskin

CCJs are rare for unsecured debts but you should be prepared for anything like this. The main thing is to ignore any threatening E Mails. Get your phone number off creditors websites, but as EH says there is always the off chance they will find your husband's number and phone him.

So way forward tell your husband ASAP and don't bin any snail mail letters without reading them in case you get a letter before action.

Sncjw

Can you post your soa people will be able to give advice with the figures presented

enthusiasticsaver

The missed payments will show almost immediately so I would not count on rushing car finance through simply to avoid telling your husband about the debt.  You really need to come up with a plan together.  4 years is not old for a car.  I certainly would prioritise sorting out the debt situation before replacing it.  

It is unusual for CCJs to be issued on unsecured debt but it always remains a possibility.  

This is certainly not helping your mental health so I am not sure whether prioritising your husbands is such a good idea when it would be much easier for you if you were on the same page.  That way you could suggest to your husband you leave financing the car until after the debt is under control.  You also really need support from him to make sure you do not gamble further. 

Emmel

Definitely tell your husband. This time last year I was drowning in debt, I decided I needed to default and manage it my own way. It was a very difficult conversation due to previous financial issues and having a very credit averse Husband. But it went better then I expected. Debts are circa 50k all in my own name and all unsecured. Its only this past month that I have made my first payment to a company who bought my debt. Some want a
minimum amount if you don’t provide them with an SOA, others accept what you pay. Good Luck on your journey.