Debt - ashamed and disgusted

Skulls_Roses

It's taken me a long time time to get to where i am today, to try and unstick my head from in the sand.
I have decades of poor decisions, frivolous pending, poor budgeting, life problems and everything else in between.  A lot problems stem from when i was married with (3) young children; we had a fairly big mortgage, childcare costs since we were in a different part of the world from the rest of our families and my job wasn't exactly hugely well paying although it was the first rung of the career ladder that has panned out well for me in the years since (i was a late Uni attender).  My (now ex) wife was a functioning alcoholic who had a decent career job of her own that she inexplicably gave up on without telling me; she fell into a series of low paid casual jobs that heaped the pressure on our finances.  We had a huge overdraft, credit cards, loans and payday loans that were taken out in my name sometime without my knowledge till the emails came in.  All in all a huge mess, but we ended up selling up and moving closer to family and most of the issues sorted themselves out although we were left with manageable levels of debt.
We separated (and subsequently divorced) 5 years ago and i had the chance to try and set myself up on an even footing but i have slowly slid into an unsustainable lifestyle.  I tried to do the right things, i obtained 2 basic bank accounts away from the provider that i had jointly used and tried to live my life within my means, reasonably successfully at the beginning.  I did have to take a share of some joint debts that we had and i took out a loan to cover that (since paid off in full); my credit score was shot and i took a Capital One card out to try and build my score back up which was the beginning of trouble for me.  With the costs of 3 teenage kids, cost of living and poor budgeting on my part i now have £22.5k worth of credit card (4) and loan (1) debt that makes me feel physically sick whenever i think about it.  I've told no-one as i'm ashamed that i'm 48 and in this position.  For the last year i've been robbing one credit card to pay for another and accepting limit increases as they come in but the wheels have finally come off in December where i have, for the first time since all this started, not managed to make a payment to anything.  I have an arrears on the gas/electric as well.
I've finally woken up and put a budget together with Stepchange this morning which reflects my circumstances and it looks like a DMP is the way forward for me although i haven't hit the button on it so to speak.  Having had a look across the forum, since everything is due in the nest couple of weeks, i seems that my next step is to default on my debts (utilities excepted) and cancel the direct debits and try and sort out something resembling an emergency fund.
To be honest i'm just looking for a bit of advice and that i've done/doing the right thing - it has taken me a huge amount of effort to actually write this out.  Thanks

inthezeroroom

Congratulations on taking this first step and writing it out – it's a big step.

Others will reply and ask you to post a statement of affairs (SOA), which can be pored over to offer some practical advice about where you might be overspending but not seeing it. Please take this in the spirit it's intended as everyone wants to help!

For now, just know this. I am a couple of years older than you and have recently become completely debt free after mismanaging money for the previous 30 years, basically since I was a student in the 1990s. I've made every poor decision about money there is to make: overdrafts, credit cards, loans, etc. My debts a year ago were higher than yours but obviously my situation will be different and your ability to get out of debt will come down to simply how much income you have and how much you spend. The higher your income and the more you're prepared to reduce your lifestyle, the faster you'll be out of debt.

So before you start looking at debt management plans (DMPs) and defaulting, first create a written budget (i.e. spreadsheet) and analyse your income and spending in detail. You'll need to do this for the aforementioned SOA anyway. See where you can cut spending. Can you sell anything? Do you have a car sat on the drive with a payment you can't afford? If so, get rid of it and buy a cheap 'get out of debt' car (tell people what you're doing – it's a fun exercise in itself and strangely liberating!). Then see if you can increase your income (overtime, extra job maybe) because the effect of this can be huge.

I look forward to following your journey and wish you the best of luck – you can do this!

Grumpelstiltskin

You must keep your utilities up to date, just stop paying all your unsecured debts.

One of the biggest mistakes  people make is to jump into a DMP too quickly, as you say you need to wait for defaults and in the meantime save what you can into an emergency fund.

Nothing moves fast in debt collection so hopefully you will have a few months to sort utilities out and save an emergency fund.

