Checking In before starting my Diary

SilverBack42

Hi,

Found this Debt-free wannabe while searching internet for solutions to my rapidly spiralling situation.

I wish I had found it before....

My first Credit Card payment got bounced by my bank this week for insufficient funds. 

I could have made the payment JUST but did not realise I did not have the funds in the Bills account until it got submitted.
I have been moving money between accounts chasing my tail to cover payments JUST
But like many everything I pay is minimum and the debt keeps spiralling.

On the subject of the missed payment it was for an MBNA card that I had a 0% Balance transfer on. Within 3 days I had an email to say I had lost this offer and was going to be charged full rate now because I missed a payment.  
Wow! They went in quick!
Reading the forum I have seen some horror stories about MBNA and this is the one that really worries me!

So, the ball has already started rolling, reading how to go about waiting for defaults then coming to a payment plan with them.

I went through Step change site and worked it all out. BUT not sure I will go this route as what appears to me that some Creditors take alot longer than others to default.

So if I deal with each as it comes in I am hoping to be able to get a good emergency fund.
Thoughts on this?

Here is my situation: £51,534.00 of loan and Credit card debt

How did I get here?

3 years ago I was made redundant from my job paying £45K

I had just taken on a high payment mortgage to buy my sisters 1/2 of my late mothers home
This is my first mortgage and my main home.
Already had a lot of debt around £10K as my mother was suffering dementia and care costs....
We did a lot ourselves but both my sister and I still had to hold down jobs.

It took 14 months to get another job as my primary role was office IT and after covid jobs were not that easy to get and being OLD... I often did not fit the young IT team dynamic.

During that period i had a hold on mortgage payments for 6 months, but my living expenses just piled onto the credit cards. Later I actually did money transfers to keep going
Stupid I know but I am stubborn I have a 'I will do it myself if it kills me" attitude.
Should have looked for help sooner!

Where am I going!

I have a good secure job now. My partner also has a secure full time employment so I can really do this!

I am defaulting on all Credit Cards and 1 loan.
Building up my emergency fund.
Then will deal with each default as it comes in.
I have my SOA done.
Stepchange plan says I could debt free in  7 years!!!! 
So 13 years until my Credit score is clear.. I will probably be retired....    

What am I doing now!

- I have opened a new bank account today to get my wages paid into.

- Opened a Santander account for all our regular bills. May even get £10 a month from it 
Be nice for the Banks to pay me for once.

- Cancelled all DD's for the loan and CreditCard

- Using my standby phone number as my primary number for all the above.

- Posting here for thoughts from the wise.

I will keep my Nationwide Flex account open as it has paid me £150 this year, cost £180 in fees, but have had Breakdown cover for anything my partner and I drive and mobile insurance.. Both of which I used a number of times. So that to me is a bonus.
Will use the account as walk around money!

Sum-up for a TLDR 

- £51,534.00 of loan and Credit card debt
- First missed payment came in for MBNA leading me to finding the forum!
- Plan to default all the CreditCards and Loan
- Get my emergency fund in a healthy state.
- Come to a payment plan with each creditor as they come in.

If anyone would be kind enough to share advice and thoughts on:

How bad have MBNA been regarding this?
Any advice resources for dealing with the creditors myself.
Anything I may have missed or thought of my cunning plan!

Apologies for the length but feel I need to get this out, maybe sleep better tonight!

sourcrates

Unsure where you got this snippet from:

"So 13 years until my Credit score is clear.. I will probably be retired...."

Defaults stay on file for 6 years regardless of what you do, so 6 years after default, that entry will vanish, whether you have repaid the debt or not.

Otherwise you appear to have all your ducks in a row, well done.

SilverBack42

sourcrates said:

Unsure where you got this snippet from:

"So 13 years until my Credit score is clear.. I will probably be retired...."

Defaults stay on file for 6 years regardless of what you do, so 6 years after default, that entry will vanish, whether you have repaid the debt or not.

Otherwise you appear to have all your ducks in a row, well done

Thanks for that, exactly why I posted.

I got that from my own misunderstanding, only started this journey a few days ago so still getting all the bases and game plan covered.

Thanks for that!

Rob5342

Remember that 7 years is based on your current payments. Your income will hopefully go up in the future so you can increase payments, and when the debts are sold on you will be able to make settlement offers and settle them for a lot less, which is another reason why you are far better off waiting for defaults.

I wouldn't worry about MBNA, its quite common to drop 0% offers when payments are missed. That would have happened anyway when you stopped paying to get defaults, and the extra interest now will be far outweighed by the savings yoy can make with a settlement offer omce the dent is sold on.

Remember that you are in charge now. There is no agreement to come to with creditors, you work out what you have left after your other expenses and then just tell them what they will be getting.

