HELP

curtain8765

Hi, 

Please excuse me as I’m completely out of my comfort zone, but I’m not not sleeping due to the worry of building debt. 😥

I have a credit card that is currently at 4,000 and my interest alone is over £100 a month, I can barely afford to pay over £100 but I make sure I do to avoid any further charges etc, this means I’m not able to cut any of the £4000 down and also leaves me with little to live on, I feel so trapped 🥲 I’ve tried to apply for a balance transfer with 0% interest for a certain amount of time but because of my low income I don’t qualify. I’m completely stuck and unsure where to turn, I’ve searched online and just feel so overwhelmed with all the information so I’ve now landed here, in hope there’s no judgement and hopefully some help/advise 😥💔 

sourcrates

Hi, well if its unaffordable, stop paying it, stands to reason what the answer is doesn't it, what else can you do???

Its a non essential, non priority debt, so if that`s your only option, so be it.

You can write to the card company and explain you can`t afford the payments, they may stop or suspend interest for you, but it won`t be for that long, its much better to take back control yourself, stop paying it, allow it to default, and then pay back what you can afford when the debt gets sold 6/8 months down the line.

Nothing is going to happen, you will get calls/letters etc, and there's nothing stopping you telling them the issue, but by stopping payments you are addressing the problem first hand, and dealing with it straight away instantly putting more money back into your pocket.

Brie

To add on to what Sourcrates has said I would suggest you click on the link on his signature for the SOA.  This will allow you to set up your full income and expenditure which you can then post back on here for helpful advice on how to deal with money more easily.

As for getting another card with 0% - to do this you'd need to be able to afford twice as much credit as you have already which with a cut in pay is unlikely to be granted.  There's no way for a card company to know that you're going to use the new card to pay off the other debt - they must assume the worst.  So working to get rid of that debt on the first card in some way is the best way to deal with it.  Defaulting will affect your credit history and ability to get further credit for a few years but if you can find a way to budget and live within your income somehow then that won't be too much of an issue hopefully.  

fatbelly

I agree with the others.

In the early stages of a debt problem, getting everything to 0% can be enough to get you out of the hole without defaulting. But if you're at the stage where even the sub-prime lenders like Capital one won't lend then that is a sign that you've gone beyond that stage.

I've subscribed to the thread so will have a look at anything you post.

londoner2019

+1 to all the other comments. 

Re: sourcrates' comment - it sounds drastic because of the general perceptions on consumer debt, but their point stands that it's simply a non-priority debt.

First step is to take a deep breath! You're going to be ok - and you've come to the right place. This board is great for support.

HenryMSingh85

Take a deep breath. You can do this. I've got 3 kids of my own and understand the pressures that come with finances. Completing the SOA is super important. You need to understand the state of your finances - what's your income and what's your expenditure. work out what are absolutely priority bills. credit card debt is a non-priority debt. I tend to agree with the others, if you cannot afford the payments on the debt, it might be better to let is default then work out what you can pay based on the analysis of the statement of affairs. your credit score will take a hit but its a path back to restoring your finances. 

While you go through this journey, dont lose sight (or hope) that there is a better you on the other side - both in terms of your financial situation and your life generally!

tlc678910

Hi OP,
You have said that you have gone part time due to childcare costs.  Do you have a partner or Grandparent that could look after the kids if you got a second job for example on a weekend day or evening so there are no childcare costs?  Could your partner get a credit card with a balance transfer 0% offer and put the debt on that to save the interest.

Although you can use the defaulting on the debt described by previous posters that seems pretty drastic for a debt of £4000 and will have knock on effects if, for example, you want a mortgage.

Another question is if you are with a partner are they short of money?  If you have separate finances and are struggling after maternity leave and having two children it is time to think of having family finances.  You are providing childcare and your partner benefits from this so even if you and your partner don't want to pool finances they should give you extra money in recognition of you reducing your hours to care for your children.  

curtain8765

Thank you all for your replies, I know its been a few months since I last posted, I've been doing a lot of research since as truthfully when some of you advised to stop paying my debt I panicked and couldn't understand why anyone would tell me to do this, however, I now completely understand why. 

Having said that I think I've rushed into setting up a DMP rather than doing the default route, being a busy mum of 2 I just wanted to have one person/company I have to talk with to deal with all combined debts. 

Original post I stated I had a £4000 credit card but with the DMP I've added some other debts like my car loan, overdraft and another card I had £500 on, combined my debt it £13,000. 

My partner is unaware of my debt (for personal reasons which I wont go into) we are both due to renew our mortgage in Feb and now I'm worried he's going to find out about the DMP/debt, is this something that will flag up in meetings with the bank etc? 

Am I making the complete wrong choice by doing the DMP and should I default them instead?

To answer other questions, my partner pays all bills and a bigger chunk of the mortgage due to my lower income, I've just recently got a new start date for a new job local to more with more ours too. 

RAS

You are going to have to tell your partner about the debt if you are going to talk to the bank.

You can go into your current bank's website today and transfer to the best option and lock in the deal, without a credit check. Do anything else that involves a credit check and your partner will find out.

curtain8765

The meeting with the bank is with our current mortgage provider asking for a better rate or what they can offer us, so surely they wont have to do a credit check? 

EssexHebridean

What happens when your partner says they aren't particularly happy with any of the rates the current lender is offering, and they want to go elsewhere?

What happens when the current lender says you need to do an income/expenditure sheet to establish which of their products might be suitable for you?

Neither of the above are definitely going to happen, but either (or both!) could. 

The issue you have re going ahead with the DMP without letting the debts default first is that chances are they are going to be on your credit file for a fair bit longer.