Help required with large Persistent Credit Card Debt. Have had a recent first Default.

theville32

Hello Debt-free wannabe's,

I am new to the Forum so just wanted to say hello first before posting anything in detail.

Just wondered if you would be ok with me listing details of 6 of my credit cards and one loan?

Thanks, M

Brie

Welcome!

yes - you can list your debts.  we normally can reply best if you post a full statement of accounts (see the link in my signature) but if you want to start by just discussing the debts themselves that's ok too.  Some people start off with rounded amounts, others go into full detail with accurate totals, amount paid monthly, APR etc.  

But the more detail you can give then we can give you better answers to any questions plus make suggestions to answer questions you haven't though up yet.

CliveOfIndia

theville32 said:

Just wondered if you would be ok with me listing details of 6 of my credit cards and one loan?

Of course it's OK !  We're a friendly bunch here, and always aim to offer impartial advice (even if it may be a tad unpalatable at times).  Feel free to post as much detail as you wish.  But as Brie says, it's probably more helpful if you can post a full SOA.  That way, fellow members can offer unbiased advice, based purely upon the facts rather than any kind of judgement.

theville32

Hi Brie and Clive, thanks for the warm welcome and the kind offer to help in what is a pretty stressful situation. If its ok, I think I will start with listing my debts first as the SOA is a bit scary at this point. I may tackle that later!

I got myself into trouble when Covid hit, when I lost a regular free-lance client which was providing £18k per year. This helped greatly to support my other commercial photography business, which had only been running for a few years at the time. Unfortunately the client restructured how they worked and I never got anymore work from them :-( 

Fast forward 5 years and I now owe around £28k in debt (£19k on credit cards and a £9k bounce back loan). Work is unbelievably quiet and I have just made the decision to cease this business due to the high overheads. I will move out of my rented space on 31/03/26, saving me over £1k p/mth. Although may have to pay to store some of my equipment locally. I have been on Universal Credit since April and are just scraping by each month, while living in my personal account overdraft of £1250. Normally as I get to the payment date for UC, I am around £1000 overdrawn so things are very tight finance-wise. 

After making the list below, I see that I could potentially emply the 'Avalanche' payment approach to the Credit Cards. I did do this recently, but it appears I am paying more than the minimum on a few cards. This can be amended.

Recent activity is that I defaulted on the MBNA creadit card in July 25. I have also agreed to a payment plan with Halifax for 5 months this week. However, I am wondering whether it may be better to explore a DMP or IVA with the recent CC Default? It will be difficult to recover from the debt and try to rebuild so I am looking for some help on the best options available, while keeping the impact to my credit file in mind.

Any help greatly appreciated!

Here is a breakdown of the debt:

01. Type of account - MBNA Credit Card (old 0% Balance Transfer card whose free interest period expired)
Date commenced - 2004
Approx balance - £11,960.00
Arrears (minimum payments not paid):
Date last paid - August 2024
Arrears (minimum payments not paid): £1250.00
Interest charged: 0% 
Are you on arrangement or not paying - Account is in Default and has been closed. Currently not paying anything for 8-12 months due to stress and financial reasons.
Question: Should I be trying to clear this debt, before the default leaves my credit file eg in 6 years? If so, this would cost an additional £167.00 per month if I started now.

02. Type of account - Halifax Clarity Credit Card 
Date commenced - 2013
Approx balance - £3500.00
Date last paid - March 2025
Arrears (minimum payments not paid): £380.00
Interest charged: 0% then revert to 25.5% (tbc) after payment plan (below)
Are you on arrangement or not paying - Have just setup a payment plan where they have frozen interest on both the Halifax and Lloyds Credit Cards. The agreement is that I will pay £111.15 over 5 months with first payment coming out on 23/12/2025.

03. Type of account - Lloyds Credit Card (old 0% Balance Transfer card whose free interest period expired)
Date commenced - 2016
Approx balance - £920.00
Date last paid - November 2025
Interest charged: 28.1%
Are you on arrangement or not paying - Currently paying £60 monthly (minimum payment £28.00)

04. Type of account - Nationwide Credit Card (old 0% Balance Transfer card whose free interest period expired)
Date commenced - 2014
Approx balance - £1650.00
Date last paid - Currently paying £45.00 monthly
Interest charged: 9.9%
Are you on arrangement or not paying - Have been put on a ‘Paydown plan’ where I am paying 9.9% interest and £45.00 p/mth. I think they said they will close the account once the balance is paid.

