Overwhelmed by debt - Progressing down Default and DMP route - Advice and help needed

Always_Fishing

Hi,

I've not had a good relationship with credit and debt throughout my adult life, initially starting around 15 years or so ago when I got into a catalogue and payday loan cycle following me and my now wife renting our own house and having children quite young and not knowing any better. We got out of this with the help of Stepchange through a successful DMP over approx 6 years., fresh start and looking good. Unfortunately again purely through not budgeting and living beyond my means I've ended up much deeper in debt through credit cards and loans. I've always naively thought I could just earn my way to a position where a budget wasn't required and almost felt sorry for myself, thinking why do I have to bother with worrying how much I spend in a supermarket when I earn reasonably well in my peer group, work hard etc. and that it all just wasn't fair (I know now, grow up...).

All of this has led to my current situation, debt spiralling out of control, paying of minimum CC payments to re-use straight away to pay for groceries etc., constantly looking for more credit options to consolidate or just get by until my income goes up or things start to improve, but reality has set in that, that is fantasy at the minute and after doing my first ever proper budget plan, it's been a huge wake up call. 

After doing some research on this forum and online, I believe if I'm right by best approach initially is to default on the debts, then initlally make token payments for a few months until my income and expenditure improves. I did consider applying for a DRO but I don't think this will suit me as I expect my income situation to improve in the next financial year, along with potentially 2 reasonably small lump some payments over the next few months of a possible 2-4k each which I believe would work against me getting a DRO if my research is correct.

Currently my budget shows me at approx -£20, however I have mapped this over the next 6 months and the situation does improve after this month and subsequently each month. This is due to some priority bills reducing, such as council tax in the next financial year, my gas and elec reduces slightly in December, my mobile payments also drop slightly in December, along with a salary increase due in April along with the lump sumps in-between. Without the salary increase, my budget shows £122 left towards debts in May '26, not a great amount however this is not accounting for the salary increase and lump sums I will receive.

Also, my budget is created for normal circumstances however some large parts of my budget are not currently required due to me being off work at the minute due to an operation, which has been a blessing in disguise as it has allowed me to put a lot of focus into this, so the hobbies and sports budget, some of the fuel budget, some of the grocery budget which would go to meals at work and a couple of others aren't currently required so are going directly into a new cash ISA I have set up. I have also set up a new bank basic bank account not linked to any creditors which I've been fortunate enough to get a £175 switch bonus from.

I've copied my SOA below for info. I'm hoping I can be advised I am taking the right initial steps in defaulting, then managing the defaults myself as they come in with initial token payments until my situation improves next year. If not is there a better solution? 

Am I right in now just sitting tight and ignoring calls, emails etc until I receive a notice of action?

Further down the line should I be looking into affordability complaints etc.?

I appreciate everyone's help in advance, this forum seems a godsend, I wish I had screwed my head on straight before it came to this but better late than never I suppose. Hopefully, if I can keep this post up to date someone will be around to hold my hand a little and help me along the way, as it's still a very daunting prospect despite my research.

[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......... 3

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

Monthly Income Details[/b]

Monthly income after tax................ 3927.52

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

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

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

Total monthly income.................... 3927.52[/b][b]

Monthly Expense Details[/b]

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

Secured/HP loan repayments.............. 534.4

Rent.................................... 900

Management charge (leasehold property).. 0

Council tax............................. 187

Electricity............................. 142.86

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

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

Water rates............................. 92

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

Mobile phone............................ 211.82

TV Licence.............................. 14.63

Satellite/Cable TV...................... 72

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

Groceries etc. ......................... 507.33

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

Petrol/diesel........................... 195

Road tax................................ 16.62

Car Insurance........................... 75.72

Car maintenance (including MOT)......... 44.75

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

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

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

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

Medical (prescriptions, dentist etc).... 0

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

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

Contents insurance...................... 30

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

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

Presents (birthday, christmas etc)...... 100

Haircuts................................ 61

Entertainment........................... 23.98

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

Emergency fund.......................... 0

Pocket Money............................ 125.67

Hobbies & Sports ....................... 174

FIL Loan................................ 257.28[b]

