How to move forward

Harrogate89

I have approx 40k plus of debt, I’m struggling with my mental health and I feel like I can’t cope anymore. Am I best to go via a DMP with step change? I’m so overwhelmed and I don’t know what to do. 

kimwp

Hiya, have you spoken to your GP about how you are feeling?

In terms of your debt, the best step is to create your statement of affairs (SOA) - link in my signature. This needs to be an accurate record of your spend, so ideally use 6-12 months of accounts, but using the last three and then adding in the annual spends (eg Christmas,car and house insurance etc) should be a good help for people here to take a look at. You will get asked questions about your SOA to help make sure it's accurate, but no-one will be judging or prying, it's just to make sure the best option is proposed.

One step a time and you'll get through this 

fatbelly

I know it sounds like we're not answering the question but getting your health dealt with is the priority and once you have some documentation on that it may well help with the debts.

Certainly don't rush into a dmp until we know more about you and have had chance to comment

RAS

Hi, please get help with your mental health and that'll enable you to start looking at your debt. 

When you are feeling able, try to fill in the SOA kimwp links to, you'll need to do the same if you work with Stepchange. Even if you just look at one utility and fill that detail in, a day at a time.

Also, creditors will be more likely to support you if you are working with your GP, keyworker etc. 

DankVielen

Harrogate89 said:

I have approx 40k plus of debt, I’m struggling with my mental health and I feel like I can’t cope anymore. Am I best to go via a DMP with step change? I’m so overwhelmed and I don’t know what to do.

First of all I am very sorry to hear you are experiencing these feelings, most people experience this sort of anxiety, I know I did.  Others have provided good advice which is to speak to your GP, I had mine draft me a letter which he did for free as he did not want to add to my debt.
I also have a lot of experience with depression both my own and with having a child in A&E countless times.  I believe that there are fundamentally two types of clinical depression, major depression and situational depression.

Anything I say is not medical advice, nor does it replace the need for medical advice, so I urge you to start with your GP and seek a referral to Adult Mental Health team, as always there is a waiting list so see the GP at your earliest opportunity.  They may or may not prescribe an antidepressant medication, depending on how you are presenting, these are a not intended as a solution by themselves but rather a companion to therapy.  What is critical is that you read the patient leaflet and/or download it, the most important things therein are not the side effects we all look for but the advice to not stop taking them without medical supervision and to be aware that for at least six weeks they can actually make things worse. So do not let things fester inside you, try not ruminate, get the number of the crisis team in your adult mental health team and also make a contact on your phone for the sanitarians 116123 and call them when you need to vent.

In my experience Depression and Anxiety are intertwined and at the core of situational depression is a feeling of loss of control with fear, uncertainty and doubt as a result. Some of this can be rational and some can be irrational, there is a therapy called CBT that helps you recognise these and deal with them early so they do not cascade into a full blown episodic collapse, speak to your GP and Adult Mental Health about getting CBT.

At the core of a spiral of anxiety are the three magic words of the domino effect

WHICH MEANS THAT

So there is a concern, that concern itself may seem quite minor but to a mind in a state of profound anxiety it is like having someone whispering on your shoulder that this concern means B which means that C will happen and D will happen, each with it's own catastrophe. What amazes me is that some minds can go from 0 to 100% in a nanosecond in terms of the dominoes falling from A to B to C and so on. What CBT does is train you to recognise early and apply some logic to the likelihood of the secondary domino falling and even accepting that if it did happen then so what, there will be a different route and more support for going on a different path.

I am not seeking to minimise how you are feeling because I know that in the moment these feeling can be massive but what I will try to do is see a helicopter view of the burning forest you feel you are trapped in and try to help you get that view whenever you need to.

In my personal opinion we get into debt for many reasons, some in themselves are grounded in depression, for example what I call spending spree debt where a person buys stuff they don't even want or need to feel better. In such cases there is usually an underlying cause for the behaviour and that needs to be resolved by a mental health clinician if one is to stop the behaviour repeating over and over again. So again, if you think this is the case then mention it to your GP when you ask for the referral to your Adult Mental Health team.

The other main reason I think most people fall into debt is because that is the trap created for them by the Lenders, it is their goal to put you in a place where you can barely afford to service the debt never mind pay it off.  At that time they say your credit record does not merit a zero percent facility and you get moved to between 24.9% to 39.9%.  This makes things even worse from an affordability aspect and causes people to grasp at getting even more credit to service original debt, that makes their credit record score even worse and so it goes on.

Now what would you say if I said there was a guardian angel who will pay off all your debts and remove all of these anxieties?  Would you say phew and get rid of all but one of your cards which has a small credit limit only to be used to provide Section 75 consumer protection OR would you keep your cards and try to manage them better?

If you chose the latter it would mean you have not really learnt from this awful experience, like many things in life we have to go through the hardship before we get to the "never again" state of mind.  Some will say that "never again" is unnecessary, but I think that depends on each individual. 

