I’m in a right old mess - any advice appreciated

dabear1

And to answer your questions:

The groceries are for two people and a dog.

The insurances are for my phone and laptop is probably not essential.

and I don’t really have many other subscriptions. Phone unfortunately has over a year left on it as it was a 3 year contract.

thanks again

dabear1

elsien said:

What are your other subscriptions and are you properly separating out your business expenses from your personal ones?

I was until recently but these have been coming out of my personal accounts recently as I ran out of money. I know that’s a bit silly. I do know which expenses are business though because there are only a few (web hosting, email, etc). 

Grumpelstiltskin

Does you other bank account have an overdraft facility? If so it is no good you need a basic account with no overdraft.

As soon as it is set up contact UC to get your benefit paid into it.

dabear1

sourcrates said:

Eleven creditors, self employed income, homeowner, so you can`t go bankrupt, an IVA would be to restrictive, a DRO is out, so that just leaves a DMP.

New bank account is essential, and you should cease all creditor payments now.

Doing this on a self managed basis would be the ideal scenario for you, stepchange etc will not provide help to the self employed, you would need to take advice from business debtline should you need it, but its pretty much assured a DMP will be the way forward, but its your decision to take advice or not.

We only advise waiting for defaults as it stops all interest from accruing, and gives you a clear 6 year window till your credit file recover`s, you do not have to do this, its just works out better for you.

For someone who has "basically relied on accessing credit for years and living in my overdraft" this will require a root and branch rethink of how you treat money and budgeting, you can treat creditors individually, or as a whole, its your DMP you are in charge of it.

Collection activity is to be expected, mostly it will be letters and calls, Lendable/Fluid and Creation may cause you issues, they have a tendency to use the courts after a period of time, rather than the usual debt collection route, the rest are all mainstream lenders who will just use debt collection agencies or sell your debt to a 3rd party, but you can never be 100% certain what action a creditor will take as it can vary by customer.

All I can tell you is any impending legal action must follow civil procedure rules, a letter before action (LBA) is usually first, this gives you a chance to agree terms prior to legal action, and has a 30 day return window, so a CCJ can be avoided at this point.

Lots to take in, lots to think about, we can help with most issues on this forum.

If you ned to use credit to get to your next payday then so be it, but after that you need to implement your plan.

Thanks so much for this.

The Lendable and Creation debts are worrying and I’m kicking myself because they are relatively recent. Is there any way I could continue paying those ones? They would be affordable when I start the job etc. But I know I’ve read you have to stop paying all.

Grumpelstiltskin

No you don't treat some creditors differently from others you stop paying all your creditors and realize you are not going to use credit again in the foreseeable future.

dabear1

Grumpelstiltskin said:

Does you other bank account have an overdraft facility? If so it is no good you need a basic account with no overdraft.

As soon as it is set up contact UC to get your benefit paid into it.

No, it doesn’t have an overdraft. 

Grumpelstiltskin

dabear1 said:

Grumpelstiltskin said:

Does you other bank account have an overdraft facility? If so it is no good you need a basic account with no overdraft.

As soon as it is set up contact UC to get your benefit paid into it.

No, it doesn’t have an overdraft. 

OK As long as it isn't connected to your other bank get your UC paid into it ASAP

katsu

dabear1 said:

sourcrates said:

Eleven creditors, self employed income, homeowner, so you can`t go bankrupt, an IVA would be to restrictive, a DRO is out, so that just leaves a DMP.

New bank account is essential, and you should cease all creditor payments now.

Doing this on a self managed basis would be the ideal scenario for you, stepchange etc will not provide help to the self employed, you would need to take advice from business debtline should you need it, but its pretty much assured a DMP will be the way forward, but its your decision to take advice or not.

We only advise waiting for defaults as it stops all interest from accruing, and gives you a clear 6 year window till your credit file recover`s, you do not have to do this, its just works out better for you.

For someone who has "basically relied on accessing credit for years and living in my overdraft" this will require a root and branch rethink of how you treat money and budgeting, you can treat creditors individually, or as a whole, its your DMP you are in charge of it.

Collection activity is to be expected, mostly it will be letters and calls, Lendable/Fluid and Creation may cause you issues, they have a tendency to use the courts after a period of time, rather than the usual debt collection route, the rest are all mainstream lenders who will just use debt collection agencies or sell your debt to a 3rd party, but you can never be 100% certain what action a creditor will take as it can vary by customer.

All I can tell you is any impending legal action must follow civil procedure rules, a letter before action (LBA) is usually first, this gives you a chance to agree terms prior to legal action, and has a 30 day return window, so a CCJ can be avoided at this point.

Lots to take in, lots to think about, we can help with most issues on this forum.

If you ned to use credit to get to your next payday then so be it, but after that you need to implement your plan.

Thanks so much for this.

The Lendable and Creation debts are worrying and I’m kicking myself because they are relatively recent. Is there any way I could continue paying those ones? They would be affordable when I start the job etc. But I know I’ve read you have to stop paying all.

If you are self-managing a DMP then you can pay these lenders if you can afford to, and you decide it's what you want to do. 

