Trying to avoid DMP, thoughts please.

System

This discussion was created from comments split from: 0% credit card deals ending - sick with worry.

Dotinspace

Not sure whether to post here or start seperate thread.

I have a similar issue where I have a 0% credit card offer that ended at the start of March (Card 1) and further 0% balances that are coming to an end 31 May (Card 2) / 2 June (Card 3) / 31 July (Card 2). The total I owe across the 3 cards is £7200. My post 0% offer interest rates are: Card 1: 21.68%/ Card 2: 23.8% / Card 3: 21.9%

The debt is money I have had to spend to stay afloat as single parent, to get through a degree, and now the onset of long term health condition that has impacted how much I can work. My annual income is now only around £17600 and I have scaled back my life accordingly.

I have previouisly managed my credit card debt through 0% balance transfers as I always had new offers from the banks my credit cards are with. This is no longer the case, likely because my income has fallen dramatically since the the onset of the long term health condition and with the 0% balances nearing their end.

I have never missed a payment, am up to date with all bills, and the required montly payments for all cards are allocated in my budget. But from this month, the interest on Card 1 will outstrip what I am able to pay towards it. With the other 0% balances ending in the next months, this can quickly spiral out of control because of the limited income I have. I have checked eligability for other 0% cards and not eligable at present.

Like KeinGeld, I am trying to avoid the impacts of going on to a DMP or Breathing Space (I have spoken to StepChange, but not taken these options forward), and would like to remain in control of managing my own payments.

Any advice on adressing the interest directly with the banks? Is this advisible or will it really have the same impact as the DMP on my credit viability?

ManyWays

@dotinspace - I think you should start a separate thread where you can discuss your whole situation. Not being able to get a 0% transfer is just one symptom of your situation, and there is no easy option that will solve that symptom.
posting a Statement Of Affairs (see https://www.stoozing.com/soa.php for how to do this) is the best start for getting good suggestions. 

sourcrates

New thread created for you.

Dotinspace

Thanks for these suggstions and creating the new thread. Here is my SOA:

My current living / rent arrangement includes all utilities, council tax, TV lisense, and internet.

I do not own the car I have access to, and only pay fuel and annual road tax.

The 'savings' I have is my only buffer. I spent most of my savings trying to stay out of the benefit system, which I have not managed to do.

At the moment I do not have additional income, but when I am able I do try to take on work that is managable.

It is my hope that I will be able to increase my income over the rest of this year, but this is not certain as I have had a few failed attempts at returning to work due to health.

Household Information
Number of adults in household........... 1
Number of children in household......... 0
Number of cars owned.................... 0

Monthly Income Details[/b]
Monthly income after tax................ 0
Partners monthly income after tax....... 0
Benefits................................ 1468.17
Other income............................ 0
Total monthly income.................... 1468.17

Monthly Expense Details
Mortgage................................ 0
Secured/HP loan repayments.............. 0
Rent.................................... 750
Management charge (leasehold property).. 0
Council tax............................. 0
Electricity............................. 0
Gas..................................... 0
Oil..................................... 0
Water rates............................. 0
Telephone (land line)................... 0
Mobile phone............................ 6.9
TV Licence.............................. 0
Satellite/Cable TV...................... 0
Internet Services....................... 0
Groceries etc. ......................... 335
Clothing................................ 8.33
Petrol/diesel........................... 30
Road tax................................ 1.66
Car Insurance........................... 0
Car maintenance (including MOT)......... 0
Car parking............................. 0
Other travel............................ 40
Childcare/nursery....................... 0
Other child related expenses............ 0
Medical (prescriptions, dentist etc).... 70
Pet insurance/vet bills................. 0
Buildings insurance..................... 0
Contents insurance...................... 0
Life assurance ......................... 0
Other insurance......................... 0
Presents (birthday, christmas etc)...... 12.5
Haircuts................................ 5
Entertainment........................... 0
Holiday................................. 0
Emergency fund.......................... 0
Professional fees....................... 20
Total monthly expenses.................. 1279.39

Assets
Cash.................................... 700
House value (Gross)..................... 0
Shares and bonds........................ 0
Car(s).................................. 0
Other assets............................ 0
Total Assets............................ 700
No Secured nor Hire Purchase Debts

