Debt help

stu12345_2

you have 4 debts adding to £383 min payments a month, you lived on a shoestring giving you £800 to pay towards these debts, but when you did a more realistic budget that gave you some quality of life you only have £152 a month to contribute.

imy point was if you got that £152 to £75 , you would qualify for a DRO., debt free in 12 months 

but if you run a  self managed debt management plan( not one via a charity) on a more realistic £152 , then your dmp will take 12 years min , even if interest is stopped. and you didn't get any money off  offers to settle the accounts( which is unlikely)


but faster than 12 years if you do continue to live frugally , get that budget accurate and have a reasonable life at same time though 

you have to be honest with your budget, too many underestimate their budget, thinking they won't ever replace clothes, never go out at weekends and live on beans and toast .in order to repay debts as fast as possible, but what sort of a life is that 

depending on what sort of life you want to live for the next so many years determines what solution you go for.

what sourcrates suggests is the DIY repayment plan , where you do honestly know what you have left at end of month, but you don't have to officially reveal that to creditors, they will ask  and ask for your SAO, you don't legally have to provide one to them.

so if you stop paying now, let the debts default, which is when no further interest can ever be added at that point, then set up standing orders,( never a direct debit  or a recurring card payment, which the creditor will ask you to do via their website, you don't have to ) ( standing  order only puts you in charge , not them ) you get their bank account info on any of their letters and make steady repayments at your speed and your amounts 


(if you stop paying now and by the time the debts default, you will have saved up a nice healthy fighting fund , which can be put to use at a latter date) who cares about your credit file, it will be shot to pieces, but it will recover faster and anyway , getting out of debt is more important than a super credit file at the moment 

the creditors always usually accept without any further questions and you just standing  order plan let it run and run.

eventually debts get sold on, and at that point you can write to ask for any offers if you can pay in full., usually they ask where is the money coming from , you just say a third party.( you have raised this money by not giving them everything you can afford monthly.a secret fighting fund so to speak)

sometimes they write to you with an offer.

you save  up some every month in your bank or. biscuit tin or whatever ever., your fund to go towards any future offers they give you

these offers aren't guaranteed, you could wait a few years before you get a good offer.

some only give you a good offer once you have shown them a SAO, that's the ones you wrote to for an offer 

but some write to you out the blue with a straight forward no questions asked discount price to close your debt account

stu12345_2

a little footnote why I like dro over a  debt repayment plan. myself and wife have been on a dmp for nearly 3 years, and yes we reduced our debt balances, but we changed jobs to part time, we now should fit into a DRO and hopefully write off the remaining £22500 we still owe.

if a DRO is still at the back of your mind, you will have to make your budget fit perfectly that it is below £75 excess a month.

but remember if your son lands a better job or more hours in the 12 months dro, then his contribution to the household will rise and be expected, 
 so , the  insolvency service, regardless if you say he still only gives me very little housekeeping, the insolvency service have a fixed  guide they will use and how much he should give you.

you have to tell the insolvency service any increase your income you get from all sources in the 12 months, and potentially it could stop the dro and you are back to square one, still oweing your £23000

anyway, if you want to do a self run dmp instead , follow all the advice you have been given 

NOTE-- the key point  is to get debts to default, it's not scary, then interest will stop being added, then the balances will drop faster in your repayment plan !!!

keep us posted on how things are going  and any further questions 

RAS

Loyalroyal_2 said:

[font=courier new][b]Statement of Affairs and Personal Balance Sheet[/b][b]

Household Information[/b]

Number of adults in household........... 1

Number of children in household......... 2

Number of cars owned.................... 0[b]

Monthly Income Details[/b]

Monthly income after tax................ 1150

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

Benefits................................ 850

Other income............................ 262[b]

Total monthly income.................... 2262[/b][b]

Monthly Expense Details[/b]

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

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

Rent.................................... 797

Management charge (leasehold property).. 0

Council tax............................. 237

Electricity............................. 167

Gas..................................... 0

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

Water rates............................. 35

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

Mobile phone............................ 31

TV Licence.............................. 15

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

Internet Services....................... 78

Groceries etc. ......................... 360

Clothing................................ 60

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

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

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

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

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

Other travel............................ 40

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

Other child related expenses............ 30

Medical (prescriptions, dentist etc).... 10

Pet insurance/vet bills................. 10

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

Contents insurance...................... 12

Life assurance ......................... 10

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

Presents (birthday, christmas etc)...... 15

Haircuts................................ 10

Entertainment........................... 50

Holiday................................. 60

Emergency fund.......................... 30

(Unnamed monthly expense)............... 0

gym..................................... 28

appliance cover......................... 25[b]

Total monthly expenses.................. 2110[/b]

[b]

Assets[/b]

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

credit card....................10000.....162.......17

credit card....................5885......130.......20

credit card....................6549......73........25

Loan ..........................611.......18........29[b]

Total unsecured debts..........23045.....383.......-  [/b]

[b]

Monthly Budget Summary[/b]

Total monthly income.................... 2,262

Expenses (including HP & secured debts). 2,110

Available for debt repayments........... 152

Monthly UNsecured debt repayments....... 383[b]

Amount short for making debt repayments. -231[/b]

[b]Personal Balance Sheet Summary[/b]

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

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

Total Unsecured debt.................... -23,045[b]

Net Assets.............................. -23,045[/b]

[i]Created using the SOA calculator at www.stoozing.com. 

