In quite a bit of debt, advice needed!

Superhoopza

Jvoke said:

Grumpelstiltskin said:

You say you haven't received a water bill yet, you do realize it will be backdated to when you moved in so where are you going to find that money from, electric also, aren't you providing monthly meter readings to the company?

Yes I realise that. That's why I am thinking of just freezing/not paying some of my creditors this month (July) so I can assess the situation further in August once I have a better idea on running costs. 

Stepchange won't speak to me as they just say with my high salary I can afford repayments (I can't lol) and that I should just keep up with my minimums.

No idea what to do, I need a DMP for sure, but what approach I take to that DMP I am undecided still. I obviously want to minimise the length of impact on my credit score so the default approach is the one I am contemplating the most, also allows me to pick and choose myself what creditors to default and DMP. 

God knows...

I know its a long read but the first 10 or so pages addresses questions like this. The conclusion eventually is that 1 default is almost as bad as 10 defaults so if you go down the default route, which unfortunately looks like the only path for you as you're still £1k a month short even after having no spending money, then you will have to accept a very bad credit file for 6.5-7 years (6 years default and 6-12 months for all defaults to come through). I also raised the questions about whether you can get mortgages with defaults and the answers were mixed but the outcome was someone would say yes but at a much higher rate. 

I know you want to protect your credit file for the future in order to buy a home but unless you can significantly increase yours or your partner's income very quickly, have a big cut on costs or (very unlikely) get the payment structures with your creditors to change to pay less per month, then you simply don't have enough money to pay your monthly minimums. You can't rely on getting 0% deals anytime soon.

Jvoke

Superhoopza said:

Jvoke said:

Grumpelstiltskin said:

You say you haven't received a water bill yet, you do realize it will be backdated to when you moved in so where are you going to find that money from, electric also, aren't you providing monthly meter readings to the company?

Yes I realise that. That's why I am thinking of just freezing/not paying some of my creditors this month (July) so I can assess the situation further in August once I have a better idea on running costs. 

Stepchange won't speak to me as they just say with my high salary I can afford repayments (I can't lol) and that I should just keep up with my minimums.

No idea what to do, I need a DMP for sure, but what approach I take to that DMP I am undecided still. I obviously want to minimise the length of impact on my credit score so the default approach is the one I am contemplating the most, also allows me to pick and choose myself what creditors to default and DMP. 

God knows...

I know its a long read but the first 10 or so pages addresses questions like this. The conclusion eventually is that 1 default is almost as bad as 10 defaults so if you go down the default route, which unfortunately looks like the only path for you as you're still £1k a month short even after having no spending money, then you will have to accept a very bad credit file for 6.5-7 years (6 years default and 6-12 months for all defaults to come through). I also raised the questions about whether you can get mortgages with defaults and the answers were mixed but the outcome was someone would say yes but at a much higher rate. 

I know you want to protect your credit file for the future in order to buy a home but unless you can significantly increase yours or your partner's income very quickly, have a big cut on costs or (very unlikely) get the payment structures with your creditors to change to pay less per month, then you simply don't have enough money to pay your monthly minimums. You can't rely on getting 0% deals anytime soon.

Yeah I'm coming to terms with this I think. I'm OK to sacrifice the credit score because realistically I won't be able to save for a mortgage anyway at this rate.

At least 6-7 years gives us enough time to get set back up, even gives us the freedom to rent in different cities/areas of the UK as I work remotely and not tied down to a mortgage etc. Although I am worried mainly on the bad credit score affecting future rental opportunities but I've read online that defaults and the overall score doesn't impact renting, just CCJs/Bankruptcies etc (legal agreements). Not sure though!

Worst case is we could just live abroad again and wait for it to settle down again...

Superhoopza

Jvoke said:

Superhoopza said:

Jvoke said:

Grumpelstiltskin said:

You say you haven't received a water bill yet, you do realize it will be backdated to when you moved in so where are you going to find that money from, electric also, aren't you providing monthly meter readings to the company?

Yes I realise that. That's why I am thinking of just freezing/not paying some of my creditors this month (July) so I can assess the situation further in August once I have a better idea on running costs. 

