Advice needed please

Icecold49

Hello

I have got myself into a situation that will soon become unmanageable.

While I am meeting all my commitments at the moment, and still have just about enough to get by, I feel like I am teetering on the brink before things collapse around me.  This is causing me a lot of anxiety and sleepless nights.  

Whilst I am married, the house is fully in my wife's name. We do not have any "connected accounts". I give her money every month though as my half of the household bills, and some I pay for in full.  Aside from my car (balance of @4500 - car is now worth @ £1500) all my debts are unsecured loans or credit cards and I have no significant assets.

I was in an IVA in the past which completed successfully but I am now in a situation where I may need to go into a DMP - either independently or through Stepchange.

Despite having a few existing cards/loans, in quick succession at start of this year, I got 2 Natwest Cards, each with £10,000 limit (0% Balance transfer for 12 months and 16 months respectively) and a Barclaycard with £10,000 (32 month Balance Transfer). I did use these as wisely as possible and cleared balances, and have been paying more than the minimum to each one every month. However as the 12 month limit is coming up, I am going to be hit with a huge increase in the minimum payments and I can't afford it.  Effectively all the money I have paid back will have been of no consequence as it will be replaced by interest. I suspect I have an argument for irresponsible lending from both companies (at least) - but having paid no interest to them yet, I am unsure what they could do?

It looks like I have around £500-£600 every month to allocate to all my unsecured debts (I am currently paying £1200+ a month.  

I have set up a new email address and mobile number as a contact point for the various accounts.  

I don't know......
a/  whether just to stop paying the cards & loans now by cancelling the Direct Debits and wait for the emails/letters to start and saving the money in anticipation of the DMP starting/being accepted
b/ write to the companies first re the affordability/irresponsible lending
c/ whether to try this on my own or whether to go to one of the charities

Any/all advice appreciated

Statement of Affairs & Personal Balance Sheet

Summary

Monthly Budget Summary	Amount(£)
Total monthly income	2,700
Monthly expenses (incl. HP & secured loans)	2,040
Available for debt repayments	660
Unsecured debt repayments	1,274
Amount short for making debt repayments	-614

Personal Balance Sheet Summary	Amount(£)
Total Assets (things you own)	2,000
Total Secured & HP Debt	-4,582
Total Unsecured Debt	-54,416
Net Assets	-56,998

Household Information

Number of adults in household	3
Number of children in household	0
Number of cars owned	0

Income, Expense, Debt & Asset Details

Income	Amount(£)
Monthly income after tax	2700
Partners monthly income	0
Benefits	0
Other income	0
Total monthly income	2700

Expenses	Amount(£)
Mortgage	0
Secured/HP loan payments	183
Rent	800
Management charge (leasehold property)	0
Council tax	0
Electricity	75
Gas	100
Oil	50
Water Rates	0
Telephone (land line)	0
Mobile phone	75
TV Licence	0
Satellite/Cable TV	40
Internet services	0
Groceries etc.	150
Clothing	50
Petrol/diesel	80
Road tax	20
Car Insurance	70
Car maintenance (including MOT)	50
Car Parking	0
Other travel	30
Childcare/nursery	0
Other child related expenses	0
Medical (prescriptions, dentists, opticians etc.)	25
Pet Insurance/Vet bills	30
Buildings Insurance	0
Contents Insurance	0
Life Assurance	22
Other Insurance	25
Presents (birthday, christmas etc.)	50
Haircuts	15
Entertainment	50
Holiday	0
Emergency Fund	50
Total monthly expenses	2040

Secured & HP Debt Description	Debt(£)	Monthly(£)	APR(%)
Mortgage	0	(0)	0
Hire Purchase (HP) Debt	4582	(183)	19.9
Secured & HP Debt totals	4582	-	-

Unsecured Debt Description	Debt(£)	Monthly(£)	APR(%)
118 Card	1320	80	40.4
aqua card	2100	64	36.4
asda card	1650	82	33.34
updraft	5000	110	35.8
118118 loan	3000	150	61
finio loans	3000	161	61.4
kroo	5000	135	13.63
barclaycard	8780	100	27.25
vanquis	2617	55	25
tesco	550	25	26.4
natwest card 2	8640	100	26.4
natwest card 1	9159	100	26.4
fluid	3000	76	37.6
post office card	110	10	30.34
capital one	490	26	30.34
Unsecured Debt totals	54416	1274	-

Asset Description	Value (£)
Cash	0
House Value (Gross)	0
Shares and bonds	0
Car(s)	2000
Other assets (e.g. endowments, jewellery etc)	0
Total Assets	2000

Icecold49

When I ran my details through, the calculator recommended the payments below.  Would it be realistic to expect the companies to accept these? In reality, I could pay off the Capital One, Post office and Tesco cards relatively quickly.