It sounds like you have it all in hand. I started a DMP four years ago and I very quickly started to feel that I was on top of everything. Its surprising how fast it goes, in two years my first default will drop off. 

kimwp

Just a note re your emergency fund - it's a good idea to start paying towards a debt once it's defaulted, but prioritise building your emergency fund - so just pay small amounts until you have your emergency fund in place.

SilverBack42

Rob5342 said:

Remember that 7 years is based on your current payments. Your income will hopefully go up in the future so you can increase payments, and when the debts are sold on you will be able to make settlement offers and settle them for a lot less, which is another reason why you are far better off waiting for defaults.

I wouldn't worry about MBNA, its quite common to drop 0% offers when payments are missed. That would have happened anyway when you stopped paying to get defaults, and the extra interest now will be far outweighed by the savings yoy can make with a settlement offer omce the dent is sold on.

Remember that you are in charge now. There is no agreement to come to with creditors, you work out what you have left after your other expenses and then just tell them what they will be getting.

It sounds like you have it all in hand. I started a DMP four years ago and I very quickly started to feel that I was on top of everything. Its surprising how fast it goes, in two years my first default will drop off. 

Thank you for that and the encouragement, still reading some of the posts here, found emsgirl - no-choice-but-to-consider-dmp-help-appreciated/p1, who's situation debt wise is sooo close to mine.

kimwp said:

Just a note re your emergency fund - it's a good idea to start paying towards a debt once it's defaulted, but prioritise building your emergency fund - so just pay small amounts until you have your emergency fund in place.

Thanks! I have questions regarding that and small token payments.
Going through spending last 6 months to get a realistic hold on my SOA.
Will post it here soon.


A couple of questions in the meatime!

• 1 loan £4k @ £100 a month is from Hastings for my partners car, I don't want this getting possessed as it is needed for travel to work. Should I keep paying this or default on it along with the CrediCards.

• I use credit checking apps, when i was going for a mortgage previously and they have access to accounts for `affordability` checks. I.E. ClearScore
  Are these a bad idea? I understand creditors can't demand my accounts if I am giving a SOA but can they see my current affairs through these apps?

SilverBack42

SilverBack42 said:

A couple of questions in the meatime!

• 1 loan £4k @ £100 a month is from Hastings for my partners car, I don't want this getting possessed as it is needed for travel to work. Should I keep paying this or default on it along with the CrediCards.

I think iI have found the answer this one! Confirmation would be good though :-)

The car was purchased as part of a "Car" loan, I.E. just another credit agreement. NOT HP from a dealership.

I assume as the money was initially paid to me then I went and found the vehicle it is just another non-secured credit agreement.

Still reading this awesome forum and learning.
I wish I had found this 6 months ago, I was near suicidal with stress, so glad this hopefully will be easy to achieve.

Sorry still have my doubts but reading so many posts give me hope!

SilverBack42

Here is my initial draft...  

I see so many comments about the SOA i thought I would just post what I have ATM

My draft SOA , please let me know if it is reasonable:


TBH it is shocking what you spen your money on when you are not looking!!!  

My situation:
3 bedroom Semi in desperate need of updating.
In secure employment working from home with 2-3 times in office once a month
Partner commutes 6:00am everyday

Partner also supports parents  hence the Parental Assitance...................... 200
Actually she pays another £50 to her overseas government to keep her equivalent of NI / Gov Pension going. So may up this to £250

If anyone would be kid enough to go through it, much appreciated.

Sorry I am still very new and learning! BUT please you are all so much appreciated.  I was soooo depressed and desperate last few months and finding you peeps has really given me hope!

SOA

[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......... 0

Number of cars owned.................... 2[b]

Monthly Income Details[/b]

Monthly income after tax................ 2850

Partners monthly income after tax....... 1250

Benefits................................ 0

Other income............................ 38[b]

Total monthly income.................... 4138[/b][b]

Monthly Expense Details[/b]

Mortgage................................ 1050

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

Rent.................................... 0

Management charge (leasehold property).. 0

Council tax............................. 210

Electricity............................. 195

Gas..................................... 115

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

Water rates............................. 35

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

Mobile phone............................ 75

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

Satellite/Cable TV...................... 45

Internet Services....................... 75

Groceries etc. ......................... 650

Clothing................................ 100

Petrol/diesel........................... 180

Road tax................................ 85

Car Insurance........................... 95

Car maintenance (including MOT)......... 180

Car parking............................. 15

Other travel............................ 40

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

Other child related expenses............ 0

Medical (prescriptions, dentist etc).... 45

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

Buildings insurance..................... 14

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

Life assurance ......................... 0

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

Presents (birthday, christmas etc)...... 10

Haircuts................................ 15

Entertainment........................... 100

Holiday................................. 50

Emergency fund.......................... 25

Parental Assitance...................... 200[b]

Total monthly expenses.................. 3709[/b]

[b]

Assets[/b]

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

House value (Gross)..................... 260000

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

Car(s).................................. 7000

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

Total Assets............................ 267000[/b]

[b]

