£31k debt through bad decisions, help with DMP

bigaaron

So, over the last few years, I've managed to get myself into a mess, financially. It's jeopardised my marriage, massively impacted mine and my wife's mental health and limited my family's sort to mid term opportunities.

I've been treading water for a while, paying minimum payments only, using credit cards to pay down other credit cards, consolidating debts then spending the newly-freed credit and generally using frivolous spending to manage my mental health issues and give me some minor and temporary dopamine hits ... All the worst things I should do but I'm now having counselling to address the root causes and I never want to feel this out of control ever again. A hard lesson that's hurt those closest to me, but I've learned it the hard way. 

I've attached my SOA and I've been doing a lot of reading on here and I think a DMP is my way forward. My mortgage fix runs out next August, but the fixes on offer aren't too dissimilar to what we have now, so that's less of a stress than I thought it would be. None of my debts are with my bank and I have no overdraft, just a basic amount and an impulse saver account for any rounding to be stashed away etc.

All of these unsecured debt are in my name only, nothing in my wife's name or joint name at all, other than the mortgage.

[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................ 2300

Partners monthly income after tax....... 0

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

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

Total monthly income.................... 2300[/b][b]

Monthly Expense Details[/b]

Mortgage................................ 650

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

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

Management charge (leasehold property).. 0

Council tax............................. 115

Electricity............................. 40

Gas..................................... 40

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

Water rates............................. 40

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

Mobile phone............................ 32

TV Licence.............................. 7.5

Satellite/Cable TV...................... 25

Internet Services....................... 16

Groceries etc. ......................... 250

Clothing................................ 35

Petrol/diesel........................... 0

Road tax................................ 0

Car Insurance........................... 0

Car maintenance (including MOT)......... 0

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

Other travel............................ 170

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

Other child related expenses............ 50

Medical (prescriptions, dentist etc).... 20

Pet insurance/vet bills................. 25

Buildings insurance..................... 20

Contents insurance...................... 20

Life assurance ......................... 15

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

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

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

Entertainment........................... 80

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

Emergency fund.......................... 50

Driving lessons......................... 152[b]

Total monthly expenses.................. 1892.5[/b]

[b]

Assets[/b]

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

House value (Gross)..................... 325000

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

Car(s).................................. 0

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

Total Assets............................ 325000[/b]

[b]

Secured & HP Debts[/b]

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

Mortgage...................... 295125...(650)......3.54[b]

Total secured & HP debts...... 295125....-.........- [/b]

[b]Unsecured Debts[/b]

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

Aqua CC........................6372......190.......26.05

MBNA CC........................7833......338.......23.94

NatWest CC.....................3473......43........23.9

Hastings Direct Loan...........10580.....273.......11.8

Virgin Money CC................2996......30........26.49[b]

Total unsecured debts..........31254.....874.......- [/b]

[b]

Monthly Budget Summary[/b]

Total monthly income.................... 2,300

Expenses (including HP & secured debts). 1,892.5

Available for debt repayments........... 407.5

Monthly UNsecured debt repayments....... 874[b]

Amount short for making debt repayments. -466.5[/b]

[b]Personal Balance Sheet Summary[/b]

Total assets (things you own)........... 325,000

Total HP & Secured debt................. -295,125

Total Unsecured debt.................... -31,254[b]

Net Assets.............................. -1,379[/b]

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

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

I'm ready to begin planning when I want to trigger the defaults and I'm more than versed in dealing with banks and collection agencies etc, being firm with them and not getting scared by them due to previous jobs. I'm planning on paying back around £75/month per creditor, which I think is about reasonable and certainly less than I'm paying now just to keep my head above water. I think my main worry here is potential legal action in CCJs being taken out. From what I understand, consumer debt is very low down the list for litigation, but it's still a worry as I had one a very long time ago for a very small account I had forgotten about but was able to have it set aside by paying it in full immediately.

Basically, I just need some guidance on kicking this whole process off and which letters etc I should be sending to who. Any other hints, tips etc also very gratefully received.

You forumites have been an incredible resource of lived experience and opened my eyes to this process, otherwise I'd have felt utterly panicked and hopeless. Now I'm just ready to get this ball rolling, settle them off eventually and never have to feel like this again. Really, thank you all so much, for now and any future advice.

fatbelly

Yes that looks like a dmp.

When it comes to offering payment, you do it on a pro-rata basis

E.g if you have £400 available, Virgin would get (2996/31254) x 400

Andyjflet

Good luck with your journey, you seem to have the numbers sorted, is there anyway you can start some side hustles to gain some extra income? £2300 is a low number for a family of 4, is there any government child benefit? 
Can you do Uber eats or similar deliveries a few evenings a week to gain some income? When I was getting out of debt, during Covid, I got a job on amazon Flex which was welcome income at the time, being sales based it was uncertain how much commission I could earn in my usual job. 

RAS

Some of your spends seem low?

Presumably your wife is getting the Child Benefit? Any other benefits that you can claim?

Rather you working extra hours and paying tax, can your wife work a little as her income would be untaxed and contribute more to the family resources? Or is she working already, and contributing but less than the tax allowance?

This might also mean you committing to being home when she works?

bigaaron

Andyjflet said:

Good luck with your journey, you seem to have the numbers sorted, is there anyway you can start some side hustles to gain some extra income? £2300 is a low number for a family of 4, is there any government child benefit? 
Can you do Uber eats or similar deliveries a few evenings a week to gain some income? When I was getting out of debt, during Covid, I got a job on amazon Flex which was welcome income at the time, being sales based it was uncertain how much commission I could earn in my usual job. 

The amount is purely for my income. My wife also works full time. Like I say, these are all in my name, nothing joint. Most of those figures are my half, not the full ticket. 

We've been scraping by for a little while (literally, just a few quid left at the end of the month), but now need to take control!

We sell a decent amount on Vinted, which brings in about £75-100 per month, on average, and upwards of £250-300 on a good month but it's on my wife's account. I just take the photos and trudge to the Evri parcel shop!

Thankfully the childcare costs are very low due to help from family members and free after school clubs. 

Smudgeismydog

Firstly well done for posting and taking the first steps.

I agree with @fatbelly, this looks like a DMP. None of your listed expenditure stands out as excessive, and your current repayments are unaffordable.

You have noted £50pm to the emergency fund, but have no cash savings, so I presume that is aspirational?

fatbelly

Whether or not you tell your creditors about it, you do need to be saving a fund on the side for eventual full & final settlement deals. If that means you increase your declared expenditure, so be it.

I don't think I would declare the driving lessons as hopefully that is short-term. Bury that figure somewhere

katsu

As you and your wife have kids, have you tried managing your household income and expenditure together? 

If you can, for example, look together at your household costs like gas and electric, I assume you'd be spending £160 a month on both. Is that accurate? Enough to cover your winter costs too? Are you on the best tariff etc.

£80 a month for water sounds crazy high. Are you on a meter?  I'm assuming the £40 is more likely to be the total but then where is the money

Re the Vinted. I assume that money is on top of the full- time wage you and your wife are both earning. If so, have you worked out where that money is going too?  It's an extra 1.2k - 3.6k a year going somewhere. Don't forget to set aside money for income tax (I assume if you are making that much money it isn't just selling your old stuff).

It's not a magic wand but it might help if you can look at your bills and free up a bit more cash.