Find myself in debt again! (Scotland)

beezlebob

You would think I’d have learned the first time round! This time round it’s way worse! £30k worse!

I’m currently at the stage of missing the first payments so few months of defaults yet.

Is there a template letter for offering token payments (once debt has defaulted)

What do I need to provide to offer token payments? Bank statements? Salary slip? Proof of outgoings? How much to offer? Do lenders/collectors accept them?

How long have people been paying token payments? Do you ever get offers to settle?

My debts are made up from credit cards - some high street and some extremely high interest and two unsecured loans - one for zopa and one to lendable.

I’ve opened up a bank account that is not affiliated to my current bank but also use Starling. Is Starling bank connected to Zopa? Sure I read they used Zopa for lending? Would this affect me?

I’m trying to concentrate on an emergency fund. I have ZERO savings. What amount would you suggest? House bills only are £1500 monthly. I’m not in arrears with them.

Thanks

beezlebob

Also I’m not a homeowner

Brie

Well done for coming for advice after Plan A failed. It happens to a lot of people including some of us here.

OK so focus on your priority debts and let the rest slide to give you time to build up that emergency fund. Wait until they all default before setting up payments. Meantime you might want to check if they have a copy of your credit agreement or did an affordability check. Fail on either of these and the debts may be unenforceable.

And post a statement of accounts (SOA, link below) so we can give you better advice.

Creditors will want to see something like an SOA (usually their own template) so they can see what is actually affordable. They don't need to see bank statements or payslips. Once you know how much you can reasonably afford to pay your debts you divide that up and tell (not ask) them how much they will be getting from you on a pro rata basis. They may demand more but if you don't have it they can't get it. You pay them by standing order not direct debit so you stay in control.

The SOA may show where your budget is weak and help you plan on how to spend your money better. This will be essential so that there isn't a third time.

beezlebob

[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......... 2
Number of cars owned.................... 1[b]

Monthly Income Details[/b]
Monthly income after tax................ 1641.36
Partners monthly income after tax....... 614.67
Benefits................................ 112.88
Other income............................ 100[b]
Total monthly income.................... 2468.91[/b][b]

Monthly Expense Details[/b]
Mortgage................................ 0
Secured/HP loan repayments.............. 287
Rent.................................... 518.56
Management charge (leasehold property).. 0
Council tax............................. 225.67
Electricity............................. 135
Gas..................................... 0
Oil..................................... 0
Water rates............................. 0
Telephone (land line)................... 0
Mobile phone............................ 17
TV Licence.............................. 14.95
Satellite/Cable TV...................... 80
Internet Services....................... 38
Groceries etc. ......................... 600
Clothing................................ 30
Petrol/diesel........................... 40
Road tax................................ 18
Car Insurance........................... 45
Car maintenance (including MOT)......... 15
Car parking............................. 0
Other travel............................ 0
Childcare/nursery....................... 0
Other child related expenses............ 0
Medical (prescriptions, dentist etc).... 20
Pet insurance/vet bills................. 0
Buildings insurance..................... 0
Contents insurance...................... 19.43
Life assurance ......................... 0
Other insurance......................... 0
Presents (birthday, christmas etc)...... 40
Haircuts................................ 40
Entertainment........................... 30
Holiday................................. 40
Emergency fund.......................... 30[b]
Total monthly expenses.................. 2283.61[/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 ...... 21000....(287)......11.9[b]
Total secured & HP debts...... 21000.....-.........- [/b]

[b]Unsecured Debts[/b]
Description....................Debt......Monthly...APR
Natwest........................1564.83...49.41.....29.9
Natwest........................7407.29...73.71.....25.9
Natwest........................2300.94...23.01.....25.9
Lendable.......................4819.25...128.7.....13.07
Zopa...........................6417.85...173.4.....24.4
Zopa...........................725.51....28.26.....37.51
Capital One....................174.49....9.77......30.34
Capital One....................1629.59...75.35.....30.34
Asda...........................1788.41...40.39.....41.24
Argos..........................821.95....0.........39.9
Fluid..........................2524.94...87.79.....37.2
Vanquis........................3556.1....130.......36.9
Aqua...........................2111.5....21.12.....29.1
Natwest........................2662.1....26.62.....29.9[b]
Total unsecured debts..........38504.75..867.53....- [/b]