Secured & HP Debts[/b]

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

Mortgage...................... 135000...(1050).....3.1[b]

Total secured & HP debts...... 135000....-.........-   [/b]

[b]Unsecured Debts[/b]

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

MBNA...........................3211......96........31

MBNA...........................8180......245.......31

VIRGIN.........................5514......165.......29

PayPal.........................2430......104.......28

LLOYDS.........................5410......162.......28

TESCO..........................6393......191.......26

TESCO..........................8169......245.......26

VIRGIN.........................7800......234.......29[b]

Total unsecured debts..........47107.....1442......-  [/b]

[b]

Monthly Budget Summary[/b]

Total monthly income.................... 4,138

Expenses (including HP & secured debts). 3,709

Available for debt repayments........... 429

Monthly UNsecured debt repayments....... 1,442[b]

Amount short for making debt repayments. -1,013[/b]

[b]Personal Balance Sheet Summary[/b]

Total assets (things you own)........... 267,000

Total HP & Secured debt................. -135,000

Total Unsecured debt.................... -47,107[b]

Net Assets.............................. 84,893[/b]

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

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

SilverBack42

I look at the SOA above and wonder how I keep my head above water but then realise in all honesty the above do not apply as I either don't do them them. or DIY them

Presents (birthday, christmas etc)...... 10

Haircuts................................ 15

Entertainment........................... 100

Holiday................................. 50

Emergency fund.......................... 25
Not saved / done this past few years, you find who your friends are when you tun up with a home made present / piece of art work!!  


Medical (prescriptions, dentist etc).... 45
Been putting off dentist, just so I can stay on the NHS register (took 2 years to get on one)


Groceries etc. ......................... 650
If I cut back I could get this down to £450


Satellite/Cable TV...................... 45
Cancel TV. Trash on ATM anyway but Youtube without Ads is a bonus as that is what I watch

Electricity............................. 195

Gas..................................... 115
Actually £243 but I am in debt by the sum of £240, they want to up the DD but I have said I can not afford it. To be fair Octopuss have been good about it!


That is a saving on £100 (Presents) , £15 Haircut (Wife aint that great at it but it will do,she tries bless her cotton socks) , £100 (Entertaiment  ) , £50 (Holiday) , £25 (No Saving/Emergency Fund)

Soo I have been saving about £465 I have not been spending past 6 months or so..... Realistic!! Sad but true yes 

Other than that I am out of ideas.

Thoughts please?

kimwp

SilverBack42 said:

I look at the SOA above and wonder how I keep my head above water but then realise in all honesty the above do not apply as I either don't do them them. or DIY them

Presents (birthday, christmas etc)...... 100

Haircuts................................ 15

Entertainment........................... 100

Holiday................................. 50

Emergency fund.......................... 25
Not saved / done this past few years, you find who your friends are when you tun up with a home made present / piece of art work!!  


Medical (prescriptions, dentist etc).... 45
Been putting off dentist, just so I can stay on the NHS register (took 2 years to get on one)


Groceries etc. ......................... 650
If I cut back I could get this down to £450


Satellite/Cable TV...................... 45
Cancel TV. Trash on ATM anyway but Youtube without Ads is a bonus as that is what I watch

Electricity............................. 195

Gas..................................... 115
Actually £243 but I am in debt by the sum of £240, they want to up the DD but I have said I can not afford it. To be fair Octopuss have been good about it!


That is a saving on £100 (Presents) , £15 Haircut (Wife aint that great at it but it will do,she tries bless her cotton socks) , £100 (Entertaiment  ) , £50 (Holiday) , £25 (No Saving/Emergency Fund)

Soo I have been saving about £465 I have not been spending past 6 months or so..... Realistic!! Sad but true yes 

Other than that I am out of ideas.

Thoughts please?

Hiya, are you saying that you were spending these amounts before? What is your SOA based on (what accounts/bills have you used to calculate the numbers?)

SilverBack42

kimwp said:

SilverBack42 said:

..........

Soo I have been saving about £465 I have not been spending past 6 months or so..... Realistic!! Sad but true yes 

Other than that I am out of ideas.

Thoughts please?

Hiya, are you saying that you were spending these amounts before? What is your SOA based on (what accounts/bills have you used to calculate the numbers?)

It is based on 12 months of statements, my DD's
Last 6 months or so we have done nothing but work eat sleep....

My SOA after going through Accounts and putting into lemonfool is above.

The part you have quoted is what we used to spend sometimes but have not recently due to ever spiralling debt. My shortfall according to SOA is £1013.

Never done an SOA, never looked at spending this closely.

I was asking if I should include it or are they expecting me to keep going as we have been not doing any above!!
Probably should not have put that last post as it will probably confuse things.

Posted my SOA in the second post, which is what I am trying to focus on.

The above is the not as absolutely essential things that I thought creditors would probably not accept on an SOA.

I don't know it is new to me    Sorry!