Just overwhelming

Leofather123

Hi there, first time post and have been in awe of all you SME's for so many years amd would desperately appreciate your guidance.

I’m a father of three and have always worked hard to support my family. Things became financially strained when my wife left work after our twins were born and our eldest was 2 years old.
I now owe £54k across 8 unsecured debts (5 credit cards, 3 loans). Until August, I managed to pay everything monthly, but it left us with almost nothing to live on. I’ve since missed a few payments, though I’ve always kept up with priority bills — mortgage, utilities, and car finance — and will continue to do so.

My mortgage fixed rate with NatWest ends in 8 months. I’ve never missed a payment with them in nearly 10 years, and none of my other debts are linked to NatWest. I’m hoping they’ll offer a new deal without penalising me for missed payments elsewhere.

I’ve just submitted details to StepChange for a Debt Management Plan, but I’m feeling overwhelmed by all the talk of defaults, interest freezes, late fees, and switching bank accounts. Nothing’s finalised yet, so I could still withdraw if needed.

My biggest concern is what happens next — especially around debt collectors. All debts are unsecured, so I’m trying to understand the real risks. Loans are with Zopa (2) and MBNA; credit cards with Tesco, MBNA, Virgin, Zopa, and M&S. I’m still making minimum payments to M&S and Virgin, and had a temporary agreement with Tesco that ends this month. Zopa gave me two months to get back on track but wouldn’t freeze interest, so I’ve fallen behind.

Any advice would be hugely appreciated — I’m just feeling so lost. Thank you 

Brie

And breathe!  Inhale, exhale and relax.  Well done.  Be assured you're not the first and won't be the last that ends up in a bit of a pickle. 

Best thing to do is to start with completing a statement of account (SOA, see below in my signature for the link).   If you've submitted details to StepChange you'll have most of the info at your fingertips.  Post it back here and the various helpful types will have a poke at your budget to see what might be sharpened up to make things more affordable.  

Glad to hear you're covering the priority bills.  Now stop paying the non priority ones and let them default (yes, scary).  Save the money for your emergency fund.  SC will know (but sometimes ignores) that a DMP shouldn't be put in place until the defaults have happened.  

Do take the leap and open a new bank account if you have an overdraft or the account is linked to any other debt.  Choose a bank that is unrelated to any of your debts and open an account and then manually set up any direct debits etc, don't do a "switch".  

Lots of practical advice is ready and waiting for you once we see some details!!

sourcrates

OK, all of your unsecured debts are what are deemed "non priority".

Obviously as you are aware, priority debts come first, non priority lenders realise this, and once they are aware of your financial difficulties, it really all runs quite smoothly, so no need to worry on that score.

There are lots of scenarios to be aware of, but I don`t want to flood you with too much information straight away.

We tend to advise people to wait until debts have defaulted before starting in debt management, this has three benefits for you, first, you can save up an emergency fund, second, all interest gets stopped, and third, your credit file will improve after 6 years regardless of what else happens.

You will be advised to follow this process rather than jumping straight in to a stepchange plan.

Also re-mortgage with the same lender does not require a new credit check so DMP`s are fine in that regard.

Leofather123

Thamk you . 
I'm receiving half a dozen calls a day at present. What am i meant to say to the non priority companies who are calling? (Mainly Zopa) and do I contact the others on basis I would stop paying them to build up an emergency fund?
By default, do you mean accumulated missed payments? And how does this move to freezing interest etc..
Feel free to send on more useful information on the process, please, and in the meantime i'll complete the SOA. 
THAMK YOU Brie and Sourcrates. 🙏

sourcrates

Leofather123 said:

Thamk you . 
I'm receiving half a dozen calls a day at present. What am i meant to say to the non priority companies who are calling? (Mainly Zopa) and do I contact the others on basis I would stop paying them to build up an emergency fund?
By default, do you mean accumulated missed payments? And how does this move to freezing interest etc..
Feel free to send on more useful information on the process, please, and in the meantime i'll complete the SOA. 
THAMK YOU Brie and Sourcrates. 🙏

Its best to have a plan, so if collection calls are a nuisance, as the pesky auto-dialler can be annoying, you can take action to stop that very easily.

Under GDPR you have the right to be contacted how you choose, so if you want to stop collection calls, write to the lender/lenders concerned, and tell them that in future you consent to contact in writing only, and to remove all telephone numbers they currently hold for you, from their systems.