Unsecured Debts
Description....................Debt......Monthly...APR
Credit Card1...................4228.3....50........21.68
Credit Card2...................2078.4....50........0
Credit Card3...................665.34....50........0
OnlineCredit fascilit..........228.4.....50........0
Total unsecured debts..........7200.44...200.......-

Monthly Budget Summary
Total monthly income.................... 1,468.17
Expenses (including HP & secured debts). 1,279.39
Available for debt repayments........... 188.78
Monthly UNsecured debt repayments....... 200
Amount short for making debt repayments... -11.22

Personal Balance Sheet Summary
Total assets (things you own)........... 700
Total HP & Secured debt................. -0
Total Unsecured debt.................... -7,200.44
Net Assets.............................. -6,500.44

Dotinspace

@sourcrates Is there a way to create a heading that is more specific? I do not neccesarily want the world to see my details, but with all the posts on this forum, it might not be picked up with the general title

ManyWays

What are the actual minimum payments on the cards and when do the 0%s end?
is your living situation stable, or may you need to move out and get your own car?

Dotinspace

Thanks for following up @ManyWays

Actual minimum required payments + 0% ends are:

Card 1: £42.28    0% Balance ended 1 March

Card 2: £25         0% Balance1 ends 31 May / 0% Balance2 ends 31 July

Card 3: £16.63    0% Balance1 ends 2 June

Card 4: £5           0% Balance1 ends 8 May

Obviously the minimum payments varies slightly from month to month.

For now living situation is stable, but might change later this year (Sept onwards)

ManyWays

Dotinspace said:

Actual minimum required payments + 0% ends are:

Card 1: £42.28    0% Balance ended 1 March

Card 2: £25         0% Balance1 ends 31 May / 0% Balance2 ends 31 July

Card 3: £16.63    0% Balance1 ends 2 June

Card 4: £5           0% Balance1 ends 8 May

Obviously the minimum payments varies slightly from month to month.

For now living situation is stable, but might change later this year (Sept onwards)

So if we guess that the minimums will end up at about 3% of the balance when the 0%s end, that is about £220 a month in total. 

That means you budget isnt far off balancing. Is there a reason your groceries are so high (pet costs?)
If you can take £40 off that, that would let you pay the minimums. Just, and with no money for entertainment of an emergency fund, that is a stressful and fragile budget.

And paying credit card minimums isnt a sustainable way to repay them. So this is far from idealuneless you expect to get some work soon.

The problem here is what may happen in September; if you may have to get a private tenancy, that is easier if your credit record is intact, it isnt impossible in a DMP but its easier if you arent.

If your housing situation was very stable, you should look at a DMP or even a DRO if your health problems will persist.

Asking card lenders for help should get you frozen interest and lower payments, just like a DMP. These are normally recorded as payment arrangements, but may turn into defaults after a while. Payment arrangements damage your credit score less, but the problem lasts for longer as the record stays on your file for 6 years after the debt is paid off, while a default disappears 6 years after the default date.

Dotinspace

Thanks for responding @ManyWays.

It is a fragile and stressful budget indeed. Especially with the benefit announcements yesterday, as a person with a disability and long term health condition, 

It is helpful to think in terms of an estimate of 3% of the balances (and total). Agree I can make the budget stretch to cover that. The issue remains that it will be doing virtually nothing to reduce the debt. And it means I just hold on in this fragile reduced way of life until I manage to improve other factors, some of which are beyond my control. Believe you me, I am trying to manage what I can. 

PS: Grocery amount includes all other household items and sundry, not just food. But always looking where I can make improvements to save a few pennies. 

Also just to note, my tenancy is private. Might be extended but not clear yet. Agree however that in the current state and even more so if there is damage to my credit record, it will be hard if not impossible to get another private tenancy. 

Sounds like asking banks directly is much the same as a DMP in terms of impact to financial status / ‘credit rating’. Saw in another thread that these direct arrangements with banks might even be kept on file longer than 6 years. 

Can I please ask: Why would payment arrangements with banks turn into defaults after a while? I know banks want to sell off debt when they do not make money on the debt and might be ‘keen’ on a default accordingly. 

But if I keep paying the minimum + whatever extra I can, and the accounts do not default, I presume they will not indefinitely agree to remove / reduce interest. 

This is assuming I can keep paying of course. 

Ergh. Now way out for the wicked it seems.