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Advice on potentially defaulting credit cardpaymenst

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hollinspaddington
hollinspaddington Posts: 10 Forumite
Name Dropper Photogenic First Post
in Debt-free wannabe
Hi, need some advice, I have 3 maxed out credit cards, and 2 catalogue debts. Total around £21K. I can afford the minimum but it’s going to take years to pay off.  I’m thinking of defaulting, but do I have to do that on all my open credit accounts or can I just default on the credit cards. My thinking is if I can build up an emergency fund over six months I won’t have to rely on credit when the car breaks down. I am pretty clueless. Thank you
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Comments

  • 13thlegion
    13thlegion Posts: 117 Forumite
    100 Posts Second Anniversary Name Dropper
    Hi. You've come to the right place and well done for wanting to get yourself sorted 

    This thread will help with one starter information https://forums.moneysavingexpert.com/discussion/6496941/in-debt-and-wannabe-debt-free-first-steps-to-take-are-here-please-read-then-ask-questions#latest
    My Debt free diary
    https://forums.moneysavingexpert.com/discussion/6492297/10-000-steps-1-step-at-a-time
  • ManyWays
    ManyWays Posts: 1,344 Forumite
    1,000 Posts Fifth Anniversary Name Dropper
    So this depends on what the other open accounts are. Obviously you have to keep paying the car finance! And you dont want to default any credit cards in 0% offers unless you are sure you have no other choice, its probably better to default on loans before them...

    Could you post a Statement of Affairs here, as it usually help to talk about your specific situation rather than generalities which may not be right for you. https://www.stoozing.com/soa.php 
  • EssexHebridean
    EssexHebridean Posts: 24,424 Forumite
    Part of the Furniture 10,000 Posts Name Dropper Photogenic
    SOA is a brilliant first place to start.

    It's a risky game deciding that some credit is good, and you want to keep it open, but other credit is bad, and you want to default. You can differentiate easily between secured debt (like some car finance, a finance deal to purchase furniture, or a mortgage for example) and unsecured debt (standard loans, credit cards, storecards). You can ignore the first group for the purposes of this - you just continue to pay them as normal. The issue is that if you keep some lines of credit in that second group open, the temptation is always going to be there to use them for things that aren't in your budget, and that is exactly the situation you need to step away from. No good working to clear off £10k in credit card debt if you emerge from that with another £10k on storecards, paypal credit etc! 

    Generally, if you are dealing with problematic debt, the ideal is to get your budget into a position where it covers your priority and necessary discretionary spending, with some left over for saving, some left over for a small amount of "fun money" aka entertainment budget, and then a further amount to cover a payment to debt by way of a DMP - either self managed or through one of the free debt charities. 
    🎉 MORTGAGE FREE (First time!) 30/09/2016 🎉 And now we go again…New mortgage taken 01/09/23 🏡
    Balance as at 01/09/23 = £115,000.00 Balance as at 31/12/23 = £112,000.00
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  • hollinspaddington
    hollinspaddington Posts: 10 Forumite
    Name Dropper Photogenic First Post
    Thanks ever so much. I will do the SOA and post on .here shortly 👍
  • hollinspaddington
    hollinspaddington Posts: 10 Forumite
    Name Dropper Photogenic First Post
    [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......... 1 17
    Number of cars owned.................... 2[b]

    Monthly Income Details[/b]
    Monthly income after tax................ 207.52
    Partners monthly income after tax....... 0
    Benefits................................ 3066.58
    Other income............................ 1345.83[b]
    Total monthly income.................... 4619.93[/b][b]

    Monthly Expense Details[/b]
    Mortgage................................ 0
    Secured/HP loan repayments.............. 197.6
    Rent.................................... 1250
    Management charge (leasehold property).. 0
    Council tax............................. 35
    Electricity............................. 65
    Gas..................................... 65
    Oil..................................... 0
    Water rates............................. 75
    Telephone (land line)................... 0
    Mobile phone............................ 46
    TV Licence.............................. 13.25
    Satellite/Cable TV...................... 80
    Internet Services....................... 36.82
    Groceries etc. ......................... 600
    Clothing................................ 50
    Petrol/diesel........................... 150
    Road tax................................ 16.31
    Car Insurance........................... 48.13
    Car maintenance (including MOT)......... 60
    Car parking............................. 0
    Other travel............................ 0
    Childcare/nursery....................... 0
    Other child related expenses............ 290
    Medical (prescriptions, dentist etc).... 60
    Pet insurance/vet bills................. 62
    Buildings insurance..................... 0
    Contents insurance...................... 15.49
    Life assurance ......................... 28.89
    Other insurance......................... 0
    Presents (birthday, christmas etc)...... 25
    Haircuts................................ 30
    Entertainment........................... 50
    Holiday................................. 115
    Emergency fund.......................... 0[b]
    Total monthly expenses.................. 3464.49[/b]
    [b]

