Starting out getting debt free - feeling scared

debtspiraldisaster

Hello, 
I posted on someone else's thread of becoming debt free and their advice for starting out and got some great advice including starting my own thread so here goes:
Due to my own stupid money management I got myself into a debt spiral where I now can't afford my monthly minimum payments even though I have a full-time job which pays fairly well. I panicked last weekend and contacted StepChange who immediately advised a debt management plan where the payments were the same as my monthly minimums (which I can't afford!) anyway I searched on here and realised there is another way. Here's a list of my debts, they are all credit cards and personal loans: 
Zable credit card: £508
MBNA credit card: £516
Barclaycard credit card: £13 (not worth including but thought I would) 
Capital 1 credit card: £207.74
Salad Loan: £864
Loans2Go Loan: £1726
Everyday Lending Loan: £7000
Likely Loan Loan: £1962
The repayments on these is approx £1500 pcm. This month (May) is the first month I have cancelled all direct debits on all accounts. The Likely Loan I haven't been able to pay for 3 months now and they have told me my account is going in default. The others this is the first month payment missed which I won't pay later. I was hopeful at the beginning of this month that I would start to build up my funds through not paying to then put me in a position to make offers when defaulted but I had a horrible shock yesterday when my monthly paypacket was £1000 short. My tax code for the new financial year was wrong so I rang HMRC and got it corrected but won't see the payback until next paycheck (end of this month). So I'm panicking because I'm struggling to pay my basics this month meaning my grand plan to not pay my debts and put that money to one side to start my default offer fund is already a month behind but the missed payments are already a month in. 
I hope that makes sense. I'm panicking, my phone is blowing up with all these companies ringing me for missed payments and I'm ignoring the calls and the emails too, is this the thing to do until it's defaulted? StepChange now keep emailing me saying it's time to set up my debt management plan. I was so confident at the weekend after reading the advice here but the HMRC set back has really knocked my confidence and being hounded is making me panic. 
Sorry, any advice? 

Grumpelstiltskin

Firstly contact Stepchange and tell them you have changed your mind about the DMP at the moment.

Secondly don't panic about not paying your debts, nothing is going to happen.

Thirdly block all the phone numbers, don't answer E Mails but do look at anything you receive by snail mail.

Even if you don't pay things like council tax, water etc. for 1 month you will be able to make them up next month.

fatbelly

Yes. Good advice above.

Actually I wouldn't bother too much about not paying water (can't cut you off), elec/gas ( can put you on prepayment but takes many months.

Rent/mortgage and council tax are priority payments so keep them ticking over if you can

You need to eat and stay warm, though the latter will be easier if this weather improves.

You need to stay legal if you have a car or tv licence

Stuff like loans and credit cards are at the bottom of the queue if things are tight. You can stop paying.

RAS

Absolutely second fatbelly.

Keep the roof over your head, eat and pay your essential usage taxes (car/TV).

If you can't afford CT this month, ring and then deliver a letter explaining the situation and pay double next month. Or ask them to put you on a 12 month plan, which might take enough time to organise.

Reply to Stepchange telling them that your tax code is messed up and you have a massive shortfall this month. Once you're feeling a little less burdened, explain that you want to wait before doing the DMP.

sourcrates

Just make sure your priority debts are taken care of, the rest will ring and text and write, and generally make a nuisance of themselves, you would assume you owed them millions, the non priority, non essential credit debts always make the most noise, as they are scared of you not paying them, because they know they are a very low priority when things get tough.

I was reading a previous post a little earlier, that fatbelly commented on.

  "the Government want you to think debt is a scary subject" he wrote.....

but really it isn`t, if you don`t have money or assets, then there is virtually nothing creditors can do to get you to pay.

Its the fear factor that plays in everyone's heads, once you get past that, things will seem a whole lot better.

For instance, were you aware you can stop the phone calls by sending just one email to each lender?
Under GDPR (data protection laws) you can now choose how a company contacts you, so just tell them to only contact you in writing, they have to comply with your request.

That`s another string to your bow, there are many more, its all about regaining control of the situation, and making things work in your favour, where you call the shots, not them.

