Debt

Starboy23

Hi everyone 
so not going to make excuses I got into this
Mess I am in all by myself and ignoring things.
so I am in a lot of debt and just don’t see a way out of paying this back anytime soon. The interest on each card is getting higher and higher and I can’t change over to a interest free card as it seems to be impossible because I have just went self employed ( I don’t know if it is that or my debt is so high) but I always get declined 
I have around 

£10,200  virgin card 
£4000 sainsbury card 
£5000 Halifax 
£3000 MBNA 

even just writing that I am so embarrassed and ashamed but I would really appreciate any help and advice I am given 
I am paying around £600 a month on interest alone and it’s getting scary 
I know I have been silly with money.

Thanks in advance for any advice 

fatbelly

There are lots of posters like you on our board at the moment. Long-term in debt, now finding options drying up and contractual payments unaffordable.

Have a read of this and give us an soa in due course

https://forums.moneysavingexpert.com/discussion/6496941/in-debt-and-wannabe-debt-free-first-steps-to-take-are-here-please-read-then-ask-questions

ManyWays

A good test of how bad your situation is is whether you can stop using the cards totally. If you can, then some cutbacks may give you extra to start overpaying the credit card with highest interest and things can turn around slowly.

If you cant, then unless there are easy ways to cut a lot (not living on beans on toast for a year) then you probably need a debt management plan to get the lenders to stop charging interest and make a single lower payment a month. And making some affordability complaints may speed up a DMP a lot. 

BUT how is the self-employment going? Are you generating enough profit to live on, or is that sometime in the future? If it is profitable now, are you putting money aside for tax, otherwise adding a HMRC debt onto those cards and you will have a much bigger crisis.

DankVielen

Starboy23 said:

Hi everyone 
so not going to make excuses I got into this
Mess I am in all by myself and ignoring things.
so I am in a lot of debt and just don’t see a way out of paying this back anytime soon. The interest on each card is getting higher and higher and I can’t change over to a interest free card as it seems to be impossible because I have just went self employed ( I don’t know if it is that or my debt is so high) but I always get declined 
I have around 

£10,200  virgin card 
£4000 sainsbury card 
£5000 Halifax 
£3000 MBNA 

even just writing that I am so embarrassed and ashamed but I would really appreciate any help and advice I am given 
I am paying around £600 a month on interest alone and it’s getting scary 
I know I have been silly with money.

Thanks in advance for any advice 

Honestly there is not need to be ashamed, the simple fact is that the lenders goal is to put you in a place where you can just about afford to service the debt but are unable to pay it off.  They do this with zero percent cards, low minimum repayments and other deals plus irresponsible lending way beyond what is affordable.  The final nail in the coffin is manipulation of the credit score, for example they may decline you because of the percentage of your collective balances is over some arbitrary percentage and then others lower your score because you keep applying for other cards having been declined.

I can assure you that everyone on here has been where you are now or worse, my debt was above £90k and three of my lenders are on your list.

At this stage without a full disclosure of the money you have coming in and going out (SOA) it is hard to give you exact advice but it is going to come down to whether you see yourself wanting a bright shiny clean credit score (for a mortgage, car or mobile phone) or whether you don't see these as being an option.  

Another factor is whether you have already trashed your credit score by failing, if so you will not clean it for 6 years.

What will make you feel worse is that the lenders did not lend you their money or anyone else's money, they did not work for it, they did not inherit it, they just created it on their computer.  They have a license granted by the FCA that allows them to do this as long as they do not have bad ratios.  So they pay the central bank 3% of the amount they are lending and this limits how much invented money they can lend. That is why when people default they sell the debt for pennies in the pound to a debt consolidator, this gets your bad debt off their books and helps them look squeaky clean to the regulators.

IF you desperately need a credit record, have a security clearance to maintain, are a lawyer or work in financial services then you will want to pay all that debt off.  An illustration on your debt is that it will take you nearly four and a half years to pay it off and you will pay over £11550 in interest at current payment amount and estimated interest (it could be worse).

You can create your own illustration at the following MSE link

https://www.moneysavingexpert.com/credit-cards/minimum-repayments-credit-card/

Making the minimum payment of: The greater of 4% of balance or £600.

---

This £22,200 debt will take 4 years and 4 months and cost £11,501 in interest.

If you have a grip of the underlying cause of the debt (lifestyle beyond your disposable income, shopping addition, gambling problem) then you can take steps to reduce the debt by cutting back and paying more off.  You would do this in the order of the facility with the highest interest rate, even moving money from a more expensive card to a cheaper card is possible by spending say groceries on cheaper card and using money you would have spent on those groceries to reduce the debt of the card with higher interest rate.

The alternative if your credit record is already trashed or you are not in one of those industries is to STOP PAYING YOUR UNSECURED DEBT.

In fact I would go further and write to each of the four providers and tell them that due to a massive change in circumstances you will no longer be making any payments to their debt.  This would be your last communication with them on the debt because if you don't acknowledge a debt or make any payments towards it then in six years it will become statute barred.  There is a chance that one of the lenders might seek a CCJ but you will have other options before that and be given clear warning by way of a Letter of Claim before Action.

This is called a DMP and if you look at the sticky messages on this debt free wannabe thread you will see guidance on this.

Different people have different goals, some simply wish a reduction and so they save up the £600 they were spending and put it towards an emergency fund.

There are some things to do before you start, including opening a new bank account and savings account with a DIFFERENT lender to any of the four you owe money to.

It is also advisable to inform the lenders before you write to them that your email and telephone number have had to be changed to avoid scammers, sometimes you can just do this on their portal.  You only need to create a new email with one of the free online mail providers (Gmail, Yahoo, Hotmail, Proton, GMX) and to go buy a £1 pay as you go sim, perhaps get a £15 non smart phone while there.  This will help your mental health because you will be enter this debt world only when you want to, also when they sell your debt the debt consolidator and all of their agents will only have the latest phone and email.  Even so I would advise you do NOT answer calls from numbers you do not know or that have caller ID withheld.

I am not advising you to take this DMP route just explaining it as an option.

What I can tell you is that there a lot of very good people on this forum they also include debt counsellors who work for debt charities, but nobody can really give you pertinent accurate relevant advice until you complete an SOA. The link below will help you do this and you can paste the output to this thread (do not start a new one), then you will get good advice.

https://www.lemonfool.co.uk/financecalculators/soa.php