    Assets[/b]
    Cash.................................... 0
    House value (Gross)..................... 0
    Shares and bonds........................ 0
    Car(s).................................. 1500
    Other assets............................ 0[b]
    Total Assets............................ 1500[/b]
    [b]

    Secured & HP Debts[/b]
    Description....................Debt......Monthly...APR
    Mortgage...................... 0........(0)........0
    Hire Purchase (HP) debt ...... 4547.64..(197.6)....11.9[b]
    Total secured & HP debts...... 4547.64...-.........-   [/b]

    [b]Unsecured Debts[/b]
    Description....................Debt......Monthly...APR
    Catalogue me...................610.13....25.47.....64.9
    Catalogue husband..............1694......100.......44.9
    Catalogue husband..............1018.32...40.57.....24.9
    Credit card husband ...........4700......200.......21.9
    Credit card me.................4483.4....130.......25.6
    Credit card me.................7005.13...390.......42.4
    Credit card me.................7050......250.......24.9
    Online credit .................979.21....37........23.9
    Catalogue me...................910.29....45.8......21.9[b]
    Total unsecured debts..........28450.48..1218.84...-  [/b]

    [b]
    Monthly Budget Summary[/b]
    Total monthly income.................... 4,619.93
    Expenses (including HP & secured debts). 3,464.49
    Available for debt repayments........... 1,155.44
    Monthly UNsecured debt repayments....... 1,218.84[b]
    Amount short for making debt repayments. -63.4[/b]

    [b]Personal Balance Sheet Summary[/b]
    Total assets (things you own)........... 1,500
    Total HP & Secured debt................. -4,547.64
    Total Unsecured debt.................... -28,450.48[b]
    Net Assets.............................. -31,498.12[/b]
  • hollinspaddington
    hollinspaddington Posts: 10 Forumite
    Name Dropper Photogenic First Post
    For context. Husband is retired and now severely disabled, I have a small self employed business and the income above is the monthly net earnings. I am a carer for my husband. 
  • RAS
    RAS Posts: 35,604 Forumite
    Part of the Furniture 10,000 Posts Name Dropper
    hollinspaddington said:
    [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......... 1 17
    Number of cars owned.................... 2[b]

    Monthly Income Details[/b]
    Monthly income after tax................ 207.52
    Partners monthly income after tax....... 0
    Benefits................................ 3066.58
    Other income............................ 1345.83[b]
    Total monthly income.................... 4619.93[/b][b]

    Monthly Expense Details[/b]
    Mortgage................................ 0
    Secured/HP loan repayments.............. 197.6 is this a car?
    Rent.................................... 1250
    Management charge (leasehold property).. 0
    Council tax............................. 35
    Electricity............................. 65
    Gas..................................... 65
    Oil..................................... 0
    Water rates............................. 75
    Telephone (land line)................... 0
    Mobile phone............................ 46 can you review your packages?
    TV Licence.............................. 13.25 it's £14.20 I think so you need to edit this
    Satellite/Cable TV...................... 80 - you simply cannot afford this
    Internet Services....................... 36.82
    Groceries etc. ......................... 600 - this is very high for three adults. Aim to reduce by £150-200
    Clothing................................ 50 - with a teenager?
    Petrol/diesel........................... 150
    Road tax................................ 16.31
    Car Insurance........................... 48.13
    Car maintenance (including MOT)......... 60
    Car parking............................. 0 - never?
    Other travel............................ 0
    Childcare/nursery....................... 0
    Other child related expenses............ 290 - what is this? As really you're struggling
    Medical (prescriptions, dentist etc).... 60
    Pet insurance/vet bills................. 62
    Buildings insurance..................... 0
    Contents insurance...................... 15.49
    Life assurance ......................... 28.89
    Other insurance......................... 0
    Presents (birthday, christmas etc)...... 25
    Haircuts................................ 30
    Entertainment........................... 50
    Holiday................................. 115 - is this booked? How much is the total package? You're not going to be able to afford this going forward.
    Emergency fund.......................... 0[b]
    Total monthly expenses.................. 3464.49[/b]
    [b]

