£31,000 Credit Card Debt and My Anxiety is Unbearable

husnu1

Grumpelstiltskin said:

Do not think about starting a DMP until your debts have defaulted. Why do we say this?

If you start making reduced payments before they have defaulted your credit report is marked ' Arrangement too Pay'
Then the debt isn't removed until 6 years after you make the final payment, so if it takes 4 years to pay off the debt it doesn't disappear for 10  yrs.

Once it defaults the defaults disappear after 6 years even if it hasn't been cleared.

Can they try anything sinister while waiting for the defaults, like getting a CCJ or repossessing my house/car? Has something like this happened to anyone while waiting for defaults?

RAS

husnu1 said:

RAS said:

husnu1 said:

RAS said:

It'll probably be many months before your accounts all default. Meantime you need to use the money you will in future pay each month towards your debts to create/boost your emergency fund. Because you won't have access to credit in the next 6 years, so you need to self-insure against any emergencies, whether that's something in the family, ill-health or a major repair not covered by insurance.

If you don't need it, sometime in the future, once your debts are sold, your creditors will offer you a discount to close the account. You might be able to negotiate further if you have emergency funds. So you've cleared a debt for less than the book value. 

What do I do in the meanwhile?

Do I contact my creditors to make them a monthly offer and stop the interest? If yes, how would I do that? Do I have to answer their calls? I blocked their numbers, but they keep sending me texts.

Do I go through Stepchange or try to do it myself? Most people here seem to prefer doing it themselves.

Looks lie your existing main account is fine, just check banking groups.

 Ok, some basics. 

If you arrange payments with your creditors, they mark your account Arrangement to Pay. That stays on your credit record for 6 years after the debt is paid off, and the creditor can still charge fees and interest meantime.

If you stop paying and wait for the creditors to issue a default, the interest stops and the debt is removed from your credit record 6 years after it is issued, even if you haven't paid a penny. 

Perverse, isn't it? But it's why we suggest that you go cold turkey. 

Tell the creditors to remove your phone number from their records. All important information has to be posted anyway. There will be one scary letter just before the default is issued demanding your repay the whole debt. That is a legal requirement and creditors don't expect you to pay. And even then it could be several months before they get round to telling you whether who to pay.

You just calculates this debt as a percentage of total debt= % of debt repayment to go to that company. And keep saving the rest until the next company defaults.

Stepchange do much the same but they insist you start the DMP more quickly so you end up with AP markers and you don't get the chance to save the emergency fund. So your credit record often takes longer to recover.

I need to read this a few times to grasp it fully. It all sounds terrifying. I fear they might try something sinister while waiting for the defaults, like getting a CCJ or repossessing my house or car. That would kill me. 

They can't. Full-stop.

It is only once the debt is defaulted that they can even think about taking legal action. 

They'll write telling you who to pay. You set up the payment on-line. You've not got debts with a credit union or Amex who can be more difficult. 

You're paying a sum that will clear the debt. They are happy, why spend money on legal action when you're coughing up for free?

As for repossession, no, just doesn't happen for unsecured debt.

ayupmeduck

Do your children not get any maintenance loans? or is it college not uni they are at. I know it's not lot's but they can surely pay for their own haircuts or contribute something to the household costs.

Grumpelstiltskin

No they can't, please stop worrying about things that are not going to happen.

husnu1

I asked ChatGPT to write me an email to send it to my creditors. What do you guys think? Or is there a better template within the group that I can use?
This is the email:

Subject: Request for Temporary Hold, Interest Freeze & Email-Only Communication

Dear [Creditor Name],

I am writing to let you know that I am currently experiencing significant financial and personal difficulties, and I kindly request your support and understanding during this time.

Due to recent changes in my circumstances, I am unable to keep up with my regular repayments. I am in the process of seeking debt advice and working on a full financial assessment so I can agree on a fair and realistic repayment plan.

In the meantime, I would be very grateful if you could:

1. Place my account on hold for 30 days to give me some breathing space while I seek help and prepare a way forward.

2. Suspend any interest or charges during this period to prevent the situation from worsening.

3. Confirm in writing (via email) that you will do the above, and

4. Contact me only by email from now on. Receiving phone calls about this is causing me a great deal of anxiety, and I find it very difficult to talk about my situation over the phone.

I hope you understand that I’m not ignoring my responsibilities. I just need a short pause to get the right support and get back on track.

Thank you in advance for your understanding and consideration. I look forward to your confirmation by email.

Kind regards,
[Your Full Name]
[Your Address – optional]
[Account Number / Reference Number]

kimwp

husnu1 said:

I asked ChatGPT to write me an email to send it to my creditors. What do you guys think? Or is there a better template within the group that I can use?
This is the email:

Subject: Request for Temporary Hold, Interest Freeze & Email-Only Communication

Dear [Creditor Name],

I am writing to let you know that I am currently experiencing significant financial and personal difficulties, and I kindly request your support and understanding during this time.

