£57k debt - Stepchange or self?

LoneFrog

Hello,

I (29M) am finally resolving my debts after years of letting it get worse, I found myself trying not to miss payments and so took out further money which got me into this hole. (Not missed any payments on anything)

I have 4 loans, 3 credit cards and 3 overdrafts and I am looking at a DMP with Stepchange, I can afford to pay back around 500 a month but this will take 9 years and I have spoken to some creditors who have already advised they would not stop interest on a DMP.

I was ready to go ahead with the DMP but have seen on here that I should let me accounts default first and then wait for the debt to be sold? 

Could anyone help me understand the best route? The loans take up £47000 of this debt (interest included) and some overdrafts I could swallow up with the funds saved whilst waiting for defaults. 

I pay HP for my car, needed for work! And I rent privately and this will be unaffected.

Thanks! 

Grumpelstiltskin

OK Do not start any DMP until the debts have defaulted.

Stop payments make sure your bank account is moved to a banking group you don't owe money to and it should have  no overdraft potential. Also do not use the banking switch service, change all vital direct debits manually

Do not contact any of your creditors, and save as much as you can into your emergency fund.

That will do for starters

LoneFrog

Grumpelstiltskin said:

OK Do not start any DMP until the debts have defaulted.

Stop payments make sure your bank account is moved to a banking group you don't owe money to and it should have  no overdraft potential. Also do not use the banking switch service, change all vital direct debits manually

Do not contact any of your creditors, and save as much as you can into your emergency fund.

That will do for starters

Thank you for the Advice, so I assume that having 10 defaults as opposed to 8/9 makes no difference so may as well open a new account rather than make one have a balance of 0?

Have you heard of how the online loans (updraft x2, Novuna) work when you stop paying? These are the two that have already advised they won’t stop interest! 

Grumpelstiltskin

At the moment don't worry about Updraft &  Novuna, they are expensive loans and down the line you may be able to do affordable complaints.

Read through this thread.
In Debt and Wannabe Debt Free? first Steps to take are here, please read, then ask questions. — MoneySavingExpert Forum

Fill in a SOA, format for MSE and copy and paste on here.

Make sure you have the interest rates on the debts.

Once we see your SOA we will have the full picture and can give you the best advice.

LoneFrog

Grumpelstiltskin said:

At the moment don't worry about Updraft &  Novuna, they are expensive loans and down the line you may be able to do affordable complaints.

Read through this thread.
In Debt and Wannabe Debt Free? first Steps to take are here, please read, then ask questions. — MoneySavingExpert Forum

Fill in a SOA, format for MSE and copy and paste on here.

Make sure you have the interest rates on the debts.

Once we see your SOA we will have the full picture and can give you the best advice.

Ive filled out the SOA below, even worse than I thought when some places didn't show the interest added figures, this is also as of now, I will be removing some of this cost (tv price and phone are high):

Statement of Affairs and Personal Balance Sheet[/b][b]

Monthly Income Details[/b]

Monthly income after tax................ 2481

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

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

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

Total monthly income.................... 2481[/b][b]

Monthly Expense Details[/b]

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

Secured/HP loan repayments.............. 276.4

Rent.................................... 1200

Management charge (leasehold property).. 0

Council tax............................. 0

Electricity............................. 0

Gas..................................... 0

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

Water rates............................. 0

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

Mobile phone............................ 43.45

TV Licence.............................. 34

Satellite/Cable TV...................... 56.49

Internet Services....................... 35

Groceries etc. ......................... 50

Clothing................................ 20

Petrol/diesel........................... 70

Road tax................................ 15.75

Car Insurance........................... 23

Car maintenance (including MOT)......... 20

Car parking............................. 23

Other travel............................ 36

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

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

Medical (prescriptions, dentist etc).... 9.65

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

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

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

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

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

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

Haircuts................................ 18

Entertainment........................... 30

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

Emergency fund.......................... 20[b]

Total monthly expenses.................. 2000.74[/b]

[b]

Assets[/b]

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

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

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

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

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

Total Assets............................ 0[/b]

[b]

Secured & HP Debts[/b]

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

Mortgage...................... 0........(0)........0

Hire Purchase (HP) debt ...... 7777.07..(276.4)....5.9[b]

Total secured & HP debts...... 7777.07...-.........-   [/b]

[b]Unsecured Debts[/b]

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

Santander .....................1979.38...30........29.9

Monzo..........................764.85....14........39

Starling.......................1150......14........15

Admiral........................12105.9...403.5.....14.6

Novuna.........................13168.5...263.3.....21.6

Updraft........................15030.5...274.9.....19.9

Updraft........................10755.8...229.3.....21.9

Barclaycard CC.................892.21....31.62.....29.93

Virgin CC......................5176.48...186.1.....23.29

Monzo CC.......................1036.08...64........29[b]

Grumpelstiltskin

You need to check your SOA please.