[b]
Monthly Budget Summary[/b]
Total monthly income.................... 2,468.91
Expenses (including HP & secured debts). 2,283.61
Available for debt repayments........... 185.3
Monthly UNsecured debt repayments....... 867.53[b]
Amount short for making debt repayments. -682.23[/b]

[b]Personal Balance Sheet Summary[/b]
Total assets (things you own)........... 0
Total HP & Secured debt................. -21,000
Total Unsecured debt.................... -38,504.75[b]
Net Assets.............................. -59,504.75[/b]

[i]Created using the SOA calculator at www.LemonFool.co.uk.
Reproduced on Moneysavingexpert with permission, using other browser.[/i][/font]

sourcrates

Not really a fan of template letters, just say what you want to say, and put it down on paper.

If you have been here before, then you will know how this works, I would go in with the "I am unable to afford any kind of payment" defence, and will be sure to update you if or when the situation improves, you can also show a copy of your budget to back that up.

Token payments are not a good long term strategy, maybe keep that one for a rainy day for now.

Your best bet is to try and save as much as you possibly can, if you can, and attempt to either settle each debt as and when appropriate or hope they eventually go statute barred.

NatWest is your largest creditor at around 14k, when you have multiple debts with a particular bank, they tend to sell them as a batch, and will sometimes combine them into just one account, so creating a new debt that did not exist previously, and thus will have no legal paperwork to boot, so one thing to check for in the future.

Brie

OK - so some thoughts….

TV Licence.............................. 14.95

Satellite/Cable TV...................... 80

Internet Services....................... 38

When do your contracts end for your satellite/cable/internet? Can you look at getting a cheaper bundle somewhere? Assuming you are not mid contract. And since you have those do you need a TV licence? I'm assuming the kids are older so unlikely to be watching live TV. So BBC iPlayer may be the only thing it's needed for. If no one watches live or iPlayer then cancel the licence. It's not a lot but it will help.

Presents (birthday, christmas etc)...... 40

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

Entertainment........................... 30

Holiday................................. 40

Are all of these needed? Maybe haircuts unless someone at home is talented with scissors. But presents, entertainment and holidays - I'd be considering cutting those to the bare minimum. They're £110 a month, that's £1320 a year. The kids are presumably old enough to know the situation and should understand that they're not going to be getting much of anything for a couple of years.

As for the debts - looking at the duplicate ones Natwest, Zopa, Capital One - these need affordability checks done. If you have one card and are applying for another should they have given it to you? I suspect not.

And solutions. How did you get out of debt last time? If you are renting and don't have much in the way of assets and don't actually own a car would a DRO work for you? Have a read of this….Debt solutions - what is your best option?

fatbelly

If you are banking with Nat West you need to change banks. That seems the most important thing. Starling is fine

Then stop paying all the nonpriority debts. I wouldn't even bother with token payments. Try to save an emergency fund while the debts default. Aim for £1000.

The sooner the better as they are all high interest. How long before the HP completes. Is it hp? Or is that a vehicle on a pcp deal?

beezlebob

https://forums.moneysavingexpert.com/discussion/comment/81863876#Comment_81863876

Car is PCP with just over 3 years left.

ManyWays

Your rent looks low, is this social housing, so it is a secure tenancy?

Is the secured debt on the car? How much is it worth, it looks like PCP, when will it end and when is the balloon payment?

Does your partner also have debts?

How old are your children? There is nothing in your SoA for their clothes, school uniforms, pocket money, school costs…

beezlebob

https://forums.moneysavingexpert.com/discussion/comment/81863874#Comment_81863874

Haircuts are not cheap - shirt back and sides is £20! Cutting hair during covid was bad enough - there’s no way I could do it again without ending up in jail!

Internet still has 18months to run, tv is due for review in summer - this also includes my Netflix subscription. Thought about cancelling tv licence but this house has recently discovered traitors and eldest uses bbc iplayer so can’t really cancel.

Last time I ignored my debt - let it go statue barred after 5 years.

Can’t do that this time because there is so much. Plan is to let it all default, make token offer then hopefully get some decent settlement offers further down the line.

DRO would likely affect my job so keen to stay away from this.

beezlebob

https://forums.moneysavingexpert.com/discussion/comment/81863866#Comment_81863866

Thanks for the tip re Natwest. I’ll look out for this. If they do do this, does that make the debt unenforceable?

So am I writing to the creditors after default or writing to them just now?

When would token payments be a good idea? If they demanded payment? Threatened CCJ?