They must comply under GDPR or face a hefty fine from the ICO.

Leofather123

Hello Brie,
I hope I've followed process correctly below re your request for my SOA. I recently cancelled my life insurance i had for 9 years with Aviva (£88 p/m) to save more money towards debt psyments. I wish I hadn't now. 

re your and Sourcrates replies, shall I postpone the DMP with SC for now? (only submitted to them earlier today but it did include the D.D. instruction).

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

Household Information[/b]

Number of adults in household........... 2

Number of children in household......... 3

Number of cars owned.................... 0[b]

Monthly Income Details[/b]

Monthly income after tax................ 4450

Partners monthly income after tax....... 200

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

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

Total monthly income.................... 4650[/b][b]

Monthly Expense Details[/b]

Mortgage................................ 1590

Secured/HP loan repayments.............. 1033

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

Management charge (leasehold property).. 0

Council tax............................. 217

Electricity............................. 222

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

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

Water rates............................. 70

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

Mobile phone............................ 60

TV Licence.............................. 15

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

Internet Services....................... 90

Groceries etc. ......................... 600

Clothing................................ 0

Petrol/diesel........................... 30

Road tax................................ 55

Car Insurance........................... 38

Car maintenance (including MOT)......... 24

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

Other travel............................ 92

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

Other child related expenses............ 40

Medical (prescriptions, dentist etc).... 11

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

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

Contents insurance...................... 35

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

Other insurance......................... 16

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

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

Entertainment........................... 0

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

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

Total monthly expenses.................. 4258[/b]

[b]

Assets[/b]

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

House value (Gross)..................... 620000

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

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

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

Total Assets............................ 620000[/b]

[b]

Secured & HP Debts[/b]

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

Mortgage...................... 280000...(1590).....1.6

Secured Debt.................. 40000....(556)......0

Hire Purchase (HP) debt ...... 30000....(477)......0[b]

Total secured & HP debts...... 350000....-.........-   [/b]

[b]Unsecured Debts[/b]

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

Zopa loan......................5900......365.......0

Zopa loan......................11000.....308.......0

MBNA loan......................1700......331.......0

Zopa credit card...............1200......50........0

M&S credit card................3990......98........0

Virgin credit card.............5400......70........0

Tesco credit card..............8700......250.......0

MBNA credit card...............16900.....250.......0[b]

Total unsecured debts..........54790.....1722......-  [/b]

[b]

Monthly Budget Summary[/b]

Total monthly income.................... 4,650

Expenses (including HP & secured debts). 4,258

Available for debt repayments........... 392

Monthly UNsecured debt repayments....... 1,722[b]

Amount short for making debt repayments. -1,330[/b]

[b]Personal Balance Sheet Summary[/b]

Total assets (things you own)........... 620,000

Total HP & Secured debt................. -350,000

Total Unsecured debt.................... -54,790[b]

Net Assets.............................. 215,210[/b]

[i][/i][/tt]

elsien

You have children. That is not a realistic budget because there is nothing in there for clothes or for birthday and Christmas presents. Your budget won’t work unless the things that you know will be needed are accounted for. 

Have you looked at bank statements and the receipts for the past 12 months or so to see what you actually have been spending In these areas? 

RAS

Agree with elsien re the elements missing from your budget? There are other small elements missing

I do hope you've got building insurance in with the contents?

What are those two very large secured debts about?

How have you been spending £600 on groceries monthly, even if it includes nappies

itsthelittlethings

Are the two large secured debts cars? Is there any scope for returning them and getting something cheaper?

gwynlas

And breathe. At this stage do not make arrangements with anyone or complete SOAs that they request it is u to you to decide whether to self manage or use Stepchange for your DMP.
You can tell any callers that you are currently unable to service debt and are considering options but require them not to contact you until the new year
Hopefully you are already thinking of a sensible Christmas and not spending more than you can afford on gifts.
Keep on posting as there are many knowledgible users on the forum.
It will be a long time before you are approaching being debt free so be kind to yourselves and do not commit to tightening your belts to the extent that you cannot breathe but live within your income.

in_need_of_direction

I see your uncertainty about cancelling life insurance. Before panic kicks in it might be worth investigating if your employer offers death in employment benefits. It may alleviate some concerns.

also, given how little car fuel appears to cost, is it worth paying maintenance and insurance costs or would a car club be an option?