Total monthly expenses.................. 3766.06[/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 ...... 14605.2..(534.4)....6.9[b]

Total secured & HP debts...... 14605.2...-.........-   [/b]

[b]Unsecured Debts[/b]

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

Aqua CC........................4699.51...314.4.....30.38

Barclaycard CC.................410.44....14.41.....31.04

Capital One CC.................1034.47...76.02.....30.34

M & S CC.......................5605.33...221.1.....26.9

Capital One CC.................1023.81...55.51.....30.34

Fluid CC.......................3422.27...156.5.....29.84

Vanquis CC.....................3682.21...289.7.....66.4

Zopa CC........................1649.35...119.6.....39.65

Jaja CC........................1547.99...95.67.....26.9

118 Money Loan.................3020.43...52.99.....39.9

Abound Loan....................7169.1....198.8.....22.82

Bamboo Loan....................3267.15...93.35.....44.7

Finio Loan.....................2846.36...129.3.....54.9[b]

itsthelittlethings

Three big things jump out at me. You may be on an ok salary but you’re a single income household supporting 2 adults and 3 children. It’s not surprising you’re struggling.

Can you cancel the satellite tv? And are you really spending nearly £200/ month on gifts?

Brie

Well done for getting started on this.  So difficult I expect being your second go at getting things right.  Hopefully the good habits will stick this time.

So now to ask some questions.....or one, really.  How accurate is this?

Zero for clothing?  How old are the kids, do they not need anything?  School uniforms?

£72 a month for haircuts?  Can that be cut (sorry) a bit?
£184 a month for presents?  No.  That has got to be reduced.  That's over £2k a year!

Over £200 for mobiles but nothing for internet?  Or is that bundled?
And a hefty bill for pay TV.  When can you get away from that?  Or maybe do without the TV licence if you're not watching live stuff or iPlayer.

Now about the DRO.  That's going to take some time as everything should default first.  And I was going to say that owing FiL is a debt like the others (yes but no but) And then I thought you don't want to mess up there so frankly I'd pay him off asap.  One of the reasons I say that is that with a DRO you can't be treating creditors preferentially.  But if it takes a year to get to a DRO (it may take that long) then FiL's little bit of money will be well into the past and can be forgotten about.  Usually a year would do it but there's nothing public about this debt so likely won't be noticed.  If asked "yeah I owed FiL a bit but that was paid back ages ago."  

Right - so I'll let others put in their tuppence wortha as well!  Best of luck with it all!!!

Always_Fishing

itsthelittlethings said:

Three big things jump out at me. You may be on an ok salary but you’re a single income household supporting 2 adults and 3 children. It’s not surprising you’re struggling.

Can you cancel the satellite tv? And are you really spending nearly £200/ month on gifts?

Hi,

Sorry, I may have completed this wrong. We're not a single income house, my wife is self employed, her income on average is around £14-15k year, however I've only competed this based on my outgoings as all the debts are in my name, is this incorrect?

I'm currently in contract on sat TV but have recently reduced it to the bare minimum I can without breaking contract which is £72.  

I'm not spending £200 each month on gifts, I've just tried to average out what we'd usually spend over a year for 3 children and family over Xmas and birthdays, I have estimated this on the higher side, as my wife would also be contributing usually. This is just my first attempt at a budget, it's certainly not tried and tested yet so I am absolutely willing to reduce this figure if required. Obviously anything we didn't spend would go towards savings or debt afterwards. 

itsthelittlethings

Always_Fishing said:

itsthelittlethings said:

Three big things jump out at me. You may be on an ok salary but you’re a single income household supporting 2 adults and 3 children. It’s not surprising you’re struggling.

Can you cancel the satellite tv? And are you really spending nearly £200/ month on gifts?

Hi,

Sorry, I may have completed this wrong. We're not a single income house, my wife is self employed, her income on average is around £14-15k year, however I've only competed this based on my outgoings as all the debts are in my name, is this incorrect?

I'm currently in contract on sat TV but have recently reduced it to the bare minimum I can without breaking contract which is £72.  

