Slowly giving up - advise needed

Worm352

Hi All!

I'm around £33,000 in debt at the moment, 3 loans and 2 credit cards.

Barclays loan - 15300
MBNA - 7300
Tesco bank - 7500

Vanquis bank cc - 1850
Lloyds cc - 580

My monthly income at the minute is around £2900 and my partner's income £1000.

Total repayments are over £1200/mth 

After all essentials and debt repayments I'm left with £20 in the pocket. 

My income can potentially go down by £600 soon as the overtime at work will stop which worries me a lot. 

I have no idea how all solutions like DMP works so I'll be very grateful if you guys can show me a right direction.

sourcrates

The simplest explanation of a DMP is this, a DMP is flexible, it can change if your income dips or goes up, so basically you work out a budget that you can live on, one that covers all your monthly essential payments.

What is left over is known as your "disposable income".

You then split this money between your creditors, either pro-rata, or however you want to do it.

They all then receive a smaller payment over a longer period of time, and you keep this up until your debts are re-paid or settled by arrangement.

If you like to be in charge of things and are reasonably astute, you can do this all yourself, otherwise get one of the free debt charities to do it for you.

There are other things to know, but that is essentially it.

Oh, and never pay for a DMP either, there are companies that will charge for this service, you should avoid those at all costs.

elsien

Although you might want to post a statement of affairs up here first.
Sometimes what appears essential is not always the case on further reflection. 

Worm352

Thank you for your reply!

I've seen some people deciding not to pay any debt for a period of time to get some emergency funds. Is this a good think to do ? Obviously at the minute if something happens, I have nothing in my pocket.

sourcrates

Worm352 said:

Thank you for your reply!

I've seen some people deciding not to pay any debt for a period of time to get some emergency funds. Is this a good think to do ? Obviously at the minute if something happens, I have nothing in my pocket.

It serves a number of purposes, first it alerts your lender that something is wrong.

Second, it allows you time to think about what you are doing, and to save an emergency fund.

Third, when entering debt management, its best to let all accounts default first, and again, there are good reasons why we advise this, all interest stops for one thing, and your credit file also has a clear 6 year window till it recovers.

Its best not to jump into things too soon, as lenders would have you do, knowing the process makes things so much easier.

RAS

If you carry on paying a small sum towards each debt, most will be marked Arrangement to Pay (AP). These stay on your credit record for 6 years after they are paid off. These may be superceded by defaults but the delay could damage your credit record for a decade.

If you stop paying, creditors will issue defaults sooner rather than later which clear from your credit record in 6 years even if you do not pay a penny. It's not quite so simple because if you ignore them they could start court action for a CCJ, which extends the time your credit record is damaged. So we suggest that if you have the money, you start paying something after the default is issued.

Worm352

[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......... 2

Number of cars owned.................... 1[b]

Monthly Income Details[/b]

Monthly income after tax................ 2800

Partners monthly income after tax....... 1000

Benefits................................ 160

Other income............................ 0[b]

Total monthly income.................... 3960[/b][b]

Monthly Expense Details[/b]

Mortgage................................ 0

Secured/HP loan repayments.............. 0

Rent.................................... 815

Management charge (leasehold property).. 0

Council tax............................. 150

Electricity............................. 90

Gas..................................... 80

Oil..................................... 0

Water rates............................. 49

Telephone (land line)................... 0

Mobile phone............................ 30

TV Licence.............................. 15

Satellite/Cable TV...................... 0

Internet Services....................... 36

Groceries etc. ......................... 800

Clothing................................ 30

Petrol/diesel........................... 60

Road tax................................ 17

Car Insurance........................... 69

Car maintenance (including MOT)......... 25

Car parking............................. 0

Other travel............................ 0

Childcare/nursery....................... 0

Other child related expenses............ 10

Medical (prescriptions, dentist etc).... 30

Pet insurance/vet bills................. 0

Buildings insurance..................... 0

Contents insurance...................... 0

Life assurance ......................... 70

Other insurance......................... 0

Presents (birthday, christmas etc)...... 20

Haircuts................................ 20

Entertainment........................... 20

Holiday................................. 0

Emergency fund.......................... 0[b]

Total monthly expenses.................. 2436[/b]

[b]

Assets[/b]

Cash.................................... 0

House value (Gross)..................... 0

Shares and bonds........................ 0

Car(s).................................. 1000

Other assets............................ 0[b]

Total Assets............................ 1000[/b]

[b]

No Secured nor Hire Purchase Debts[/b]

[b]Unsecured Debts[/b]

Description....................Debt......Monthly...APR

Barclays loan..................15700.....576.......29.9

MBNA loan......................7300......277.......14.9

Tesco loan.....................7500......121.......12.9

Fluid card.....................1600......90........44.9

Argos card.....................900.......150.......0

Creation.......................650.......54........28.5

Lloyds card....................550.......35........21.9

Vanquis card...................1850......75........32.9[b]

Total unsecured debts..........36050.....1378......-  [/b]

[b]

Monthly Budget Summary[/b]

Total monthly income.................... 3,960

Expenses (including HP & secured debts). 2,436

Available for debt repayments........... 1,524

Monthly UNsecured debt repayments....... 1,378[b]

Amount left after debt repayments....... 146[/b]

[b]Personal Balance Sheet Summary[/b]

Total assets (things you own)........... 1,000

Total HP & Secured debt................. -0

Total Unsecured debt.................... -36,050[b]

Net Assets.............................. -35,050[/b]

[i]Created using the SOA calculator at www.LemonFool.co.uk.

Reproduced on Moneysavingexpert with permission, using other browser.[/i][/font]

My SOA...

What is your advise looking at it ? Should I keep paying every month untill I can work extra hours, or think about going for DMP?

tigergambit

Is the APR on the Barclays loan correct? Seems very high.

Worm352

Sorry, it should be 21.6% 

fatbelly

That's 3 loans, 4 credit cards and a Creation account.

Although your soa says this is affordable, and there would seem to be some room for cost cutting, e.g. The £800 spend on groceries, it looks like you have been getting increasingly in debt, and your income is set to decrease.

I think I would

Look more closely at the grocery spend. Conversely l would expect a £1000 car to cost more in maintenance. Do you really need life insurance?

I would default and do the usual preparations for a dmp. Getting the expenditure under control and the interest frozen should see you debt free in maybe 3 years

Worm352

I would default and do the usual preparations for a dmp. Getting the expenditure under control and the interest frozen should see you debt free in maybe 3 years.

I would love that honestly... I can't get out of this trap for around 7 years now. 

Can you explain exactly what do you mean by 'I would default' ? I really have no experience and not a clue how that works...