Tackling £31,000 of Debt

Auriel1198

Hi there,

I hope this post is in the right place?
I would like some help. I really want to start tackling my debts. I am 27, self-employed with a rough income of £2500 a month. I had some issues the last few years, struggling with depression and addiction. This led me to borrow a lot of money that I didn't really responsibly think about.
I am now sober and trying to sort out my finances, but it's very hard and I'm worried about how my partner and close family will react if they knew.
I currently live with my parents at the moment, and my rent is only £200 a month. My current debt is around £31000. This is with 4 loans, 2 credit cards and various finance agreements. I have made a table to see these in detail
I worked out I pay roughly £1200 towards my debt each month, and I'm anxious about my future. I would love to move in with my partner next year but money is a constant worry for me at the moment. With all my insurance, expenses and bills put into the equation, I can barely save anything each month
I'd really like some advice on what to do. Every day now since my recovery I feel a sense of shame and frustration with myself but my therapy has been helping me. 

Thank you so much for reading,
Jacob

Brie

Well done for facing up to the debt.  This is a big step after the addiction and depression.  I'm glad you have therapy to support you and now can take the next step to a better life.  

First step here is to ask people to fill out a statement of accounts (see below in my signature for the link).  The fact that you have put together a table with the details should make this fairly straight forward.  Copy and paste that back here and people will be able to advise in more detail.  Don't worry - we don't bite! (well not much )  Most of us have been through our own debt issues so know what it's like and know that outsider advice can be a great idea.  

Don't be surprised if you get told to stop paying your debts.  It's a common thing to stop paying, get the debts to default and then find a solution that will work for you.  If you want info on the solutions available I always suggest reading this from the DebtCamel website.  Debt solutions - what is your best option?

Hope to hear more from you soon!!

RAS

Welcome

Your situation is not unusual, and with debt around 1 time next income, manageable one way or the other.

You need to do an SOA. Look for the NEW POSTERS stickie on this forums front page? Open that and you can find the link in sourcrates' signature.

You can share this with us if you wish. We don't bite and from experience it's more likely that you'll fail to include money for irregular but predictable expenditure and emergency funds than be told you've overspent.

The other thing you need to start doing is researching banking groups. You'll need a basic bank account with a provider who has no relationship with any with which you have debt, as there will be no credit check. Come back when you've identified one.

 And an instant access ISA for your emergency fund.

Auriel1198

Here is some information I have compiled. Thanks for reading.

Debts:	Amount:	Interest:	Amount I’m Paying A Month:
1) Creation	£204.20	0% APR	£51.05
2) PayPal	£138.65	0% APR	£138.65
3) Barclays	£271.14	19.20% APR	£63.87
4) HMRC	£403.49	Fluctuates/on-going	£135.49
5) NatWest Credit Card	£1,779.55	18.90% APR	£55.16
6) NatWest Loan 1	£3,987.41	22.00% APR	£128.13
7) NatWest Loan 2	£4,236.94	21.80% APR	£132.12
8) Santander Credit Card	£4,341.84	Not sure, but high cash-interest rate	£89.34
9) NatWest Loan 3	£6,484.64	19.90% APR	£209.58
10) Lendable Loan	£9,346.77	48.90% APR	£191.75
	£31,194.63		£1,195.14

Grumpelstiltskin

The first thing we say is if you can't afford to pay your unsecured debts then stop paying the nothing terrible is going to happen if you do stop paying.

As  you are self employed you need to contact Business Debt Line for help, the normal debt help websites such as Stepchange can't help you.

Debt advice | Free Debt Advice and Support | Business Debtline

We do need to see a full SOA, don't rush trying  to do one, it takes time to do a correct one.

There will be a way forward, just don't panic.

Auriel1198

Thank you. How do I do the SOA?

RAS

Stop paying the other debts and clear the HMRC one this month as that is priority debt. Are you putting aside 25% of your self employed income to cover future HMRC bills?

Grumpelstiltskin

Auriel1198 said:

Thank you. How do I do the SOA?

Link is here. SOA Calculator

Format for MSE and paste on here. 

Auriel1198

[font=courier new][b]Statement of Affairs and Personal Balance Sheet[/b][b]

Monthly Income Details[/b]

Monthly income after tax................ 2200

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

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

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

Total monthly income.................... 2200[/b][b]

Monthly Expense Details[/b]

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

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

Rent.................................... 200

Management charge (leasehold property).. 0

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

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

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

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

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

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

Mobile phone............................ 25.3

TV Licence.............................. 0

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

Internet Services....................... 0

Groceries etc. ......................... 150

Clothing................................ 30

Petrol/diesel........................... 100

Road tax................................ 3

Car Insurance........................... 61.78

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

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

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

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

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

Medical (prescriptions, dentist etc).... 10

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

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

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

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

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

Presents (birthday, christmas etc)...... 200

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

Entertainment........................... 100

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

Emergency fund.......................... 0[b]

Total monthly expenses.................. 1020.08[/b]

[b]

Assets[/b]

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

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

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

Car(s).................................. 750

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

Total Assets............................ 750[/b]

[b]

No Secured nor Hire Purchase Debts[/b]

[b]Unsecured Debts[/b]

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

Creation.......................204.2.....51.05.....0

PayPal.........................138.65....138.6.....0

Barclays Finance...............271.1.....63.8......19.2

Lendable Loan .................9346......191.7.....48.9

NatWest Loan 3 ................6484......209.5.....19.9

Santander Credit Card..........4341......89.3......0

NatWest Loan 2 ................4236......132.1.....21.8

NatWest Loan 1.................3987......128.1.....22

NatWest Credit Card............1779......55.1......18.9

HMRC...........................403.49....135.4.....0[b]

Total unsecured debts..........31190.44..1194.65...-  [/b]

[b]

Monthly Budget Summary[/b]

Total monthly income.................... 2,200

Expenses (including HP & secured debts). 1,020.08

Available for debt repayments........... 1,179.92

Monthly UNsecured debt repayments....... 1,194.65[b]

Amount short for making debt repayments. -14.73[/b]

[b]Personal Balance Sheet Summary[/b]

Total assets (things you own)........... 750

Total HP & Secured debt................. -0

Total Unsecured debt.................... -31,190.44[b]

Net Assets.............................. -30,440.44[/b]

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

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

enthusiasticsaver

You only have two options but at least you are tackling the debts now before they get any bigger.  

The first option is to cut back even further, take advantage of the fact you have very low outgoings at the moment and throw everything at the debt to pay it down aggressively starting with the most expensive debts like that Lendable Loan and Nat West loans.  I assume at least one of those loans were debt consolidations as you do not have any assets? The advantage of this is it keeps your credit record intact but does require a tremendous amount of budget discipline as you resign yourself to at least 3 more years of having very little spare money. 

The second option is to default and set up a DMP either managing it yourself or through a free debt charity. This will affect your credit record for 6 years which is as long as it takes to get the defaults to drop off. The advantage is that the interest will stop so stopping the debts rising further and you can then set an affordable monthly repayment to the DMP.  You will no longer have access to credit but that is no bad thing. 

Emmia

£200 a month (£2.4k per year) on presents is too high, but you haven't budgeted for car maintenance/MOT costs, unless they're covered elsewhere.

Have you told your parents/girlfriend about the situation? This is not to ask them to pay off the debts, but to be understanding /supportive when you decline to do things which are outside your budget.