Stepchange won't speak to me as they just say with my high salary I can afford repayments (I can't lol) and that I should just keep up with my minimums.

No idea what to do, I need a DMP for sure, but what approach I take to that DMP I am undecided still. I obviously want to minimise the length of impact on my credit score so the default approach is the one I am contemplating the most, also allows me to pick and choose myself what creditors to default and DMP. 

God knows...

I know its a long read but the first 10 or so pages addresses questions like this. The conclusion eventually is that 1 default is almost as bad as 10 defaults so if you go down the default route, which unfortunately looks like the only path for you as you're still £1k a month short even after having no spending money, then you will have to accept a very bad credit file for 6.5-7 years (6 years default and 6-12 months for all defaults to come through). I also raised the questions about whether you can get mortgages with defaults and the answers were mixed but the outcome was someone would say yes but at a much higher rate. 

I know you want to protect your credit file for the future in order to buy a home but unless you can significantly increase yours or your partner's income very quickly, have a big cut on costs or (very unlikely) get the payment structures with your creditors to change to pay less per month, then you simply don't have enough money to pay your monthly minimums. You can't rely on getting 0% deals anytime soon.

Yeah I'm coming to terms with this I think. I'm OK to sacrifice the credit score because realistically I won't be able to save for a mortgage anyway at this rate.

At least 6-7 years gives us enough time to get set back up, even gives us the freedom to rent in different cities/areas of the UK as I work remotely and not tied down to a mortgage etc. Although I am worried mainly on the bad credit score affecting future rental opportunities but I've read online that defaults and the overall score doesn't impact renting, just CCJs/Bankruptcies etc (legal agreements). Not sure though!

Worst case is we could just live abroad again and wait for it to settle down again...

I couldn't answer that, it would need someone else's expertise. 

stu12345_2

when you gave step change your income and expenses and showed yourein deficit , how can they possibly refuse to help 

it don't matter if you earn £100000 and have £110000 in outgoings, they only refuse if you are self employed or not from the UK or currently in a legal insolvency agreement eg bankruptcy 

Jvoke

stu12345_2 said:

when you gave step change your income and expenses and showed yourein deficit , how can they possibly refuse to help 

it don't matter if you earn £100000 and have £110000 in outgoings, they only refuse if you are self employed or not from the UK or currently in a legal insolvency agreement eg bankruptcy 

I tried calling them and went through the automated answers on the phone and it just says that I do not need this service as I am not in a debt emergency (I am lol). 

I went through the online SOA tool too and it just said to keep trying to make repayments... It was the same SOA pretty much as I posted here. So I don't know. Maybe I'll try another debt charity for advice but I'm of the mind that they'll just get me on a DMP asap, when I think I want to default before DMP if that's correct right?

stu12345_2

just default and then  try another company national debtline or payplan or Christians against poverty or money wellness or the CAB

a creditor can do no legal action until it defaults and even then months after default , if they ever do take action, but you will be in contact by that point after it defaults to make your offer of repayment 

I wonder if stepchange auto service asks how late are you with repayments, how many have you missed, have you had demanding letters etc

DisabledDan

Jvoke said:

Here is my SOA, I clicked formatted for MSE but it pasted weirdly with the format tags displayed so I just formatted it myself.

I put childcare costs in to groceries as my little ones main expenses at the moment are food, formula, nappies and wet wipes, all of which we buy at the supermarket.