Council tax............................. 0

Electricity............................. 0

Gas..................................... 0

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

Water rates............................. 0

Why?

£50 monthly on food?

£20 emergency fund but no cash?

TV licence £34?

Total amount of debt repayments?

How much short each month?

LoneFrog

Grumpelstiltskin said:

You need to check your SOA please.

Council tax............................. 0

Electricity............................. 0

Gas..................................... 0

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

Water rates............................. 0

Why?

£50 monthly on food?

£20 emergency fund but no cash?

TV licence £34?

Total amount of debt repayments?

How much short each month?

Sorry should have been clearer, my partner pays the other bills but I have left her income blank and her bills out as this is mine to deal with! She’s supportive but I sprung this on her down the line and will be sorting this debt myself.

Hence the 50 on food, that’s my share that I input, the £20 for emergency fund I have put into finishing a payment for our sofa and then it’s been swallowed up by overdraft, so I guess counts as 0.

TV licence we are paying an upfront fee for 6 months so I believe it’s doubled? should go down to half that over the next 12 months.

seems it didn’t copy across the final data also:

repayments: 1510.72

so I’m short £1030 odd

Grumpelstiltskin

Sorry but if you have a partner you really need to do a joint SOA, both incomes what totals are etc.

How was all that debt built up?

Are you as a couple living within your incomes now?

LoneFrog

Grumpelstiltskin said:

Sorry but if you have a partner you really need to do a joint SOA, both incomes what totals are etc.

How was all that debt built up?

Are you as a couple living within your incomes now?

Appreciate the support here!

I’ll redo the SOA if needed, but the debt was built up by me simply trying to not miss payments and overspending, the overpayments then got larger and larger.

I sprung this onto my partner and we are resolving that but putting that to one side in this forum.

As a couple we now would not be living within our incomes due to my overpayments, but the above is what I will be working off, we have no joint debts and she cannot afford to help with this.

RAS

The joint SOA has two functions:

To ensure that jointly you have enough income to cover your essential spends. And have a sustainable budget (you can live on a knickers, socks and shoes budget for a year but will probably need other clothes longer term, unless you've been mainlining on clothes shopping for years).

To ensure that you are paying a fair portion of the joint expenses.

No point in you debt paying like mad and your partner getting into a mess, or your joint budget being so restrictive she decides she doesn't want to live like that.

kimwp

I have slightly different thinking about joint SOAs.

I think that it often makes sense for families to deal with debt together, so that everyone understands the situation and what can be spent, so that there's not one person scrimping while the other is spending and keeping the family in debt. In which case a joint SOA with all income and all outgoings and subsequent management of the family finances as one pot is sensible.

And seeing all the outgoings gives us a chance to advise on whether any outgoings might be reasonably reduced - for example a very high car insurance or grocery bill. Sometimes there are good reasons why they are high, sometimes they can sensibly be reduced. Water bills are a good one- I was paying more than £50 a month for my water bill, and when I changed to a water meter, my bill dropped to £15 a month - nearly £450 a year that I was spending for no reason.

But joint SOAs when it's been agreed that someone will cover certain bills or a certain percentage can become really confusing as lots of questions get asked about the splits and are the numbers for one person or both etc.

If you and your partner and happy with the split, particularly as she can't afford any more and you are both accepting that you need to be careful with joint spends, then I suggest it would be a good idea to share all the "shared" the bill amounts are, so forumites can take a peek and offer advice if needed on how to reduce them, but it doesn't need to be in a joint SOA. Shared in this case meaning all bills, total rent, groceries, tv license, internet etc, but not mobile contract, clothes, medical (assuming the values in your SOA are just for you and cover you entire costs for these categories)

£50 on food for an adult for a month is quite low, is this accurate? - a lot of people will spend that in a week.