I'm not spending £200 each month on gifts, I've just tried to average out what we'd usually spend over a year for 3 children and family over Xmas and birthdays, I have estimated this on the higher side, as my wife would also be contributing usually. This is just my first attempt at a budget, it's certainly not tried and tested yet so I am absolutely willing to reduce this figure if required. Obviously anything we didn't spend would go towards savings or debt afterwards. 

Ok, you can do it that way, all the figures are your contribution to household expenses? Your contributions look quite high then - I’m assuming they’re not half (or a proportion based on wages) of costs. I’d be interested to know what your partner is contributing to food, for instance, or mobile phones or council tax.

Always_Fishing

Brie said:

Well done for getting started on this.  So difficult I expect being your second go at getting things right.  Hopefully the good habits will stick this time.

So now to ask some questions.....or one, really.  How accurate is this?

Zero for clothing?  How old are the kids, do they not need anything?  School uniforms?

£72 a month for haircuts?  Can that be cut (sorry) a bit?
£184 a month for presents?  No.  That has got to be reduced.  That's over £2k a year!

Over £200 for mobiles but nothing for internet?  Or is that bundled?
And a hefty bill for pay TV.  When can you get away from that?  Or maybe do without the TV licence if you're not watching live stuff or iPlayer.

Now about the DRO.  That's going to take some time as everything should default first.  And I was going to say that owing FiL is a debt like the others (yes but no but) And then I thought you don't want to mess up there so frankly I'd pay him off asap.  One of the reasons I say that is that with a DRO you can't be treating creditors preferentially.  But if it takes a year to get to a DRO (it may take that long) then FiL's little bit of money will be well into the past and can be forgotten about.  Usually a year would do it but there's nothing public about this debt so likely won't be noticed.  If asked "yeah I owed FiL a bit but that was paid back ages ago."  

Right - so I'll let others put in their tuppence wortha as well!  Best of luck with it all!!!

Hi, the wife usually handles kid clothing so I haven't included that, the budget is just based on my
debts and outgoings only, I can review if this is t the correct way to approach it. 

The haircuts can possibly be reduced, it's not just be getting fancy hair cuts though I promise ha, that covers me and the children.  

The gifts is an estimate to be honest averaging out what we might spend a year for Xmas and birthdays for kids and family, it's not a monthly expense, more a projected saving. This is definitely on the higher side though as wife would normally contribute to this also. My thoughts were any excess would stay in my savings/emergency fund. It's my
first estimate at a budget so I'm expecting it to be picked apart and chopped and changed until
its nailed.  

The mobiles is so high because I pay for mine,
my wife's and 3 children's contract. On top of that I was stupid enough a couple of years ago to add a MacBook and couple of accessories on there also, that bill does start to drop from December though and a little more through next year and certainly devices will be paid off, leaving sim only contracts. 

I have another 12 months left on TV, I've lowered it to its lowest amount as recently as last week, removing everything other than what I'm contracted to. 

Do you think a DRO should still be an option I consider then taking the FIL comments into account? I was concerned about starting one now given my circumstances are likely to change over the next 6 months for the better a little, however it seems I may have been expecting that to start to early anyway. Could I offset any salary increases to maintain a DRO by increasing pension contributions as and when?

In the meantime, am I still doing the right thing waiting for accounts to default then making contact to arrange payment plans, starting with token payments short term in your opinion?

itsthelittlethings

Also - you should be getting that gifts cost down.

Always_Fishing

itsthelittlethings said:

Always_Fishing said:

itsthelittlethings said:

Three big things jump out at me. You may be on an ok salary but you’re a single income household supporting 2 adults and 3 children. It’s not surprising you’re struggling.

Can you cancel the satellite tv? And are you really spending nearly £200/ month on gifts?

Hi,

Sorry, I may have completed this wrong. We're not a single income house, my wife is self employed, her income on average is around £14-15k year, however I've only competed this based on my outgoings as all the debts are in my name, is this incorrect?

I'm currently in contract on sat TV but have recently reduced it to the bare minimum I can without breaking contract which is £72.  

I'm not spending £200 each month on gifts, I've just tried to average out what we'd usually spend over a year for 3 children and family over Xmas and birthdays, I have estimated this on the higher side, as my wife would also be contributing usually. This is just my first attempt at a budget, it's certainly not tried and tested yet so I am absolutely willing to reduce this figure if required. Obviously anything we didn't spend would go towards savings or debt afterwards. 