DisabledDan

dabear1 said:

Hi everyone,

I’ve been reading through many of the threads on this forum and digesting some of the incredibly helpful advice on offer here.

So, firstly, thank you. This has had a big impact on me facing up to this, hence my post today. 

Basically, I currently find myself with £17k+ of debt, £650+ monthly repayments, and very little income (although that is increasing, as I’ll explain).

It began with taking out credit cards that I used to top up my income - the usual sort of thing. 

Then, I was made redundant last year and went back to being self-employed (which I was for many years prior to getting the job).

Unfortunately, things didn’t go well, contracts falling through, and basically everything grinding to a halt. I found myself in depression, which really affected my ability to work day to day, although things have improved in that respect.

For months I was living off my dwindling savings and paying for stuff on my credit cards to keep me going. I held on to the belief that next month things would pick up etc, but everything that was on the table failed to materialise. So incredibly frustrating but that’s how the cookie crumbled. 

As my savings ran out, I signed on for Universal Credit and for the past 6 months or so I have been living on this + credit cards, and a little bit of sporadic income from self-employment and casual work.

In all honesty, I should really have looked for a job a long time ago but didn’t because self employment has always been what I wanted to do. I thought that this would be the month I would turn it around and that I would win that contract. And also burying my head in the sand somewhat. 

My monthly repayments on my debts have continued to increase and now exceed any income I have coming in. I’m basically running out of money and everything goes on keeping up with the repayments to the point I am putting food shops on more credit cards. I can’t continue doing it any longer as I have hardly any credit left. 

I also (very stupidly) took out a loan a few months ago as I didn’t have enough money to live and now that’s added almost £3k to the total amount I owe despite the loan being for £1.5k.

Oh and I’m £1.5k into my overdraft. My total debt balances are around £17.5k (see below)

Anyway, to a cut a long story short, things are starting to turn as I have changed my business direction slightly, and initially the signs are very positive. I finally have some income coming in from it. I also now have a job lined up (although part time and not the pay I would like). 

But the debts are a big problem. The repayments are eating up every single penny to the point I am putting food shops on cards, etc. 

I can’t believe I have let it get to this point and I feel incredibly ashamed if I’m truthful.

*My finances*

As I say, the problem I have is that monthly debt repayments currently exceed my income, and even with the new job and promise of increased self employed earnings it basically leaves me with more or less nothing, so I don’t really know what to do. I can’t sleep and know I need to do something fast because the money is near to running out (while it already has if you count the overdraft).

My current debts are as follows:

Credit cards:

Vanquis - £3,806.42 (next payment £170.78)

NW - £2,873.19 (next payment £71.01)

Marbles - £1,365.67 (next payment £97.58)

Fluid - £1,319.43 (next payment £45.90)

Virgin - £1,055.82 (next payment £30.96)

CapitalOne - £731.89 (next payment £40.39)

Zopa - £473.82 (next payment £23.15)

Debenhams - £465.40 (next payment £34.93)

Overdraft:

Overdraft - £1,580.85 (next payment £44.14)

Loans:

Lendable - £2,924.48 (next payment £63.50)

Buy Now Pay Later 

Creation - £926.73 (next payment £23.04)

TOTAL BALANCES: £17,523.79

TOTAL MONTHLY REPAYMENTS (EST): £662.88

I have never missed a payment so far but ironically it’s this that has drained all my money.

*Monthly Income*

Currently circa £300 UC credit + £100-£250 in casual earnings + any self-employment income (£0-£500).

Going forward from August it will hopefully be:

Job: approx £900/month 

Self-employed income (estimated:) £500/month (but that is uncertain, although I have great hopes that this will increase significantly to £1k+ in the not too distant future)

*Monthly Expenses*

Food shops - est £300

Tax payment: £27.58

TV license: £13.25

Mobile: £53.08

NHS: £11.16

Dentist: £16.66

Streaming: £5.99

Insurances: £28.48

Other subscriptions: £21.74

Travel: £50 estimated

TOTAL: £506.20

Also to mention - my situation is slightly unusual. I co-own our house outright with my brother (who I also live with) - no mortgage.

Most of the household bills (council tax, gas, electric, water, phone/broadband, pet insurance) are paid out of my brother’s account.

Prior to my problems, we would work out our expenditure each month, and work out the difference, etc, and then I’d do him a bank transfer for my share. I haven’t been able to do this for the last few months but previously it was between £200-£300 on average depending on the month.

*What to do*

I have been looking into DMPs. 

The thing that is stopping me is that I don’t know how I’m going to make it through the next month and a half. I’m already so far into my overdraft, so I am worse than having no money at all, I am already well into the minus and don’t know what I will do without any credit. I have basically relied on accessing credit for years and living in my overdraft, lol.

It also seems incredibly scary in terms of people saying I have to stop making all the repayments and getting letters/calls etc - but then I don’t think I have any other choice as if I carry on making the payments I’m just making it worse. I hate the thought of 10 different companies hounding me for missed repayments or god forbid turning up at my house. But reading on here it seems that’s the advice. Is that what a dent charity would say? Or can I pay some and not others? It’s all so confusing. 