Stick to your grand plan, don`t be put off at the first fence, be proactive, many, many people choose to tackle their debts this way, its unconventional, which is why I like it.

debtspiraldisaster

Thank you @sourcrates, @RAT, and @fatbelly so much for your advice, I’m just focusing on getting through this month (again!) to start getting somewhere positive. I’ve got a question about when I’m offering a settlement for the defaults: I’ve seen the template letter and there’s a section to say why you’re in this situation - I have no real reason or excuse, I just got stuck in a debt spiral, I’m worried they won’t accept my offer because of this. Also, I’m worried about how they’ll view my bank account, I have animals and spend money on them (food, insurance etc) and I’m worried they’ll not accept that as reasonable priority spending, do they look through your bank account? Sorry for all the silly questions, they keep me up at night. 

stu12345_2

when you say settlements, do you mean full and final settlements, if so where will you have the total money you need and it may take many months or years before you get any discounts at all .
 or do you mean a repayment plan?

cos no one requires your bank statements on a dmp

bank statements, yes in a DRO or bankruptcy application.

I'm confused what you mean

I had a dmp with step change, I had a rescue cat that needed prescription food, insulin, arthritis medicine, vet visits, I put it  as a monthly expense, no problems asked or questioned 

sourcrates

debtspiraldisaster said:

Thank you @sourcrates, @RAT, and @fatbelly so much for your advice, I’m just focusing on getting through this month (again!) to start getting somewhere positive. I’ve got a question about when I’m offering a settlement for the defaults: I’ve seen the template letter and there’s a section to say why you’re in this situation - I have no real reason or excuse, I just got stuck in a debt spiral, I’m worried they won’t accept my offer because of this. Also, I’m worried about how they’ll view my bank account, I have animals and spend money on them (food, insurance etc) and I’m worried they’ll not accept that as reasonable priority spending, do they look through your bank account? Sorry for all the silly questions, they keep me up at night. 

You are a long way of settlement yet, and no one can look at your bank account, did you forget data protection rules?

Just allow the process to unfold, with luck, your debts will be sold or assigned pretty quickly, debt collectors are much easier to deal with in most cases, as they have shiny new websites where you can easily and simply make payments without saying boo to a goose or giving anyone access to your personal documents or spending.

Try not to overthink things, don`t put up barriers where non exist.

debtspiraldisaster

Hello again,
I need some advice. I have multiple accounts (credit cards and loans) which are all now in turn being defaulted. I have a mixture of credit cards and loans. Question is should I be paying off the smaller debts now in full with the money I’m building up by not paying repayments each month or should I be saving it all up to build a lump sum? I’ve got one large loan defaulting which I’ll need to save up for so paying the smaller ones off will slow this process but in time I’d only have that one left. Hope that makes sense 

RAS

We really can't tell you how to allocate your funds. It's a very personal decision. 

However, based on the limited information you've provided, it's not clear whether any of your debt has actually been defaulted, and whether you budget allows you any money towards your debts, and how much. 

You only posted here 4 weeks ago. Have you yet had your new pay check with the correct HMRC tax sorted out? 

In order to get a default, you'll have a letter demanding full repayment of the whole sum, then a couple of weeks later a letter telling you the financial relationship has broken down and a default will be registered. Even if they act promptly, it takes a few more weeks for a default to show on your credit record.

The basic question is how much do you earn? And how much do you need for essential living? You need to do a full Statement of Affairs, so you can see how much you have spare each month. If you want to post that here, that's for fine, just format for MSE. We can then remind you if you've missed anything off. The fact that Stepchange thought that you could afford the full £1500 repayments suggests that you had left important items off the list of monthly expenditure, so it's important to identify those, so you know what you can afford.

You will get phone calls, texts and possibly emails. These are computer generated and autodialled and just get triggered without human intervention. You can block them, or even send them a message telling not to use your phone number or email address. The important stuff has to be posted to you by letter, by law. 

Can you scan a copy of your default letter from Likely Loan, having crossed out the identifying details? Then we can tell you what stage you are at?

And, as I suggested if you don't want to post the SOA, just you tell us what your normal take home pay is and how much the expenses you need to pay are monthly?

fatbelly

You had one very small debt. £13. I think it's ok to clear that. The ones for a few hundred pounds - well even a good settlement deal a few years down the line isn't going to save you much, and you should be putting plenty into your fighting fund.

So i'd probably clear those too.