Don't contact your creditors all they will do is try to get you to pay them.

EssexHebridean

Nothing to be ashamed about - instead think to celebrate the fact that you are now looking to sort out your situation and take control!  Pretty much anyone who might comment with help on your thread here has at some stage been in a situation of being in debt themselves to one extent of another, so you really are in good company! 

Correct call not to proceed with the DMP until the debts have defaulted - get those DDs cancelled now to any unsecured debts as the sooner you cancel, the sooner things start improving and the clock starts to tick on those defaults. 

First step from there is to put together your SOA (Statement of Affairs) so you can see exactly where you DO stand financially and be sure that all your priority bills are accounted for and covered.  There is a link to the calculator we suggest in my signature below - use the "format for MSE" option and copy and paste into this thread and we can take a look, eye up any savings you might have missed, and hopefully also spot anything you might not have accounted for. 

sourcrates

Just some basics for starters, any form of unsecured credit debt is deemed by all, including lenders, to be non priority debt, if you can`t make your money stretch to payment, then it doesn't get paid, simple as that.

Your essential debts are mortgage/rent, utilities and council tax, as well as food etc.

Make certain they are paid, if applicable, before all else.

Get the basics covered first before even thinking about any non priority debts, they can wait.

fatbelly

I agree with the others.

Stop paying the cards and the loan. Nothing will happen for months.

See if you can catch up with gas/electric. Check your providers' websites to see if there is any assistance available. The big suppliers have Charitable Trusts that will help.

You need to be banking where you do not have debts and to save a small emergency fund.

When all that is done you can have a look at a dmp

Rob5342

I don't have much more advice to offer but I just wanted to say that you are far from alone. I was in a similair position and got into £44k of credit card debt, and I was doing all sorts of things like withdrawing cash from one card to pay in to pay off another, and then doing the same thing the other way a week later. Once I started on a DMP the stress disappeared overnight and it wasn't long before I was really starting to feel on top of things. As you mention you should wait for defaults before starting on a DMP. I made the mistake of following Stepchanges advice and started a DMP straightaway, as a result my credit report will be harmed for two years longer than it could have otherwise been (it will be clear in 2029 rather than 2027)

Skulls_Roses

Thank you for your kind words and advice   

A query if i may: i pay my Zable card with a recurring card payment rather than a direct debit which is something i cannot cancel in my banking app; similarly, i cannot change to anything other than a bank payment or debit card payment in the Zable app or i can reduce the payment value itself - there seems to be no way to cancel the payment completely?

EssexHebridean

Recurring payments like that are a nightmare. I suspect that even if you reduce the payment right down they may simply put it back up again - those payments don't have the protection that would come with a direct debit or standing order.  It  may be that the only option is to get yourself a new basic bank account opened up, manually transfer all your priority payments to come from it (don't use the account switching service or things you don't want transferring over will go across too!) and you can then close the old bank account which will have the effect of stopping the payment. 

You can formally tell the creditor that they are not to take any further payments via that method, and you can also ask your bank not to pay them anything - but there is the possibility that neither of those things will work. 

ManyWays

my Zable card with a recurring card payment rather than a direct debit which is something i cannot cancel in my banking app; similarly, i cannot change to anything other than a bank payment or debit card payment in the Zable app or i can reduce the payment value itself - there seems to be no way to cancel the payment completely?
Tell Zable you are stopping paying and tell the bank to cancel the continuous payment authority to Zable, it is your right to do this: https://www.fca.org.uk/news/news-stories/continuous-payment-authorities-it-your-right-cancel. If the bank refuses, lodge a complaint.  

If you owe any money to your current bank, then you need a new bank account anyway.

How large are your unsecured debts, do you have a mortgage or a car on finance?

sourcrates

You can cancel CPA on your banking app, click on the transaction, then click "dispute with transaction", you can get previous payments refunded and future ones cancelled.

To stop the lender refuting the above, you must inform them you don`t want them to take any further payments by CPA.