Need help getting out of debt cycle!!!

IWantaFreshStart2025

Hi, I'm new here so apologies if this isn't the right section to post this and thank you to all the knowledgeable and helpfull people that contribute to this forum .

Over the years I have accumulated this debt and I have just borrowed and borrowed to cover the monthly payments and it's caught up wiyh me and can no longer afford the monthly payments. 

I have a total debt of £26500.

Tesco Bank Loan 5 Years (Barclays) = £13500 (£7500 left after 2.5 years)
Santander Loan 5year loan = £10500 (£5200 left after 2 years)
Barclays Credt Card = £6800 ( Interest free peiod ends Feb 2026)
MBNA Credit card = £3400 (Paying 24.5% APR)
Paypal =£1500
Virgin Money Credit card = £725

Carmoola card loan = £5000. Paying £94 a month. Want tk keep paying this and keep my car.


My long term goal is to default on all the agreements and stop the interest and charges. Then set up monthly payments with all creditors and pay what I can afford and set up emergency fund on the side and wait for offers of full and final payments where hopefully I have to pay only 50% or less of what I owe. 

I rent and don't own any assets so avoiding a CCJ is my main priority and I know 90% unsecured personal debt never get CCJs but I don't want to be the unlucky 10%.


So my question is Should I take out a new loan and concolidate the smaller debts into one montly payment so less amount of creditors to deal with and default on that or not? I've read that PRA group are notorious for not offering good full and final settlement discounts and Barclays use them. My 2 biggest ones are with Barclays around £14000 and I have been offered a £14000 loan at 21.8% Apr over 5 years by co op. Am I better off taking this loan and paying off what I owe Barclays and then default on the CO op loan so I don't have to deal with PRA group? Or not? Anyone know who co op sell their loans to? 

Any input and constructive criticism is welcome

sourcrates

I got to the part before you asked about consolidation, thinking this person seems remarkably well switched on in their thinking process, and how they are going to deal with their debts, then BOOM you blew me outa the water with the consolidation question lol.

Honestly, you were doing so well, too.

No, its a terrible idea, it kicks some of the debt sideways, leaves you open to much higher rates of interest, and just makes more profit for the banks, forget that idea.

Lets just say your strategy up until that point was flawless, stick to that idea, and it should all work out fine.

IWantaFreshStart2025

sourcrates said:

I got to the part before you asked about consolidation, thinking this person seems remarkably well switched on in their thinking process, and how they are going to deal with their debts, then BOOM you blew me outa the water with the consolidation question lol.

Honestly, you were doing so well, too.

No, its a terrible idea, it kicks some of the debt sideways, leaves you open to much higher rates of interest, and just makes more profit for the banks, forget that idea.

Lets just say your strategy up until that point was flawless, stick to that idea, and it should all work out fine.

I have been lurking on these forum for past few weeks and read up alot on how to deal with debt specially your posts Sourcrates. They've been an eye opener ao thank you. 

My only logic for taking out a consolidation loan is to deal with as little number of creditors as possible and avoid PRA group (Barclays). My aim is to default on the new consolidation loan anyway so I won't be incurring any interest?

But seems like it's a bad idea. 

I'll post my SOA once I get a chance and I'll share my journey here as I don't want to make silly mistakes 😂

Karonher

Why would you take money knowing you are not going to pay it back?  There could be consequences worse than dealing with the existing companies.

Legal Consequences

• Fraudulent Misrepresentation: 

  If you knowingly borrow money without the ability to repay, and this can be proven, it may be considered fraudulent activity. 

Legal Action: 

Lenders can take court action, which could lead to a CCJ being issued against you. 

Brie

Karonher said:

Why would you take money knowing you are not going to pay it back?  There could be consequences worse than dealing with the existing companies.

Legal Consequences

• Fraudulent Misrepresentation: 

  If you knowingly borrow money without the ability to repay, and this can be proven, it may be considered fraudulent activity. 
• Legal Action: 

  Lenders can take court action, which could lead to a CCJ being issued against you. 

Not very helpful and certainly not supportive of someone who is trying to get stuff sorted.  Perhaps it's the banks that should have taken more care before lending money to someone who couldn't afford it.  It has happened so many times.  

To the OP - if you are paying back a small amount to each of the creditors then there is no reason for you to get a CCJ so I wouldn't worry about that.  Basically it would be setting up a DIY debt management plan which lots of people do.  Creditors are generally happy to get a bit of money, slowly, over a number of years than to get nothing at all.  Yes Barclays or others might pass the collection along to a third party but that's just them managing the admin of the debt.  Don't let it fuss you.  

Have you looked at the debt solutions as outlined on Debt Camel?  It's a simple, sensible approach and you might find it helpful.  Debt solutions - what is your best option?

bcs7

IWantaFreshStart2025 said:

My only logic for taking out a consolidation loan is to deal with as little number of creditors as possible and avoid PRA group (Barclays). My aim is to default on the new consolidation loan anyway so I won't be incurring any interest?

But seems like it's a bad idea. 

Defaults don't tend to happen until you've missed 3-6 months worth of payments.
You'll be getting charged over £250 a month just in interest with 21.8% on a £14K loan.
So that's an extra £750-£1500 on top of what you already owe, just in interest.

And after all that, you don't know who they'll sell the debt on to, could just be PRA again making it pointless.

So yes, it's a bad idea.

IWantaFreshStart2025

Karonher said:

Why would you take money knowing you are not going to pay it back?  There could be consequences worse than dealing with the existing companies.