Debt Details & Offer to Creditors

Secured & HP Debt Description	Debt(£)	Monthly(£)
Mortgage	0	(0)
Hire Purchase (HP) Debt	4582	(183)
Secured & HP Debt totals	4582	-

Unsecured Debt Description	Debt(£)	Offer(£)
118 Card	1320	16.01
aqua card	2100	25.47
asda card	1650	20.01
updraft	5000	60.64
118118 loan	3000	36.39
finio loans	3000	36.39
kroo	5000	60.64
barclaycard	8780	106.49
vanquis	2617	31.74
tesco	550	6.67
natwest card 2	8640	104.79
natwest card 1	9159	111.09
fluid	3000	36.39
post office card	110	1.33
capital one	490	5.94
Unsecured Debt totals	54416	659.99

sourcrates

Hi,

Debt management is an informal arrangement, so there is no acceptance or refusal of DMP payments, you pay what you can afford, according to your disposable income from your budget, and the lender has no choice but to accept that.

I would get the affordability complaints sent in now, the debt camel website provides information and template letters for that purpose. 

I also think you should stop all your unsecured debt repayments as well, you have 15 lenders, and a somewhat chequered history of bad financial decision making, you need to stop this behaviour in its tracks now, before things get to a point where you cant come back from the brink.

Start with the affordability complaints, and hold your payments, try to save those into an emergency fund.

Then I think a self managed DMP is the way forward.

fatbelly

You can't afford to service these debts so yes stop paying them.

Do affordability complaints on anything that you think stands half a chance. Use Debt Camel guidance and also read her article on My lender gave me two credit cards - applies to Aqua-Fluid and Nat West

It will be a long haul to get debt free but a dmp will be most flexible whether you or a free provider sets it up

It is too soon to be thinking about making offers. Could be 6 months or longer till the defaults come through

You do need an emergency fund, particularly with a £2000 car but if you save more than you are comfortable with then I see no problem in clearing the tiddler debts. You are not going bankrupt and won't be getting much of a settlement deal on them

ManyWays

I agree with @sourcrates, dont worry about whether those offers will be acceptable, the minimum payments are clearly unaffordable and so your debts must be going up every month and this has to stop.

I would just clear the Post Office debt, to tiny to be worth complaining about and one out of the way. 

That looks like a lot of very expensive lenders, have things just got worse as you have tried to make the minimum payments, or has there been a big drop in your income or some other reason for accumulating so much debt? This isnt being critical; but knowing the background this can help to talk about your options going forward. 

For affordability complaints, Aqua and fluid are both owned by Newday so make a single complaint about both of those two. 

Icecold49

Thanks for the replies. By looks of it, the hope would be that these companies would freeze interest and as it stands, all would be paid off in around 6 years. I assume therefore if i got more income (annual pay rise etc) and added, eg £5 or £10 to each payment in 6 month intervals that timeline would decrease quicker?

my situation developed because a long-standing work contract ended abruptly. I am full time employed again but on different income, and with cost of living increases things have spiralled

sourcrates

Icecold49 said:

Thanks for the replies. By looks of it, the hope would be that these companies would freeze interest and as it stands, all would be paid off in around 6 years. I assume therefore if i got more income (annual pay rise etc) and added, eg £5 or £10 to each payment in 6 month intervals that timeline would decrease quicker?

my situation developed because a long-standing work contract ended abruptly. I am full time employed again but on different income, and with cost of living increases things have spiralled

Thing is people try to struggle on making unaffordable payments for far too long, when these situations develop.

Its best to get on top of it, and just stop paying when its apparent you can`t afford it.

Once accounts default, all interest stops, further down the line your debt will be sold, and at some point settlement offers should be available for at least some of the debts, that will further reduce your time in debt management.

Icecold49

sorry for all the questions.  Do I simply cancel the direct debits and at same time send the affordability complaints - or do I send the complaint and at same time offer the pro-rata payment (by standing order) I can afford to send that particular company. I am slightly uneasy at paying absolutely nothing at the outset

RAS

Just checking, you have opened a new basic bank account (no credit check required) with a provider with whom you have no debt with the same banking group?

And organised for all income to go there?

If so, cancel the DDs and send affordability claims if appropriate.

sourcrates

Icecold49 said:

sorry for all the questions.  Do I simply cancel the direct debits and at same time send the affordability complaints - or do I send the complaint and at same time offer the pro-rata payment (by standing order) I can afford to send that particular company. I am slightly uneasy at paying absolutely nothing at the outset

What makes you feel uneasy exactly, what is it you think will happen if you don`t pay?

A debt must first default before any legal action can be taken, if that was your worry, nothing will happen for a month or two, then you may get a missed payment reminder, after a few payments are missed, you may get a letter telling you you are in arrears, most collection activity is quite underwhelming, they may try to phone you, or send another letter, eventually after 6 months they may cancel the credit card, and send you a default notice.

All pretty standard stuff, if you want to do this the correct way, then you are best off taking advice from those who have actually been through the process themselves, as they tend to be representative of what you can expect to happen to you too.

Debt advisors tend to read from a managed script, and will tell you what could happen, most will have little actual knowledge of debt collection themselves, but our regulars will guide you from their own experience, which will differ from the script quite a bit.