Statement of Affairs and Personal Balance Sheet

Household Information

Number of adults in household........... 2

Number of children in household......... 1

Number of cars owned.................... 0

Monthly Income Details

Monthly income after tax................ 3800

Partners monthly income after tax....... 0

Benefits................................ 0

Other income............................ 0

Total monthly income.................... 3800

Monthly Expense Details

Mortgage................................ 0

Secured/HP loan repayments.............. 0

Rent.................................... 1450

Management charge (leasehold property).. 0

Council tax............................. 178

Electricity............................. 150

Gas..................................... 50

Oil..................................... 0

Water rates............................. 100

Telephone (land line)................... 0

Mobile phone............................ 35

TV Licence.............................. 0

Satellite/Cable TV...................... 0

Internet Services....................... 69

Groceries etc. ......................... 600

Clothing................................ 50

Petrol/diesel........................... 0

Road tax................................ 0

Car Insurance........................... 0

Car maintenance (including MOT)......... 0

Car parking............................. 0

Other travel............................ 0

Childcare/nursery....................... 0

Other child related expenses............ 0

Medical (prescriptions, dentist etc).... 30

Pet insurance/vet bills................. 0

Buildings insurance..................... 0

Contents insurance...................... 10

Life assurance ......................... 15

Other insurance......................... 0

Presents (birthday, christmas etc)...... 45

Haircuts................................ 20

Entertainment........................... 200

Holiday................................. 0

Emergency fund.......................... 0

Total monthly expenses.................. 3002

Assets

Cash.................................... 0

House value (Gross)..................... 0

Shares and bonds........................ 0

Car(s).................................. 0

Other assets............................ 0[b]

Total Assets............................ 0[/b]

[b]

No Secured nor Hire Purchase Debts[/b]

[b]Unsecured Debts[/b]

Description....................Debt......Monthly...APR

Loan...........................8200......189.......22.3

Loan...........................15950.....580.......17.2

Loan...........................1600......335.......14.5

Variable credit card......5400......570.......26

Credit card....................3950......180.......29.6

Credit card....................3950......200.......31.1

Total unsecured debts..........39050.....2054

Monthly Budget Summary

Total monthly income.................... 3,800

Expenses (including HP & secured debts). 3,002

Available for debt repayments........... 798

Monthly UNsecured debt repayments....... 2,054

Amount short for making debt repayments. -1,256

Personal Balance Sheet Summary

Total assets (things you own)........... 0

Total HP & Secured debt................. -0

Total Unsecured debt.................... -39,050

Net Assets.............................. -39,050

Created using the SOA calculator at www.LemonFool.co.uk.

Reproduced on Moneysavingexpert with permission, using other browser.

Jvoke said:

Thank you for your reply.

Unfortunately all of the suggestions you made I can't really do.

I have a small family and none would be willing to lend me that kind of money, my parents are comfortable but retired so doubt they would be OK with it.

I don't own a car.

We already live pretty basically, but we have just moved to the UK after living in another country for a few years, so we are basically rebuilding from 0 (+ debt ).

I earn a decent wage but it's all going on debt at the moment. Like I mentioned I've never missed a payment and do regularly go without basic stuff to meet the payments. Don't have a TVL either as we aren't really TV people, we don't even have a TV in the house lol. Mobile plans are a bit expensive £35 p/m but I am paying for mine and my wife's contract.

My wife is brand new to the UK so probably won't be able to get in to work immediately as she needs time to learn the UK in general.

I understand how to approach paying down the debts, ordering it by interest, snowballing/avalanching etc. I just have no wriggle room to apply these methods. Even once I free up that £335 currently, it would have to go to buying food etc as I'm basically at 0 after paying everything each month. 

Good point about contacting them, I might do it and see what kind of pause I can get from each. If I can get 3 months freezing my debts would definitely allow me to start snowballing.

For the SOA shall I just reply to the thread or update my original post? Not sure what the etiquette is here.

Any solution is going to need a dose of reality and then the choice of whether to ruin your credit record for six years. If you are at acceptance of that then fine but just like running a business or a country, cutting spending on things you don't need is part of the process.

Things that jump out include

Water rates at £100 a month - get a meter or move to place that has one.

Electricity............................. 150 

Gas..................................... 50

Energy seems excessive, if you are on budget DD then move to Flexible and get any money on the account refunded.
Look at what appliances are using the energy. What are you using in kWh on Gas an Electricity?

Rent.................................... 1450 -

You simply can't afford this level of rent when you have the debt you have. You are probably locked in unless you are on a Statutory Periodic Tenancy now, in which case 1 to 2 months notice can get you into a cheaper place.

Mobile phone............................ 35

Internet Services....................... 69

Mobile and Internet are excessive,

Mobile would be OK if you were funding two phones but otherwise you need to look for sub £6 deals on the data and call only side.

Internet can be had for £20 odd a month, that would save £50 a month

Clothing................................ 50

You don'y NEED to spend any money on clothing

Contents insurance...................... 10

Fund your own contents insurance, they never pay what they promise anyway, cancel it.