05. Type of account - Personal Barclaycard (old 0% Balance Transfer card whose free interest period expired)
Date commenced - 1999
Approx balance - £960.00
Date last paid - 16/11/2025
Interest charged: 16.6%
Are you on arrangement or not paying - Currently paying £50 monthly (minimum payment £23.00)

06. Type of account - Barclaycard Commercial
Date commenced - 2005 ?
Approx balance - £2940.00
Date last paid - November 2025
Interest charged: 21%
Are you on arrangement or not paying - Currently paying minimum monthly payment approx £80.00 p/mth

07. Type of account - Barclaycard Bounce-back Loan
Date commenced - 2020 ?
Approx balance - £6410.00
Date last paid - November 2025
Interest charged: ?
Are you on arrangement or not paying - Currently paying monthly payment approx £132.00 p/mth
Note: I have used up all the payment options provided with Bounce back loans.

Sub-total personal owed: £18,990.00
Sub-total business owed: £9,350.00

Total owed: £28,340.00
Total current monthly payments: £367.00. 
However, will need to increase this by £100.00+ p/mth in 5 months when Halifax minimum payments resume.

Thanks so much for taking a look. M

theville32

One thing I forgot to mention. We are currently renting and were hoping to buy a house one day. I have made sure that my wife's finances are not connected to my own, so no joint accounts etc. 

ManyWays

Without seeing your SOA, its hard to say anything useful. What is your income going to be going forward? Are you buying or renting? Do you owe any taxes on your business? Few people on UC have hundreds of pounds spare to pay to debts. 

RAS

Firstly ignore the idea of an IVA, even if you own a home/mortgage. The people promoting them are mainly lead generators looking for their referral fee.

Secondly, well done on being brave and addressing the business issues now it's plainly not viable. 

Suspect you need to talk to business debtline re  the bounce back loan, as the other debt charities won't touch business stuff.

We tend to have a slightly different attitude to debt charities. If you go straight into a DMP you get AP/AR markers which affect your credit record for 6 years after they are paid off. You also are allowed £20-30pm towards an emergency fund. Which results in a lot of stress every time anything goes awry.

If you just stop paying all consumer debt, everything drops off your credit record in 6 years. That also halts interest and fees whilst allowing you to save a decent emergency fund and later a war fund for reduced settlements. 

We don't know enough to know if affordability claims could be successful but even old accounts might be reduced a bit.

And you should aim to pay no more than 50% of the debt value in reduced settlements.

theville32

ManyWays said:

Without seeing your SOA, its hard to say anything useful. What is your income going to be going forward? Are you buying or renting? Do you owe any taxes on your business? Few people on UC have hundreds of pounds spare to pay to debts. 

Hi ManyWays, thanks for your reply. I will take a look at the SOA today as it looks like this would help assess the situation. 

- Right now I am relying on UC, which is paying around £1800 p/mth. I do have a little bit coming in from my business every now and then, although have had nothing for the past few months. 

- We are currently renting. 

- I don't owe any taxes on my business.

- Right now I am just managing to pay the £367.00 p/mth on CC/loan repayments. As you say, I only have a few hundred pounds spare each month, if anything and that is using my overdraft of £1250 to get by. However, should the UC payments be reduced or stop, then I am up !!!!!! creek. Hence the reason why I have decided to give notice on my rented premises to reduce the £1000 p/mth spent there.

I hope that helps and will follow-up later with the SOA. Thanks, M

Gandalf644

theville32 said:

I have been on Universal Credit since April and are just scraping by each month, while living in my personal account overdraft of £1250. Normally as I get to the payment date for UC, I am around £1000 overdrawn so things are very tight finance-wise. 

Just a quick note, I see you didn't include your overdraft in your list of debts above. You may also need to include the overdraft in your debts and ultimately default on repaying this along with your other debts.

