Advice for dealing with debt

Lettingissues77

We have 4 kids so 2 teenagers. A 6 year old and a 3 year old. 

HP is a few months in. 

I would imagine our financial situation is going to improve, I will have £200 extra a month from September then another £100 a month extra from next March. My husband was only able to find part-time work and is hoping to be able to find something full-time in the next few months. Which would make a considerable difference. I know this is not a popular option on the forum. But I think the best solution would be to consolidate debt so I am paying lower interest. But I don’t think I can get any.

Lettingissues77

I would be reluctant to change car, as our old one was costing us a fortune as there was always something wrong. Also it’s a very big car. Which we needed. 

So the pro’s of a DMP would be I would have approx £400 a month more disposable income. And I could clear my debt faster. 

The negatives would be obviously I would have defaults on my file for 6 years. And I would no longer have any lines of credit. Plus dealing with the whole process. 

Thank you for all your help. I have a lot to think about. 

fatbelly

I can see the appeal of a consolidation loan but I don't think you will get one.

It is looking like a dmp, particularly if you want to keep the car

https://forums.moneysavingexpert.com/discussion/6496941/in-debt-and-wannabe-debt-free-first-steps-to-take-are-here-please-read-then-ask-questions

Rob5342

Lettingissues77 said:

The negatives would be obviously I would have defaults on my file for 6 years. And I would no longer have any lines of credit. Plus dealing with the whole process. 

If you are struggling with your current debts then you wouldn't want to take on additional borrowing anyway, and given your level of debt people might say no even with no defaults, so I'd question how beneficial not having default would actually be. DMPs are very easy to deal with, you just make the payments you can afford and adjust them accordingly if your income changes. 

ManyWays

Clothing................................ 50 way too low for 2 adults and 4 children and uniforms as well

Other child related expenses............ 0 school trips? pocket money? 
Emergency fund.......................... 0  unsafe

I think this looks like a clear DMP even if you cut the presents down a bit. And affordability complaints to Amex and probably RBS for that large loan.

Lettingissues77

I don’t think I could make affordability complaints as the large loan was given when our financial situation was better when my husband was working, and with the AMEX they increased my credit limit to £10000 when my situation was good. And then reduced it down to what I owe, when it became clear I was struggling (think spending more than I was paying off triggered it.) 

My husband has lost his job since I posted. He has a few interviews lined up but I am going to struggle to pay the bills this month and am thinking rather than just default to go down the DMP route. 

Grumpelstiltskin

Do not start a DMP until your debts have defaulted.

If you start before defaults you will get Arrangement to Pay markers, these stay on your credit report for 6 years after your final payment. So if it takes you 4 years to clear it stays on your credit report for 10 years.

Once a debt has defaulted it disappears from your credit report in 6 years  even if it hasn't been cleared.


Don't make any payments to unsecured debts and if you have any spare money save it towards an emergency fund.

Lettingissues77

That was what I was planning as I think I can build a decent emergency fund in the period. I have two loans and an overdraft with the bank I have my current account with.

I was planning to open an account with starling and move my wage to go into that. Would RBS then also close my accounts when I defaulted on the loans? 

fatbelly

They may well use your overdraft to 'pay' themselves for a few months.

This is why you need a bank account, unconnected to your debts, for your income and essential expenditure

Lettingissues77

It is maxed out! I have been living in it. But what happens with them as if nothing goes in it will technically go over the agreed limit.