Due to recent changes in my circumstances, I am unable to keep up with my regular repayments. I am in the process of seeking debt advice and working on a full financial assessment so I can agree on a fair and realistic repayment plan.

In the meantime, I would be very grateful if you could:

1. Place my account on hold for 30 days to give me some breathing space while I seek help and prepare a way forward.

2. Suspend any interest or charges during this period to prevent the situation from worsening.

3. Confirm in writing (via email) that you will do the above, and

4. Contact me only by email from now on. Receiving phone calls about this is causing me a great deal of anxiety, and I find it very difficult to talk about my situation over the phone.

I hope you understand that I’m not ignoring my responsibilities. I just need a short pause to get the right support and get back on track.

Thank you in advance for your understanding and consideration. I look forward to your confirmation by email.

Kind regards,
[Your Full Name]
[Your Address – optional]
[Account Number / Reference Number]

Points 1 and 2 are a good way to get an arrangement to pay and delay getting a default.
I think there's lots of cooks in this kitchen, so I'm ging to pop out for a bit.

Grumpelstiltskin

Please stop and do not do anything until you have calmed down and worked out exactly how things are going to move forward.

As Kim said you don't ask for breathing space, OK interest will still be added before a default but by asking for breathing space you are just moving the default further away.

tigergambit

husnu1 said:

tigergambit said:

@husnu1

You have had a lot of good advice here - particularly to stop payments, change your bank account if necessary and follow the First Steps thread instructions.

As someone who hit the debt crisis at 59 with £50k+ debt, a £62k mortgage and reduced income due to a mental breakdown I can wholly relate to your circumstances and struggles with anxiety. The very first thing you should do is go to your doctor and seek help for the anxiety. The rest is just money - in fact it's just numbers someone keeps on a computer somewhere, little bits of electric charge.

Get the thought of repossession out of your head - never going to happen. Build an SOA but be honest with it and generous to yourself. My initial mistake was taking everything to heart and trying to cut expenditure to the bone which only led to more pressure and anxiety. Leave yourself room to live.

Accept that you will now have to live without credit - but at our age that is certainly not a bad thing. The hardest thing is that we are conditioned to feel bad/ashamed about "letting" things get out of control and that is a mindset you need to work on and overcome. 

Keep safe.

Thanks for all the kind words. It sounds like our situations are very similar. I’ve been on medication for anxiety for the last 15 years, so I really understand how overwhelming it can all feel.

It’s a relief to hear that they can’t repossess my property. I’ve been so worried about that. As for my credit rating, I’ve kind of stopped stressing about it too. I guess I’ve just had to accept where things are for now.

Did you end up going into a DMP? And if so, how did you cope with all the stress that comes with it? I haven’t had a full mental breakdown yet. That would kill me because I need to carry on with my jobs in order to get out of this. I think my ADHD is helping me hold it together so far.

Yes, you MUST look after yourself and your MH first. I love my meds. 

I was a subpostmaster and that drove the breakdown but since then I have just not been as capable of earning well or managing money so slid into debt. On the other hand I'm a more relaxed nicer person so not all's bad.

I rather panicked and went to PayPlan once I heard of them and let them handle everything which was fairly stress free tbh. In hindsight I should have defaulted first but there is an upside insofar that PayPlan had all the interest and charges stopped immediately so I didn't really miss out much (this was in 2021, not sure what would happen today - PP seem to be keen on IVAs which I would avoid). I think I would speak to them or StepChange about it if I were you. At the start tell them that you are on meds for anxiety. You should also tell creditors this and ask to be dealt with by their vulnerable clients team when you get round to speaking/corresponding with them.

Regarding your SOA, you have a mortgage so you must have some sort of life insurance which isn't on there. I think TV licence is £14 per month so a typo and you forgot to put down Insurance and vets bills for your lovely little dog.

If it helps I think of my remaining unsecured debt as a 0% load which I pay off what I can to - currently £2 per month as I've just had an unexpected large bill. As long as you don't go silent AFTER they have defaulted it's quite straightforward.

husnu1

So to make sure I’ve understood everything from all the helpful comments:

1. The first step is to try not to panic and give myself some space to think, even though I’ve missed two months of credit card payments.

2. I should wait for the defaults to happen before taking any major action.

3. It’s okay to ignore the creditor phone calls, especially since they cause me a lot of anxiety. I’ve already blocked the numbers to avoid the stress.

4. There’s nothing to panic about right now. Nothing will escalate until the defaults start coming in.

5. It’s a good idea to open a couple of savings accounts to start putting money aside for emergencies and unexpected costs (like car repairs or gifts) and to give myself a safety buffer.

Have I got that right? Is there anything else I should consider or add to the plan?

Thanks in advance for all your help.

Grumpelstiltskin

OK Basically right but also ignore E Mails and texts. Open any letters you receive by snail mail if you are not happy with what they say just ask on here.

You must get the rest of your family on board with the fact there will be no more credit and everyone should help to reduce expenditure and increase income.

Just don't panic. It will sort itself out.