Ok, you can do it that way, all the figures are your contribution to household expenses? Your contributions look quite high then - I’m assuming they’re not half (or a proportion based on wages) of costs. I’d be interested to know what your partner is contributing to food, for instance, or mobile phones or council tax.

Hi,

Yes they're my contributions currently. Generally my wife picks up on some groceries, school trips, kids clothes, most things children related that aren't contracted fixed cost so to speak, then I look after the bills, or at least I'm supposed to... she does heavily contribute to gifts though also, that's a point well taken on board, I can absolutely reduce that outgoing. 

Thank you again 

Smudgeismydog

It’s difficult to comment on some of the bills as it’s not clear if that’s the total for the household, or your share of the cost, e.g groceries at £507pm seems reasonable for a family of your size, but as noted clothing at £0 is not realistic.

How old are your children? Can any of them work so you can stop paying their pocket money?

Could your wife increase her earnings from work or take on a second job?
Hobbies and sports at £260 seems huge, what does this cover?

Well done for posting, some of those credit card interest rates are eye watering. You do sound determined to address this, it will take getting the whole family on board as it will mean some lifestyle changes, but this is doable.

Always_Fishing

Smudgeismydog said:

It’s difficult to comment on some of the bills as it’s not clear if that’s the total for the household, or your share of the cost, e.g groceries at £507pm seems reasonable for a family of your size, but as noted clothing at £0 is not realistic.

How old are your children? Can any of them work so you can stop paying their pocket money?

Could your wife increase her earnings from work or take on a second job?
Hobbies and sports at £260 seems huge, what does this cover?

Well done for posting, some of those credit card interest rates are eye watering. You do sound determined to address this, it will take getting the whole family on board as it will mean some lifestyle changes, but this is doable.

Hi,

Everything is my contribution. The groceries include things like toiletries and work meals also. Clothing is handled by my wife. It has just dawned on my I also need a clothing budget too though, luckily clothes aren't something I splash a lot out on but I will review and add this in. 

My children and 12, 15 and 16. My eldest has just left school so hopefully this one at least will cease soon, it's £10 pw but obviously adds up, same for his phone bill. 

We have discussed with my wife regarding another job, it's always been balanced as the kids were young by the fact she as able to work from home and balance her hours as and when around school so we never had the need for childcare, unfortunately now she tends to be earning less than a few years since, and we don't have the childcare issue now the kids are order so this may have to be an option depending on how my salary review goes at least for next year. She is fully on board with all of this by the way, I'm extremely lucky with supportive she is with this. 

Regarding the budget overall, it is just my first draft as I've never done anything like this, so some things will be estimates and I have probably aired on the side of caution with the mindset I didn't want it to fail first month. I thought if I can manage a month, track everything meticulously I'll have a better idea and can then review. The hobbies and sports for example is a lot to do with my love of match fishing, I don't expect to necessarily spend this, especially as there is usually some prize money to come back, but this will be reviewed and amended and all of this over the next few months will go in savings as I'm not currently participating. I'll also add in fully aware this is absolutely a luxury cost that will likely be sacrificed, I just wanted to understand how far my salary would go in best circumstances. 

Thank you, appreciate the advice and response. 

Brie

As you can see there's lots of people piling in to help - hope it isn't too overwhelming!!!

Yes a DRO is still possible and very likely a good solution for you.  Yes it will effect you for a few years but so does debt so best to get it dealt with and try to not fall into the old bad habits.  

re FiL  - all I'm saying is pay him off asap or consider it something that your wife is paying so it's not reflected when you come to do a DRO.  I knew someone who had to delay their DRO by a year as a couple of months before we'd wanted it to start they got together a bit of cash and paid off a loan.  That was very visible on their credit history so the DRO would have failed immediately.  FiL doesn't show on your credit history (I assume! unless he's actually a bank) so won't be obvious to anyone but you.  The alternative is to officially consider him one of your debts and he'll get written off along with the rest of your creditors.  I assumed that would not make him a happy man.