Debt management plan uk

oddmulberry2188

Hi all, new to the forum so hope I've posted this in the right place.

Just taken the first steps in addressing my debt spiral and looking for some advice on debt management plans in the UK

I'm 31M , married with 3 kids, in rented accommodation. 

I have debts that have risen to £13.5k across 2 personal loans and 4 credit cards.

I have never missed a single payment on any account but its becoming almost impossible to make minimum payments, with the knock on effect of more credit being used each month to meet living expenses.

I think a debt management plan may be the best option for me as I don't see any realistic way of paying this debt otherwise

I take home roughly £2600 a month and after working out a budget with stepchange UK I have £320 available to pay down the debt each month. My current minimum payments are £700.

I'm just a bit worried about the process of getting it set up, I've seen a lot of talk about stopping payments to creditors and saving the money for an emergency fund before I start the DMP? Is this a good idea?

Having never missed a payment this seems like a huge step!

I'm also worried about the chances of any of the creditors taking further steps such as court action or bailiffs, is this a realistic fear? Or am I just overthinking? 

Any advice greatly appreciated 

oddmulberry2188

Forgot to add in original post, my Monthly Budget is as agreed with step-change is:

£1050 rent

£300 groceries 

£180 gas/electric

£45 car insurance 

£55 Road tax 

£120 fuel costs

£41 ongoing car maintenance 

£13.50 tv licence

£35 water

£32 dentistry 

£35 broadband

£25 mobile phone 

£85 professional expenses (career training fees)

£16 haircut

£41 leisure fund

£9 clothing/footwear

£130 smoking products( I know this is somewhere I could cut and I am making steps towards this)

£50 afterschool clubs

£30 pocket money ( £10 per child) 

£25 savings

Totalling £2282

sourcrates

Hi, and welcome to the forum.

All frequently asked questions you have there, this thread will help -

In Debt and Wannabe Debt Free? First Steps! — MoneySavingExpert Forum

And, if you stuck that £130 a month you spend on smoking, into a savings account, after 12 months you would have saved £1560, after 36 months it would be £4680!!.

Your debt would come tumbling down.

Rob5342

Read what that thread says about defaults. If you can default first then in the long run it's much better for your credit report and can cost you a lot less to clear everything. Some lenders deliberately make things difficult for people by not defaulting them for a long time though.

Court action can never be 100% ruled out but it's rare if you are making repayments. Lenders tend to sell debts to debt collectors rather than take any legal action themselves. Debt collectors buy debts at a fraction of their value,  if you are making repayments they are making a nice little profit for nothing so they have little motivation to.spend time and money on court action that will only result in them getting the.same repayments from you. Even if they did decide to take legal action it's not the end of the world. You'd have acccj on your credit report but you'd only have to make payments that were affordable.

Good luck with the smoking, if you could get that down to half then over 5 years you'll have nearly £4000 extra paid off.

fatbelly

How many people are you trying to feed on £300 per month? 5?

If 2 adults and 3 kids, my starting point would be £120 per week i.e. £520 per month.

And the SFS would allow more than that.

I'm concerned your budget is too ambitious

stu12345_2

are you a single dad with kids, cos you state your earnings only.

what about child benefit amounts, or your partners wages if you have one.

ps gas and elec are too high, since April bills have went down, my smart meter now never goes above £1.80 a day for gas and electricity! wow!

don't beat yourself up about smoking costs, try vaping instead.
or try force yourself not to smoke when the kids are home in evening.

that may force you out into the garden( which it probably  does as your renting private)!
and of courses it's hard or impossible to smoke at work.

MattMattMattUK

oddmulberry2188 said:

£55 Road tax 

£130 smoking products( I know this is somewhere I could cut and I am making steps 

Your road tax seems incredibly high for s single vehicle, is that for two? If so do you really need two?
The smoking needs to go immediately, it is just not financially sustainable.

stu12345_2

how long are you on the housing association or council waiting list. 
an equivalent property would be around £400 a month rent Vs over the £1000 your giving a landlord.

TheAble

stu12345_2 said:

how long are you on the housing association or council waiting list. 
an equivalent property would be around £400 a month rent Vs over the £1000 your giving a landlord.

No experience of this myself but surely not just anyone can get a council house? If op's current home is perfectly fine then it's not clear how they would qualify.

£1.80 a day on gas and elec is impressive btw. Mine's not far off that before I've even got out of bed lol

recklessmurmur

Just a note on the smoking front - it is absolutely an addiction which is hard to crack. It was financial reasons I quit too. Used to smoke 15-20 pre made a day, you can do the maths on that. I switched to roll ups, which was a saving of about £100 pm, now I vape & it costs me max £20 a month. Hideously hard to begin with but it can be done & I'd never go back to cigarettes now. Best of luck to you. Xxx

stu12345_2

you get housing points based on your situation , it can get more points, eg need to be closer to job, poor quality private let, local  connection to the county, important  job to the county that needs filled,overcrowding , landlord selling up etc,which lets you apply 3 times weekly on the social housing site for vacant properties for your county. or any county you want to live in. so
register with home choice. ,

( even if it takes, 2, 3 or 4 years) as £1050 is unsustainable private rent you pay long term 

ps my gas only goes on for a quick shower daily and to do the dishes, it's the electric on washing machine , oven now

vaping is ok,but the nicotine molecules in the steam vapour are too big compared to smoking to give you a nicotine hit, which is a good dopamine hit, which you need if debt is stressful imo.

never go down the route of alcohol. even small amounts.

just cut back a lot on cigarettes if you can, one in morning, then vape rest of the day or if driving imo

Ive been 35 years smoker on and off, it never made me mega poor, that was buying cars at £15000 a pop! ( plus a divorce cost lol)and the cost to run them over last 37 yrs( cars, not women)

I now drive a £700 car.

imo cars and rent are the 2 biggest expenses, which folk need to reduce

i now rent council, I  once bet 83 applicants for a housing  association flat( small, but in a poor, rough ,town) years ago on homechoice, then kept swapping(, that took time, effort  and determination), I've swapped 8 times via home swapper website, I'm now in one of the nicest UK  towns for the last few recent years and here till I die, hopefully  in many many years time,in a secure tenancy