Sanity check my plan please. Currently on Maternity leave and panicking about life and finances

jmarquez

Hi everyone, I have been lurking here for a while and found some excellent advice. I was hoping someone can also advise on my situation as I am now in a situation where I can't afford all my minimum repayments for unsecured debts. I have posted my SOA below. This is my current maternity leave income + my share of the household expenses. My maternity pay will drop significantly lower from February onwards.

My plan is outlined below, please can someone advice if it sounds sane. Please can you also share any insights if you've dealt with any of my creditors below and what I might expect from them? My creditors are Halifax, Castle Community Bank, Drafty, Salad Money and Paypal Credit


Self manage DMP: 

1. I have created a new basic bank account with Monzo and will arrange for my salary and child benefits to go in here. I will manually switch all priority debt direct debits to this account
2. Cancel all DDs to unsecured debt creditor. Basically stop paying them. 
3. Generate a new email address and PAYG number and use this as my contact details for unsecured debt creditors
4. Ignore contact from creditors until I get a notice of default and default registered on my credit file
5. Once I have received notice of default, I will then make contact with each individual creditor and make arrangements to pay of what I can afford.

As mentioned above, my maternity pay will start to drop from February onwards to Feb (£987), March (£789) and April (£763). When I return back to work at reduce hours 0.5 FTE my income will be around £1290

Thank you so so  much for any help or insight!!

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

Household Information[/b]

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

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

Number of cars owned.................... 1[b]

Monthly Income Details[/b]

Monthly income after tax................ 1857

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

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

Other income............................ 0[b]

Total monthly income.................... 1857[/b][b]

Monthly Expense Details[/b]

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

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

Rent.................................... 653

Management charge (leasehold property).. 0

Council tax............................. 99

Electricity............................. 36

Gas..................................... 36

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

Water rates............................. 25

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

Mobile phone............................ 33

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

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

Internet Services....................... 18

Groceries etc. ......................... 200

Clothing................................ 10

Petrol/diesel........................... 120

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

Car Insurance........................... 23

Car maintenance (including MOT)......... 20

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

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

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

Other child related expenses............ 7

Medical (prescriptions, dentist etc).... 26

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

Buildings insurance..................... 8

Contents insurance...................... 0

Life assurance ......................... 11

Other insurance......................... 9

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

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

Entertainment........................... 20

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

Emergency fund.......................... 25

Savings................................. 15

Family support.......................... 40[b]

Total monthly expenses.................. 1469[/b]

[b]

Assets[/b]

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

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

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

Car(s).................................. 900

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

Total Assets............................ 900[/b]

[b]

No Secured nor Hire Purchase Debts[/b]

[b]Unsecured Debts[/b]

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

Halifax Loan...................8148......495.......22.44

Halifax Overdraft..............1000......35........0

Castle Community Bank..........1946......173.6.....31.85

Drafty.........................1000......101.......96.2

Paypal.........................1983......72.82.....21.9

Salad Money....................789.92....86.79.....79.5

Castle Community Bank..........2365.82...173.6.....26.17[b]

Total unsecured debts..........17232.74..1137.81...-  [/b]

[b]

Monthly Budget Summary[/b]

Total monthly income.................... 1,857

Expenses (including HP & secured debts). 1,469

Available for debt repayments........... 388

Monthly UNsecured debt repayments....... 1,137.81[b]

Amount short for making debt repayments. -749.81[/b]

[b]Personal Balance Sheet Summary[/b]

Total assets (things you own)........... 900

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

Total Unsecured debt.................... -17,232.74[b]

Net Assets.............................. -16,332.74[/b]

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

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

sammyjammy

Good plan but you could apply for a DRO once your maternity pay reduces/you are back to work.  Is the second adult in the house your partner?

jmarquez

sammyjammy said:

Good plan but you could apply for a DRO once your maternity pay reduces/you are back to work.  Is the second adult in the house your partner?

Thank you! Yes, my husband is the other adult. I've divided up the expenses 50/50. I will of course adjust the expenses division once my maternity income starts to drop. Do you have any advice about the DRO? Is Citizens advice the best people to go to with regards to this? Thanks so much!

RAS

You and you partner need to adjust your shares of the household expenses to reflect income now. Has your partner also got debts? If so those need addressing. Where is the Child Benefit? What is the HP for? And what is Family Support?

You claim to pay into savings and emergency fund? But have no assets other than the car?

You need to be aware that your Community Bank will be far less tolerant of defaults than your other creditors. They are more likely to go for CCJs to secure the debt as they don't have the same financial cushion as the major players.

So you need to engage with them sooner rather later.

I'd recommend that you and your partner do a current whole household SOA for your own purposes, and another for when you return to work. As you may well need to adjust the budget to allow for the realities of your incomes and responsibilities? I'd add that even if you are re-using baby1's clothes and buying from charity shops, £10 a month isn't going to cloth 2 adults and a child.

And check whether you can apply for any benefits?

powerspowers

If you are dropping your hours to care for your children, then your partner should be covering a bigger share of the expenses. Unless they are also going to 0.5? 

ManyWays

The overdraft, are you in this every day of the month and was it like this when you took out the Halifax loan.

How long have you been borrowing from Drafty for? 

jmarquez

Hello everyone. Thanks for all the insight. We have applied for Universal Credit and my husband now has a new  job. I went through Stepchange and they came up with £194 as the amount I can throw towards a DMP. However, as per the advice of most in this group I was hoping to default on debts first before arranging payments. I am happy to hold with Stepchange as I haven't completed the process with them yet. However, as Ras mentioned above I'm a bit worried about Community Finance as they may not be as tolerant with defaults. Should I offer them a token payment for now? I last paid them on 1 Oct 2024 so I have now missed 3 payments (With the 4th missed payment happening on 1st Feb). Thoughts? 

Thank you! 

jmarquez

Hello everyone. I went through Stepchange and they came up with £194 as the amount I can throw towards a DMP. I am happy with this, however, as per the advice of most in this group I was hoping to default on debts first before arranging payments.

I am happy to hold with Stepchange as I haven't completed the process with them yet. However,  I'm a bit worried about Community Finance as they may not be as tolerant of defaults as mentioned in this forum. Should I offer them a token payment for now while I wait for all other debts to default? I last paid my Community Finance loan on 1 Oct 2024 so I have now missed 3 payments (With the 4th missed payment happening on 1st Feb). 

My creditors are below: b]Unsecured Debts[/b]

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

Halifax Loan...................8148......495.......22.44

Halifax Overdraft..............1000......35........0

Castle Community Bank..........1946......173.6.....31.85

Drafty.........................1000......101.......96.2

Paypal.........................1983......72.82.....21.9

Salad Money....................789.92....86.79.....79.5

Castle Community Bank..........2365.82...173.6.....26.17[b]

Total unsecured debts..........17232.74..1137.81...-  [/b]

Thank you!

sourcrates

Best to stick to just one thread per subject, so I have merged your posts here.

You have two loans with them, yes?

According to their website, they work with stepchange and are approachable if the payments become unaffordable.

If your worried about what action they may take, simply talk to them, tell them your plan, to get all accounts defaulted and then work out an affordable payment plan.

Why sit worrying about it, debt management is all about you re-taking control of your finances, well why not start with this issue, and that`s one ticked off your list.

We don`t normally recommend talking to lenders prior to default, but credit unions can get legal if ignored, so its in your best interests.