Struggling with payments and think I’ve made a mistake

Tedsperson

Hi.

I'm hoping for some guidance please.  It’s been a tough couple of years.  My partner lost his father, followed by the collapse of his business.  He was in a dark place for a while.

As a result I’ve been trying to manage everything on my salary.  I’m self employed and I’m busy but of course time off, sickness,  bank holidays and Christmas impact my income month on month.

The result has been a steady increase in my credit card debt.  I am now at the stage where I can pay the monthly amounts but then have to use any spare balance to live.  When something breaks or runs out - car, heating oil, dentist I don’t have enough to cover the extra costs.

Last month I struggled with the need for two new tires and to buy heating oil. I asked Aqua to help me for a couple of months.  They said they could and seem to have transferred both my Aqua card and John Lewis credit card onto a payment plan.  They have set for review in October and have stopped charges and interest. 

I had not missed any payments.

my worry is that they tell me they will report this to the credit agencies.  Now my credit wasn’t bad - not good as obviously I’m over extended - but I haven’t had any missed payments with any of my accounts.

I guessing this will now be very bad for my credit file?

As a result I’m wondering- if the damage is already done - perhaps I should just stop battling. 

Is it better to just stop paying all of them and make an arrangement or perhaps default.

the thought of that scares me a bit!

I have £22,505 in credit card debt.  Mainly with Aqua and Virgin.

So tired try to keep all the balls in the air - any advise would be really welcome.

thank you x

enthusiasticsaver

You could post up an soa (link below) but if so much of your wage is spent servicing debt meaning you need credit to live I would say you should explore a DMP and default. If you already have arrangements to pay those markers actually stay on your file longer than defaults. 

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

sourcrates

Honestly I don`t understand why you would choose to "battle on" not been able to afford things, when all you have to do is default on payments and set up a debt management plan, its so simple, and nothing whatsoever to be scared of.

Hundreds of 1000`s of people who can`t afford to service their debts do this, its a well trodden path to managing problem debt, lenders/creditors everyone knows about DMP`s, all you have to do is contact one of the debt charities and they do all the donkey work for you, or you can choose to be more proactive and organise it yourself.

We have all the tools and information necessary to help you, so why struggle???

Tedsperson

sourcrates said:

Honestly I don`t understand why you would choose to "battle on" not been able to afford things, when all you have to do is default on payments and set up a debt management plan, its so simple, and nothing whatsoever to be scared of.

Hundreds of 1000`s of people who can`t afford to service their debts do this, its a well trodden path to managing problem debt, lenders/creditors everyone knows about DMP`s, all you have to do is contact one of the debt charities and they do all the donkey work for you, or you can choose to be more proactive and organise it yourself.

We have all the tools and information necessary to help you, so why struggle???

I think I’m keep hoping that I will be able to make some progress.  I am also frustrated I think that I’m going to have to wreck my credit rating because of something that I’ve had no control over.  However I totally get that lots of people are in the same boat.  I tried to talk to step change but they can’t help because I’m self employed. 

sourcrates

Tedsperson said:

sourcrates said:

Honestly I don`t understand why you would choose to "battle on" not been able to afford things, when all you have to do is default on payments and set up a debt management plan, its so simple, and nothing whatsoever to be scared of.

Hundreds of 1000`s of people who can`t afford to service their debts do this, its a well trodden path to managing problem debt, lenders/creditors everyone knows about DMP`s, all you have to do is contact one of the debt charities and they do all the donkey work for you, or you can choose to be more proactive and organise it yourself.

We have all the tools and information necessary to help you, so why struggle???

I think I’m keep hoping that I will be able to make some progress.  I am also frustrated I think that I’m going to have to wreck my credit rating because of something that I’ve had no control over.  However I totally get that lots of people are in the same boat.  I tried to talk to step change but they can’t help because I’m self employed. 

Right, got ya, its a doddle to set up yourself, it`s just a case of taking some time out to assess your situation, stopping payments lets them know you are in trouble, and opens the door to debt management.

Try and save a few months emergency fund, then write a letter detailing your circumstances, say you have taken advice, and intend to self manage a DMP.

Advise them of how much they will be getting and when, ask them to stop all charges and interest, obtain payment details from them, then just make your regular affordable payments to them, easy really.

Yes your credit will suffer, accounts may be sold or assigned to debt collectors, but you just pay whoever writes asking for money, you retain control, and all should run smoothly.

Simple really, just the same as you have been doing previously, except you pay what you can afford, rather than what they tell you.

Any questions, ask away.

Tedsperson

I having been reading a lot on here and I get the impression that it might be better to allow the accounts to default before agreeing a payment plan.  

Asking for help seemed like a good plan and Aqua were perfectly kind and helpful - but perhaps that was not the best way? 

Should I speak with them before I stop paying or just stop paying?

thanks 

sourcrates

And say what though?

Speaking to them means AP markers, and just slows everything down.

We advise saving an emergency fund, by non payment of your debts, this also encourages defaults, but it can take a while, depending on the creditor.

Its an automated process that kicks in when you miss payments, so speaking to them is pretty pointless, the computer runs the show, debts are sold all the time, or assigned to collectors, so its pretty much for granted that the lenders you have now, won`t be the ones you enter debt management with.

Tedsperson

Ok that’s fair

so if I already have a payment plan and I stop paying will it “convert” to a default? Sorry for the stupid questions!

sourcrates

Tedsperson said:

Ok that’s fair

so if I already have a payment plan and I stop paying will it “convert” to a default? Sorry for the stupid questions!

Basically yes, it should do.

A default means that the creditor has decided to no longer do business with you, and terminates the agreement.

An arrangement is a temporary measure which assumes you will at some point re-start normal payments.