    Assets[/b]
    Cash.................................... 0
    House value (Gross)..................... 0
    Shares and bonds........................ 0
    Car(s).................................. 1500 is that the Parker's price?
    Other assets............................ 0[b]
    Total Assets............................ 1500[/b]
    [b]

    Secured & HP Debts[/b]
    Description....................Debt......Monthly...APR
    Mortgage...................... 0........(0)........0
    Hire Purchase (HP) debt ...... 4547.64..(197.6)....11.9[b] what is this for?
    Total secured & HP debts...... 4547.64...-.........-   [/b]

    [b]Unsecured Debts[/b]
    Description....................Debt......Monthly...APR
    Catalogue me...................610.13....25.47.....64.9
    Catalogue husband..............1694......100.......44.9
    Catalogue husband..............1018.32...40.57.....24.9
    Credit card husband ...........4700......200.......21.9
    Credit card me.................4483.4....130.......25.6
    Credit card me.................7005.13...390.......42.4
    Credit card me.................7050......250.......24.9
    Online credit .................979.21....37........23.9
    Catalogue me...................910.29....45.8......21.9[b]
    Total unsecured debts..........28450.48..1218.84...-  [/b]

    [b]
    Monthly Budget Summary[/b]
    Total monthly income.................... 4,619.93
    Expenses (including HP & secured debts). 3,464.49
    Available for debt repayments........... 1,155.44
    Monthly UNsecured debt repayments....... 1,218.84[b]
    Amount short for making debt repayments. -63.4[/b]

    [b]Personal Balance Sheet Summary[/b]
    Total assets (things you own)........... 1,500
    Total HP & Secured debt................. -4,547.64
    Total Unsecured debt.................... -28,450.48[b]
    Net Assets.............................. -31,498.12[/b]
    This got buried a bit but a few thoughts. Have been fairly brutal because you're in a sticky spot. 

    I also suspect that this is not based on what you have spent in the last year, as much as what you think you need to spend to balance the budget? It would be worth getting the last year's statements for all accounts and working out where the money has gone.

    You could both do DROs but need advice on the surplus income side given you are on benefits? You could stop paying and wait for the debts to default, save an emergency fund but could get into a tangle with the benefits regulations on savings, if those are means-tested.

    You've both been buying stuff, so what do you have that you can sell? 

    And both of you need to remove your cards from the catalogue sites and discuss jointly any further on-line purchases.
    If you've have not made a mistake, you've made nothing
  • sourcrates
    sourcrates Posts: 31,557 Ambassador
    Part of the Furniture 10,000 Posts I've been Money Tipped! Name Dropper
    hollinspaddington said:
    For context. Husband is retired and now severely disabled, I have a small self employed business and the income above is the monthly net earnings. I am a carer for my husband. 
    You have a reasonable income, and currently have £1100 with which to make debt repayments without any budget cutting whatsoever.

    Proceed on the basis of getting your husbands debts written off due to his medical condition, that removes around £7 grand, the rest can be easily dropped into debt management, say £700 a month, over 30 months, debt free.
    I’m a Forum Ambassador and I support the Forum Team on the Debt free wannabe, Credit file and ratings, and Bankruptcy and living with it boards. If you need any help on these boards, do let me know. Please note that Ambassadors are not moderators. Any posts you spot in breach of the Forum Rules should be reported via the report button, or by emailing forumteam@moneysavingexpert.com. All views are my own and not the official line of MoneySavingExpert.For free non-judgemental debt advice, contact either Stepchange, National Debtline, or CitizensAdviceBureaux.Link to SOA Calculator- https://www.stoozing.com/soa.php The "provit letter" is here-https://forums.moneysavingexpert.com/discussion/2607247/letter-when-you-know-nothing-about-about-the-debt-aka-prove-it-letter
  • hollinspaddington
    hollinspaddington Posts: 10 Forumite
    Name Dropper Photogenic First Post
    Thanks for this. Brutal is good, and you’re right. I’m a bit worried about DRO as we rent and should we have to move (no indication that this would happen at all), but we rent privately so who knows.  I would worry that we would struggle to get somewhere else. This is 9ne of the things 8 beat myself up about and also why I want t9 get this sorted as I realise the freedom it would give us. 

