Is defaulting my best option or should I ask for breathing space?

Inthedeepend92

I’m devastated that I’m writing this, but I think I’m going to have to default on my credit cards as I’m unemployed and about to run out of money. 32, f. Was made redundant six months ago, had a severe mental breakdown/psychotic episode (not related to the redundancy), took a break, have tried to get a job for the past few months and nothing at all has come up. Fallen deeper and deeper into debt and now I’m at a stage where not only has my redundancy run out, but I’ll run out of money on credit cards too. I am getting some benefit money, but it doesn’t cover all my bills and leave enough money for food etc. Hence I’ve been living on credit. 

I’m about 13k in debt at the moment and I’m using debt to pay debt. Most of it is not on 0% interest - some is eye-watering. As high as 48%. Minimum payments are about £400 a month, but this will probably go up a bit soon as one of the 0% is coming to an end and I’m using more credit. 

In some ways defaulting and then coming to an arrangement seems a no-brainer as there are few/no other options. 

But it just seems so final. I’m hoping that I will get another job soon - I really needed one months ago, but my mental and physical health was dreadful at that point. The other thing is I will likely be in a situation where I will be receiving a regular amount of additional money soon, and I’m likely to inherit money in the next few years as well. This is making me thing I’m choosing a long-term solution to a short-term problem, which makes it seem even worse, as a few months might mean I didn’t have to do this. Having said that, even before the redundancy I wasn’t getting far with my existing debt, but I could at least service it and pay a bit extra off. 

I started by ringing Santander to see what my options are and they said they could offer me 30 days breathing space, but they can’t do it until I miss a payment. This didn’t really make sense, as missing a payment will plummet my score anyway (not like defaulting, but still). Maybe that is standard policy, but I’m not sure. Can anyone confirm?

I’m wondering if breathing space is the best option across all my creditors just to give me time to make a final decision, but I’m really struggling to deal with the finality of it. Mentally I just can’t forgive myself, even though some of it was out of my control. 

Given I’ll be receiving some inheritance, I thought I might be in a position to buy a house well  before 40 (I know that’s probably a joke with my level of debt, but sometimes circumstances change), but the thought that this will be around my neck for another 6 years really scares me. 

But I’m stuck. There are a few possible jobs in the pipeline, but even if I do get one of them, it’ll be a while until I start. I’ve tried tons of temping agencies and nothing so far. I’ve never struggled to get a job like this before in my life, and it’s just a vicious cycle. 

If I do default, I think I plan to self-manage, rather than go through StepChange. Will requesting breathing space from creditors stop me doing this. I know that I’d need to stop paying, wait for the defaults, then offer what I can afford at the time. 

I’m also really worried about it impacting renting in the future. From what I’ve seen agencies only see CCJs and bankruptcy, not defaults, but I’ve seen people saying different things on the matter. Would I also avoid CCJs by agreeing to pay after the default? 

Sorry, that’s a lot. I’m only just coming to terms with all this. Feel sick every night and it’s affecting my job search as I’m so anxious. No one knows other than my partner. I wish I could tell my Dad (who’s also been in debt and works in finance, so knows a lot more about it than me), but I’m just too ashamed and I think he’d be horrified. 

It’s all so much to think about. 

My Santander card payment is due tomorrow so I need to make a quick decision on what to do. I’m wondering if breathing space is just pushing the cart down the road. 

Any advice/wisdom/experience would be much appreciated. 

Inthedeepend92

Sorry, *kicking the can down the road. 

I don’t know what I’m saying today. 

sourcrates

In order to get any kind of debt help from your lender, you first have to break the terms and conditions of your agreements, otherwise both you and they, are still bound by them.

If you can`t afford it, then don`t pay it, simple as that, all unsecured consumer credit is non priority debt, and the first thing you don`t pay when times are hard.

Affordability is key these days, if you can`t pay, tell them why you can`t pay, accounts can be put on hold, until things improve, no one will take you to court at this early stage, accounts just go to debt collectors who are of little or no importance.

In the grand scale of things, your debt is not massive, try not to spend time worrying about it, just keep your creditors informed of your situation every 2/3 months or so, and hopefully you will be back in work by then.

fatbelly

Yes, breathing space is kicking the can down the road for 60 days. Nothing will happen in 60 days.

You can't afford £400 per month on debts if your income is benefits only. Just digging a bigger hole.

Bite the bullet and stop the payments