Reproduced on Moneysavingexpert with permission, using other browser.[/i][/font]

Just re-read this thread and realised your elder child's age. There's an issue with with that as by law and according to the benefit and CMS systems, they are an adult so you need to adjust your SOA accordingly. Managing finances when you are on benefits and in debt with a young adult in the house like being between a rook and a hard place.

They aren't really allowed support to live separately but you can't claim benefits to them either. So they need to start working full-time and to put some money towards CT, bills and food. You wouldn't be able to claim stuff for them like clothing, holidays, activities in a formal debt budget. Harsh but a lot better than trying to rent themself and survive on a low income. May get better if the new Government stop age deductions for minimum age regulations.

But in the short-term try to live on your revised budget for a while. Tweak that as needed and hope that in two year's time the financial situation improves. 

The first steps are to open a new basic bank account if you owe anything to your existing bank and another one also not associated with any banking group to whom you owe anything. Second, get your salary paid into the basic account, stop paying your creditors and at the beginning of the pay month transfer your surplus into second account to build an emergency fund as you won't have access to further credit. Your adult child needs to understand that their needs aren't emergencies and need to start putting money aside each month for them.

You can tell the creditors not to phone, text or email you. You need to keep track of letters though. Once a week, open and file. You are looking for default letters after which the interest and fees halt and you know your credit record will improve over time. That's when you start to make payments towards your debts which you may increase when your emergency fund is established.

Andyjflet

Quick note on the budget if you are still looking to reduce costs?

Gym membership, its summer, exercise outside at least until end of September, walking is great for mental health.

Appliance cover. Not worth it, thats £300 a year in your pocket

Holidays??

Floss

Can you trim your Internet from £78? I pay £30 a month for superfast fibre, which enables me to work from home, plus £5 for basic Netflix.
Holidays are a luxury at the moment - they aren't essential to a child's wellbeing, regardless of what they tell you! Lots of families don't take holidays but have cheap & fun days out instead.
Save the appliance care into your emergency fund, I did that & soon had enough for a new washer when mine died. 

Loyalroyal_2

Good morning 

I have had 2 letters from one cc company a notice of default sums and notice of sum of arrears do I just file these away?

sourcrates

Loyalroyal_2 said:

Good morning 

I have had 2 letters from one cc company a notice of default sums and notice of sum of arrears do I just file these away?

Yep, they are just reminding you, you are behind with your payments, that`s all.

Loyalroyal_2

Had my first default notice from Lloyds 

Default Notice served under section 87(1) of the Consumer Credit Act 1974

How your credit card agreement has been broken

Your credit card agreement says that you must pay the minimum payment each month. We haven't received the payments due, which means you've broken the terms of the agreement.

The total amount of missed payments is now £xxxThe missing payments are known as arrears.

We need you to make a payment

Please pay £xxx into this account by 23 November 2024 to clear the arrears.

If the action required by this notice is taken before the date shown, the action below will not be taken in respect of the breach.

If you do not take the action required by this notice before the date shown then the further action set out below may be taken against you.

What will happen if we don't receive the arrears payment

• We'll end the agreement with you unless you make an arrangement with us to repay the arrears.
• If we end the agreement, we'll ask you to pay the total balance owing under the agreement immediately, not just the arrears.
• If we end the agreement we'll register a default with credit reference agencies no less than 28 days from the date of this letter.
  If your account conditions allow we may also transfer money from any other accounts you have with us to pay off or reduce the amount owed on this account. If we do this, we'll write to let you know.
  We may ask a debt collection company to collect the full amount owed on our behalf.
  We may sell the debt to an external company who may decide to take you to court to recover what's owed. If we do this, we'll also need to pass the details of your financial circumstances and recent payments to them.

How to get help if you need it

Ií you are not sure what to do, you should get help as soon as possible. The Government's Money Helper website can help you find free debt advice and support, or you can cage a of 4

I am assuming I just let it go past the 23rd 

What happens if they send it to a debt collection company?? 

Grumpelstiltskin

'What happens if they send it to a debt collection company??'

You just stat getting letters from them.

sourcrates

I last commented on this thread back in July, so its taken 4 months for the first defaults to come through.

What strategy are you employing here OP?

Last I heard you were considering self managed DMP and waiting for defaults first, is that still the plan?

As stated in one of my other posts, expect your accounts to be assigned to a debt collector, or sold to a 3rd party company, or a combination of both, you just deal with whoever writes to you, once defaulted you are good to go with your plan.