However before doing so, and if your haven't done so already, it would be a good move to open a new current account (even a 'Basic' current account) with a bank totally unconnected to any of your creditors. DO NOT use the CASS switching service, but open it manually.  

Arrange for all your income and priority direct debits (utilities, council tax etc) to be manually switched to the new account. 

This is something you can get into action now before going down the route of defaulting etc. 

theville32

RAS said:

Firstly ignore the idea of an IVA, even if you own a home/mortgage. The people promoting them are mainly lead generators looking for their referral fee.

Secondly, well done on being brave and addressing the business issues now it's plainly not viable. 

Suspect you need to talk to business debtline re  the bounce back loan, as the other debt charities won't touch business stuff.

We tend to have a slightly different attitude to debt charities. If you go straight into a DMP you get AP/AR markers which affect your credit record for 6 years after they are paid off. You also are allowed £20-30pm towards an emergency fund. Which results in a lot of stress every time anything goes awry.

If you just stop paying all consumer debt, everything drops off your credit record in 6 years. That also halts interest and fees whilst allowing you to save a decent emergency fund and later a war fund for reduced settlements. 

We don't know enough to know if affordability claims could be successful but even old accounts might be reduced a bit.

And you should aim to pay no more than 50% of the debt value in reduced settlements.

Hi Ras, Thanks for your reply - it was really helpful and has helped to explain the 2 different scenarios which I was completely unaware of. I have also just read this link which explains the options you mentioned a bit clearer.

https://forums.moneysavingexpert.com/discussion/4904020/ap-dmp-markers-vs-defaults/p1

Scenario 1: Go straight into a DMP which gives you AP/AR markers up to the point that each account is paid off. This could mean that it affects my credit record for 10+ years, if taking 5-6 years to pay each account off.

Scenario 2: Stop paying my Cedit Cards so they Default as quickly as possible. Then try to arrange to pay back no more than 50% of the balance within 6 years of the Default date for each card?

Q1. If I went down the Scenario 2 option, after the cards Default would I then be negotiating with each card holder myself with regards to how much to pay back and over what period? Or would this best be done through a DMP?

Q2. As my current and business accounts (as well as Bounce back Loan) are all with Barclays, would you suggest continuing to pay these cards off normally? I am worried Barclays may take away my overdraft, threaten account closures which would obviously be an issue.

Q3. If I was to go ahead with Scenario 2, what should I do with cards that I already have Payment Plans with eg Halifax who I just set one up with this week and Nationwide? Would you stop paying the Payment Plans so they Default as soon as possible? I would hate doing this btw, but if that helps me to clear my debt sooner and get my credit rating back on track then I guess I have to consider this option.

Q4. Is there a certain number of Defaults I should avoid on my credit file? I read someone that 3 or more than 3 is really bad for your credit file. Or does the number of defaults not matter?

Thanks again for your reply and any help is greatly appreciated. Thanks so much for taking the time to help me find a path through this very stressful situation! 

Cheers,M

theville32

Gandalf644 said:

theville32 said:

I have been on Universal Credit since April and are just scraping by each month, while living in my personal account overdraft of £1250. Normally as I get to the payment date for UC, I am around £1000 overdrawn so things are very tight finance-wise. 

Just a quick note, I see you didn't include your overdraft in your list of debts above. You may also need to include the overdraft in your debts and ultimately default on repaying this along with your other debts.

However before doing so, and if your haven't done so already, it would be a good move to open a new current account (even a 'Basic' current account) with a bank totally unconnected to any of your creditors. DO NOT use the CASS switching service, but open it manually.  

Arrange for all your income and priority direct debits (utilities, council tax etc) to be manually switched to the new account. 

This is something you can get into action now before going down the route of defaulting etc. 

Hi Gandalf, thanks so much for the reply. Yes, good point about including the Overdraft in the list of Debts! That is a good suggestion about opening a bank account. 

I actually have a dormant First Direct account which is not park of any of the groups I currently have accounts with. However, its a digital bank - should this be a problem? 

I have also read that its really difficult to change your bank when on UC. Can you offer any help with this issue and maybe choosing a bank that might help the transition? Thanks so much for your help.