    On the second point, how would we get my husbands debt written off? I didn’t know you could do that.

    thank you
  • hollinspaddington
    hollinspaddington Posts: 10 Forumite
    Name Dropper Photogenic First Post
    Household Information[/b]
    Number of adults in household........... 2
    Number of children in household......... 1 17
    Number of cars owned.................... 2[b]

    Monthly Income Details[/b]
    Monthly income after tax................ 207.52
    Partners monthly income after tax....... 0
    Benefits................................ 3066.58
    Other income............................ 1345.83[b]
    Total monthly income.................... 4619.93[/b][b]

    Monthly Expense Details[/b]
    Mortgage................................ 0
    Secured/HP loan repayments.............. 197.6 is this a car? Yes it is
    Rent.................................... 1250
    Management charge (leasehold property).. 0
    Council tax............................. 35
    Electricity............................. 65
    Gas..................................... 65
    Oil..................................... 0
    Water rates............................. 75
    Telephone (land line)................... 0
    Mobile phone............................ 46 can you review your packages? They are phone and separate sim only 
    TV Licence.............................. 13.25 it's £14.20 I think so you need to edit this
    Satellite/Cable TV...................... 80 - you simply cannot afford this
    Internet Services....................... 36.82
    Groceries etc. ......................... 600 - this is very high for three adults. Aim to reduce by £150-200 👍
    Clothing................................ 50 - with a teenager? I have to battle they would wear stuff with holes if I’d let them 
    Petrol/diesel........................... 150
    Road tax................................ 16.31
    Car Insurance........................... 48.13
    Car maintenance (including MOT)......... 60
    Car parking............................. 5
    Other travel............................ 0
    Childcare/nursery....................... 0
    Other child related expenses............ 290 - what is this? As really you're struggling driving lessons 
    Medical (prescriptions, dentist etc).... 60
    Pet insurance/vet bills................. 62
    Buildings insurance..................... 0
    Contents insurance...................... 15.49
    Life assurance ......................... 28.89
    Other insurance......................... 0
    Presents (birthday, christmas etc)...... 25
    Haircuts................................ 30
    Entertainment........................... 50
    Holiday................................. 115 - is this booked? How much is the total package? You're not going to be able to afford this going forward. No it’s not booked. 
    Emergency fund.......................... 0[b]
    Total monthly expenses.................. 3464.49[/b]
    [b]

    Assets[/b]
    Cash.................................... 0
    House value (Gross)..................... 0
    Shares and bonds........................ 0
    Car(s).................................. 1500 is that the Parker's price? Yes it’s the van for my business
    Other assets............................ 0[b]
    Total Assets............................ 1500[/b]
    [b]

    Secured & HP Debts[/b]
    Description....................Debt......Monthly...APR
    Mortgage...................... 0........(0)........0
    Hire Purchase (HP) debt ...... 4547.64..(197.6)....11.9[b] what is this for? This is what is outstanding on the car
    Total secured & HP debts...... 4547.64...-.........-   [/b]

    [b]Unsecured Debts[/b]
    Description....................Debt......Monthly...APR
    Catalogue me...................610.13....25.47.....64.9
    Catalogue husband..............1694......100.......44.9
    Catalogue husband..............1018.32...40.57.....24.9
    Credit card husband ...........4700......200.......21.9
    Credit card me.................4483.4....130.......25.6
    Credit card me.................7005.13...390.......42.4
    Credit card me.................7050......250.......24.9
    Online credit .................979.21....37........23.9
    Catalogue me...................910.29....45.8......21.9[b]
    Total unsecured debts..........28450.48..1218.84...-  [/b]

    [b]
    Monthly Budget Summary[/b]
    Total monthly income.................... 4,619.93
    Expenses (including HP & secured debts). 3,464.49
    Available for debt repayments........... 1,155.44
    Monthly UNsecured debt repayments....... 1,218.84[b]
    Amount short for making debt repayments. -63.4[/b]

    [b]Personal Balance Sheet Summary[/b]
    Total assets (things you own)........... 1,500
    Total HP & Secured debt................. -4,547.64
    Total Unsecured debt.................... -28,450.48[b]
    Net Assets.............................. -31,498.12[/b]
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