I also don’t really know how that works in terms of not all bills coming from my account. It is complicated in terms of my self-employment and I know StepChange etc won’t help because of this. 

If it’s a DMP do I have to stop making the repayments before I am eligible? I was reading about defaulting etc.

Thanks so much for any help or advice you can offer.

Well done for taking that first step, the size of the debts are not massive but that is relative to your earnings which are not huge. I am astonished that so many lent you so much because your credit record must have shown it was not practical.

You have been given great advice by others, my feeling is that you are not confident of your income and so there is a chicken and egg situation.

A DMP will blow up your credit record for 6 years, you are in the enviable position of owning your own home, so you don't have to pay £1000+ a month on a Mortgage or as Rent.

Do not worry about the money, it never existed and was created by virtue of Fractional Reserve Lending.  Think of it as the authorised lenders are able to create money on their computers in order to eventually charge you high rates of interest.  Once they realise that you have twigged their game they will dump you and your debt, most will sell it on for perhaps 5p in the pound but the people who buy it can ask for it all.  Those new owners will eventually make offers up to 60% off and you can make deals. Really double check your basic bank account is not related to any of your creditors.

The only additional advice I would give is to bleed each credit source of 98% of the limit before you default, and to create your emergency fund.  Normally this would be the money you would have paid your creditors but you will need to pro-rata that to your income as you were living beyond your means.

Then when maxed out I would write to all the creditors and tell them you have had a nervous breakdown, ask for breathing space if you want but in my experience if you tell them you will not be paying anything to their debt moving forward it speeds things up for some.

Before you start I would get £1 PAYG sim from Tesco and create a new online email account, then update all the accounts with your new contact details, I would even get a cheap 3g phone from Freecycle so they can call you on it.  Then in a few months I would ask them to not contact you by phone, SMS or email and only Royal Mail.  This way if they share your data with the people who buy the debt chances are they will only have the new number.  On the number you use now you do not answer except to people in your phone book who are friends and family. Let caller ID withheld go to voicemail, delete your voicemail outgoing message so it does not suggest it is you.  This puts you in control and reduces mental health issues, you can turn the DEBT phone off.  You then ignore everything except a proper letter before action, not a threat like "we will need to pass this to our legal dept" blah blah. In time your emergency fund will give you options to pay off anyone who actually goes to Court but most will negotiate well before that, 20% is just a starting position, I have had up to 90% off but I went full nuke not tactical. 

You then need to go on a massive pruning exercise on the things you are spending what money you have, that means only things you NEED not things you WANT.  Think of it as a bath overflowing, you need to turn off the taps AND take the plug out.

Obviously the big numbers jump out, like £58 a month for mobile, I am guessing it is on contract but for how long for and can it be bought out. I only pay £2 a month on mobile, but MSE has plenty that average £3.50 a month.

I do not watch live TV or use BBC iPlayer so you can do the same and cut TVL, ask your brother if he wants it he can pay for it.

No sure what £11.16 is for NHS, Find out if you are eligible for lower prescription charges or NHS Prescription Prepayment Certificate (PPC) £114.50 for 12 months makes them £9.50 each.

Dentist can go, I am assuming it is some sort of Denplan?

Insurance can go, later you can fund your own through saving

I do not know what those "Other subscriptions" are but they can all be terminated. NEED not WANT.

Travel is too round a number, also could it be a business expense ?

I do not know what you do on a self employed basis, but one often needs to take a part time job to get started, after that it becomes a matter of networking to get regular gigs and marketing to keep new biz coming in.

Mostly I think what you need is to believe in yourself, you are clearly capable of the work, the issue seems to be the stress and anxiety of spinning plates and using debt to fund a lifestyle you can't afford.  You probably could afford it if you did not have that debt and cutting the debt will put you on track for that.  

For the income it just about understanding the equations

Fulltime Employment gives you a guaranteed income and you allow your employer to exploit you skills for make profit.

Self Employment you take the risk of unreliable income but you get to exploit you skills for your own profit but typically just cover living overheads

Own Biz employing others, you understand the processes and marketing, but you get the pressure of paying the Mortgage/Rent of all of your employees every month.

Zero Hours Contract - IMO this is modern day slavery, you bear the same risks of self employment, get none of the benefits and can become trapped.

You are now taking charge of that so the stress should reduce.  Ideally you learn that debt is not the answer, in fact it is always a mugs game.

recklessmurmur

I have nothing practial to offer except some reassurances. My knowledge of what to do has been 100% sourced from this forum.

If you look back at my posts, I was killing myself trying to service debts around the same total as yours. I was left with nothing, and working stupid hours to make repayments.

I stopped paying in April and am waiting for defaults before setting up my own DMP. I feel a weight lifted and can see light at the end of the tunnel. My debts will take me along time to pay off, like 10yr+, however I can feed my children & don't need to worry every day about how I will find money for the next meal.

There is hope. Take the first step & cancel the DDs. I fid it, it was a bit of a 'god, this is very real now' moment but the rest is, so far, going smoothly. I have a little emergency pot set up & a firm plan. I'm in control now, if nothing else.

Wishing you luck & love, you can do this. Xxx