Life assurance ......................... 15

I suppose with a child life insurance is necessary, although I never had any.

Presents (birthday, christmas etc)...... 45

You simply can't afford £540 a year on presents, it will be good life lesson, use freecycle to pick up stuff.

Haircuts................................ 20

Get a Wahl hair clipper from Tesco for £18 and save £222

Entertainment........................... 200

You can't afford any entertainment when you are in this level of debt, never mind £2400, that money should be used to pare down your debts once you decide to DMP

The MSE Salary calculator with 5 percent pension and student loan shows you earning more than £3900, every penny counts so find out where the deductions are going.  You would not be the first person to be paying too much for Student Loan.

You could probably save some money on food but I suspect some of this is on baby stuff.

So I suspect you will be reluctant to make some of these cuts, especially moving, so that puts you in DMP but it will go far easier if you attack it from both ends.

You must start with a new basic account for the money you would have been paying on these debts, this is not just an emergency fund but building a lump sum for some debts.

Then is just becomes a matter of stopping the payments for all debts, I see no point paying any if you are stopping one.  All money saved should be set aside and by making the cuts I have suggested it will put you in the money saving mindset, which will shorten the hurt overall.  Your other half needs to be in on this and agree with any solution.

DisabledDan

Jvoke said:

Floss said:

@Jvoke could I ask what the £200 for entertainment is? If you could half that it would give you a little flex.

Just an estimate of a bit of money to use for stuff like days out with the little one, some of my hobbies and their related costs, the odd takeaway etc.

Like I said me and my wife live really basic lives at the moment, we don't really have any joy apart from looking after our child. All of my money is gone each month on priority payments, debts and groceries. 

This SOA is what I would aim for. Currently we don't have £200 per month on entertainment, it's what I would put forward for a DMP so we don't go insane over the 3-4 years of repaying this...

No judgement here but you have to be serious about this, it is not forever and during this time there is no money for hobbies or joy, this is all part of the lesson that makes you never let this happen again.

DisabledDan

Jvoke said:

Superhoopza said:

J

Assets

Cash.................................... 0

House value (Gross)..................... 0

Shares and

Created using the SOA calculator at www.LemonFool.co.uk.

Reproduced on Moneysavingexpert with permission, using other browser.

Ok after posting the SOA it shows that even once the November loan goes, you still couldn't afford monthly repayments, which change the goal posts completely. 

Potentially yes, this is more my ideal spend with a DMP in place. Currently I've got £0 per month for entertainment due to it all going on debt for example.

I really can't estimate my current budget because my current budget is just: pay bills, pay rent, pay debt, scrape enough money for groceries (sometimes dipping in to credit card) for the month. It's unsustainable really right?

Jvoke said:

Superhoopza said:

Ok after posting the SOA it shows that even once the November loan goes, you still couldn't afford monthly repayments, which change the goal posts completely. 

Potentially yes, this is more my ideal spend with a DMP in place. Currently I've got £0 per month for entertainment due to it all going on debt for example.

I really can't estimate my current budget because my current budget is just: pay bills, pay rent, pay debt, scrape enough money for groceries (sometimes dipping in to credit card) for the month. It's unsustainable really right?

You are absolutely right, it is not sustainable, I see no point creating an SOA with payments you are not making.  It is better to just look at the last three months and put actual costs and actual debts.  

TheAble

DisabledDan said:

Jvoke said:

Floss said:

@Jvoke could I ask what the £200 for entertainment is? If you could half that it would give you a little flex.

Just an estimate of a bit of money to use for stuff like days out with the little one, some of my hobbies and their related costs, the odd takeaway etc.

Like I said me and my wife live really basic lives at the moment, we don't really have any joy apart from looking after our child. All of my money is gone each month on priority payments, debts and groceries. 

This SOA is what I would aim for. Currently we don't have £200 per month on entertainment, it's what I would put forward for a DMP so we don't go insane over the 3-4 years of repaying this...

No judgement here but you have to be serious about this, it is not forever and during this time there is no money for hobbies or joy, this is all part of the lesson that makes you never let this happen again.

I think you're being a bit too doctrinaire. 

Op - maybe don't cancel your contents insurance just yet..!