The truth is that there are no guardian angels, well there was Michael Sheen but I think he wasted his money as there was a better way. Before explaining that I think you need to understand that none of this was your fault, the lending industry sets traps with sweet sweet rewards, 1% cashback, zero percent balance transfer, win a holiday, improve your credit record and these are just the common ones.

Life also throws debt requirements at you, particularly now when our economy has been bouncing along the bottom since the financial crisis, then Covid then the Energy Crisis.  So for many it is just about coping and managing debt, for others it pays for holidays abroad that are unaffordable or buying stuff they WANT but do not NEED.

What you really need to know is that this unsecured money you were lent never existed in the first place, it was invented on the computers of the lenders, they paid a sort of insurance policy premium of 3% (£300 per £10k they lent you) to the central bank.  This debt creation gives them the right to charge interest at levels they determine are appropriate and variable from time to time. If you do a zero percent transfer there is inevitable a fee of around 3.5% which means they cover their costs while they wait for you to become overloaded with debt.

Whilst it would be foolish to wait for a Guardian Angel, the good news is that you can get rid of all of your debt in 6 to 12 years. You can manage this yourself with the help of people far more experienced than me who live on these forums or you can get Stepchange involved.  Personally, if you want to use a debt charity like Stepchange or National Debtline (I prefer the latter) you should remember that they take a necessary percentage and there are downsides to using them.

Yes, unless you are virtually bankrupt with no income or realisable assets or savings then a DMP is a good way to go but there are several approaches.  The main objective is to get the agreement terminated with the debt sold off by the lender for around 3% to 5% of it's value to a Debt Consolidator (DC), this is called defaulting (not to be confused with you being in default of payments).  The formal default will be a letter saying they have terminated the agreement, no more interest or charges will be applied, all future payments should be made to the company they sold the debt to and the full amount remains due to the DC.  The DC will appoint a Debt Manager (DM) who in turn will instruct a new Debt Collection Company (DCC) every 3 to 6 months depending on their performance.

The DCC will send you a set of automated letters, so nothing is personal to you, they are invariably full of scare tactics, then they play nice guy, then they try FOMO fake offers with no amount mentioned and usually just before they get sacked they mention an amount between 20% and 40% off.  Whatever they offer they or another DCC will offer more later.  The key thing is DO NOT ENGAGE as any payment or acknowledgment of the debt resets the 6 year Statute Bar period of the Limitations Act. Think snakes and ladders where a snake drops to right back to the beginning.

Now some people are still in "debt" mindset and only seek a reduction of 40% or 60% off, others like me got fed up with their games and decided to go nuclear and not pay a penny.  That was after things were fully explained to me by National Debtline and I realised that the worst they could do was very little.
Even people with a Mortgage can keep their mortgage because the debt you are DuMPing is unsecured debt, they have no authority to take your goods, they have no right to come into your home, they are impotent other than sending stupid letters.  Sure if you continue to show by spending or borrowing that you earn a lot of money they might decide to go for a CCJ, but in that situation you still have options.  Only one of my many many creditors sought a CCJ and they still got nada ni nada.

The most important thing to remember is that YOU ARE IN CONTROL not these leeches, you have no relationship with these DC firms, nor the sub leeches they employ or instruct.  Time passes and for me not being able to have any credit was a great discipline for living without credit of any kind.  I paid nothing to any of my debts but that was governed by their behaviour and my situation.

Whether you need Stepchange or National Debtline charity is subjective, you certainly should NOT go with any organisation that charging a fee and not a charity registered with the Charities Commission.  Personally I think they serve their purpose but anecdotal evidence here and online seems to suggest that they just want you to maintain payments rather than eliminate debt. 

 
I don't buy into making payments, my approach would be to cut back in your outgoings by posting a SOA on this thread so others can help you with real cost cutters, then use the money you would have paid to lenders and the cutback savings to build up an emergency fund.  There is no hurry here, there are considerations when it comes to timing of paying off debts but that can all be covered in future posts to your thread.

I hope you feel a little better knowing that the money never existed, you are really the person in control and there is a safe way out of this forest, however, I am mindful that a few words from an Internet Stranger might not help your struggle with your mental health.  So again, call that GP on Monday, that will open doors to things like Breathing Space of which there are two types, but you still maintain payments with these so I am not a fan myself.

While you are waiting I would advise you put together your statement of affairs and paste the output back here, you might find you have aged debt that is no longer enforceable or you might find a plethora of ways to cut your outgoings or get access to grants etc.

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

Get that done ASAP and don't forget to call your GP !

The steps of a Self managed DMP are covered here

https://forums.moneysavingexpert.com/discussion/comment/81517246/#Comment_81517246

DMP Mutual Support thread

https://forums.moneysavingexpert.com/discussion/5897083/dmp-mutual-support-thread-part-13#latest

National Debtline

https://nationaldebtline.org/

Breathing space .GOV page

https://www.gov.uk/options-for-dealing-with-your-debts/breathing-space







Ref. Michael Sheen Documentary

https://www.youtube.com/watch?v=J1RD7H_F8BI

ManyWays

Harrogate89 said:

I have approx 40k plus of debt, I’m struggling with my mental health and I feel like I can’t cope anymore. Am I best to go via a DMP with step change? I’m so overwhelmed and I don’t know what to do. 