Legal Consequences

• Fraudulent Misrepresentation: 

  If you knowingly borrow money without the ability to repay, and this can be proven, it may be considered fraudulent activity. 
• Legal Action: 

  Lenders can take court action, which could lead to a CCJ being issued against you. 

Thank you. This is why I'm here, to benefit from all the knowledgeable people. I appreciate the feeback 👍

IWantaFreshStart2025

bcs7 said:

IWantaFreshStart2025 said:

My only logic for taking out a consolidation loan is to deal with as little number of creditors as possible and avoid PRA group (Barclays). My aim is to default on the new consolidation loan anyway so I won't be incurring any interest?

But seems like it's a bad idea. 

Defaults don't tend to happen until you've missed 3-6 months worth of payments.
You'll be getting charged over £250 a month just in interest with 21.8% on a £14K loan.
So that's an extra £750-£1500 on top of what you already owe, just in interest.

And after all that, you don't know who they'll sell the debt on to, could just be PRA again making it pointless.

So yes, it's a bad idea.

Yeh probably not the smartest thing to do so I'll stick with not taking out anymore debt as it might just backfire or not worth it anyway in the end

IWantaFreshStart2025

Brie said:

Karonher said:

Why would you take money knowing you are not going to pay it back?  There could be consequences worse than dealing with the existing companies.

Legal Consequences

• Fraudulent Misrepresentation: 

  If you knowingly borrow money without the ability to repay, and this can be proven, it may be considered fraudulent activity. 
• Legal Action: 

  Lenders can take court action, which could lead to a CCJ being issued against you. 

Not very helpful and certainly not supportive of someone who is trying to get stuff sorted.  Perhaps it's the banks that should have taken more care before lending money to someone who couldn't afford it.  It has happened so many times.  

To the OP - if you are paying back a small amount to each of the creditors then there is no reason for you to get a CCJ so I wouldn't worry about that.  Basically it would be setting up a DIY debt management plan which lots of people do.  Creditors are generally happy to get a bit of money, slowly, over a number of years than to get nothing at all.  Yes Barclays or others might pass the collection along to a third party but that's just them managing the admin of the debt.  Don't let it fuss you.  

Have you looked at the debt solutions as outlined on Debt Camel?  It's a simple, sensible approach and you might find it helpful. 

Thanks for the link. Having read through that I think a DRO might be the best option as I don't have assets over £2k. Car is HP  loan and I don't own it technically and I don't have more than £75 disposable income. I used to be able to get regular overtime at work and more bonus but due to a structural change I am about £500 a month worse off now and no longer get help from family members with my debt repayments hence why I need to take action. 

I have no future plans for mortgage and prefer renting (flexibility to move around). My only concern is a DRO flagging up on tenancy checks as it's listed on public records and might cause me problems renting. Decisions decisions 😂

RAS

Take time.

If you stop paying tomorrow, it will take 3-18 months before your creditor issue defaults on your credit record. Your LL can't see this unless you consent to a search.

IWantaFreshStart2025

[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......... 

Number of cars owned.................... 1[b]

Monthly Income Details[/b]

Monthly income after tax................ 2105

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

Benefits................................ 495

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

Total monthly income.................... 2600[/b][b]

Monthly Expense Details[/b]

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

Secured/HP loan repayments.............. 94

Rent.................................... 1300

Management charge (leasehold property).. 0

Council tax............................. 151

Electricity............................. 35

Gas..................................... 35

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

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

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

Mobile phone............................ 30

TV Licence.............................. 16

Satellite/Cable TV...................... 0

Internet Services....................... 30

Groceries etc. ......................... 450

Clothing................................ 50

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

Road tax................................ 16

Car Insurance........................... 66

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

Car parking............................. 3

Other travel............................ 0

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

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

Medical (prescriptions, dentist etc).... 50

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

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

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

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

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

Presents (birthday, christmas etc)...... 0

Haircuts................................ 40

Entertainment........................... 50

Holiday................................. 100

Emergency fund.......................... 50[b]

Total monthly expenses.................. 2696[/b]

[b]

Assets[/b]

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

House value (Gross)..................... 1000

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

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

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

Total Assets............................ 1000[/b]

[b]

Secured & HP Debts[/b]

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

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

Hire Purchase (HP) debt ...... 5000.....(94).......10[b]

Total secured & HP debts...... 5000......-.........- [/b]

[b]Unsecured Debts[/b]

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

Tesco bank Loan................7500......228.......12.3

Santander Loan.................5200......177.......15.5

Barclays credit card...........6800......256.......0

Virgin Money card..............725.......25........25

Paypal credit..................1500......56........22

MBNA Credit card...............3400......156.......24.5[b]

Total unsecured debts..........25125.....898.......- [/b]

[b]

Monthly Budget Summary[/b]

Total monthly income.................... 2,600

Expenses (including HP & secured debts). 2,696

Available for debt repayments........... -96

Monthly UNsecured debt repayments....... 898[b]

Amount short for making debt repayments. -994[/b]

[b]Personal Balance Sheet Summary[/b]

Total assets (things you own)........... 1,000

Total HP & Secured debt................. -5,000

Total Unsecured debt.................... -25,125[b]

Net Assets.............................. -29,125[/b]

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

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

Based on the above. What's my best course of action? My parents used to help me financially but they've had enough now and my bonus has gone down as well so I used to be able to getby but no longer can. DRO?