A DMP with StepChange can be a good option if you are really struggling to cope. Have you spoken to Stepchange or filled in their online advice form Debt Management Plans. Get A Fee-Free DMP From StepChange?

DO make sure you have a really generous numbers in for your expenses, although a DMP is flexible, you will find it easier to destress if your budget is adequate and allows you to put money aside eg for car servicing, xmas and emergencies.

People will say you can do it all yourself and that your credit record will be cleaner sooner. Yes, but you also have more interest added and have to deal with all your creditors which can be tough when you are feeling very fragile.

Starting off the easy way with StepChange may be a good route for you, then in a year when you are feeling more in control people here can help you explore how to improve your situation, 

DankVielen

ManyWays said:

Harrogate89 said:

I have approx 40k plus of debt, I’m struggling with my mental health and I feel like I can’t cope anymore. Am I best to go via a DMP with step change? I’m so overwhelmed and I don’t know what to do. 

A DMP with StepChange can be a good option if you are really struggling to cope. Have you spoken to Stepchange or filled in their online advice form Debt Management Plans. Get A Fee-Free DMP From StepChange?

DO make sure you have a really generous numbers in for your expenses, although a DMP is flexible, you will find it easier to destress if your budget is adequate and allows you to put money aside eg for car servicing, xmas and emergencies.

People will say you can do it all yourself and that your credit record will be cleaner sooner. Yes, but you also have more interest added and have to deal with all your creditors which can be tough when you are feeling very fragile.

Starting off the easy way with StepChange may be a good route for you, then in a year when you are feeling more in control people here can help you explore how to improve your situation, 

I totally disagree with Manyways post quoted above.

When you default you get a letter saying no more interest and charges, the debt has been sold.

When you Self Manage a DMP you draw a line in the sand to start the 6 year statute bar process, even if you hope for a 40% to 60% discount not acknowledging or paying to the debt gives you the option to wait it out.  I waited out around £90k, I had every intention to pay 60% but they took to long so I waited for the 6 years which passed quickly.

Making payments prolongs the debt and all the anxiety that goes with it.

There is nothing scary about dealing with you creditors, the money never existed in the first place, almost all creditors sell the debt as soon as they are informed unequivocally that you will not be making any further payments.  The people they sell the debt to have no relationship to you, they did not do you any favours nor lend you any money, they pay between 3% and 12% for debts, mostly 3% and they live in the fantasy that they can get 100% of the value at default back.

Once you realise the creditors have no power, can't take your assets, can't force you to do anything and are generally impotent you will find the anxiety level drops.

 

That being said by all means call both StepChange and National Debtline, I found the latter more honest and understanding, I found StepChange to be condescending and judgmental, they also pushed me towards paying via them (where they make a commission).

You will see all sorts of letters and but they are empty threats, if you have not been paying debts then your credit record is trashed and it will remain trashed for longer if you make payments to it.  Personally. I think it is better not to have credit except for mortgages and cars which are secured on the asset.  I do not have either of those or any other debt that is enforceable.

See my post at link below for the steps to DIY including things to do first and how to file inevitable paperwork.

https://forums.moneysavingexpert.com/discussion/comment/81517246/#Comment_81517246

and if you worry about them sending people to your door remember you do not have to engage them or even answer the door, you can of course ridicule them and put their video on YouTube which can be hilarious.

https://www.youtube.com/watch?v=61DsmmQozhw

Rob5342

Once you have got to grips with things dealing with creditors yourself is easy, but if you are new to it then it can feel very overwhelming and using Stepchange to deal with them can be very helpful. Stepchange don't take any commission for a DMP. Whether you use them or not i would stress the importance of defaulting first as that can have a massive effect on you, it's potentially the difference between having a clean credit record in 6 years having paid less then 50% of the balance and having a clean credit record in 12 years having paid 100% of the balance. Stepchange rushed me into starting a DMP before I defaulted which I now deeply regret. 

fatbelly

I agree with Rob. There are two main providers of dmps that do not charge a fee. If you don't get on with stepchange, try Payplan.

RAS

Being in debt is carp. There's a horrid situation with debt and mental health where problems with one exacerbates the other. You feel crap so the money situation deteriorates, which puts you under a lot of practical and mental pressure and makes you feel even worse. Rinse and repeat.

If you are struggling with mental health, consider providing a burner email address and telling them that all comms must be by letter. Then ask a debt or MH supporter to help by reading the mail once a fortnight or month. Nothing important can happen until the debt defaults.

If you keep track of your credit records, you will see when the debts default anyway. Once that happens ask Stepchange to run the DMP.

Once its all in place, you will feel a lot better. If you want to get the best discounts, you may want to take control in a few years, but you don't have to.