Debt help… DMP?

GreenFrogMum

Hello, I’m new here, but I’ve been doing a lot of reading while I was waiting for my account to be approved.

I’ve got myself in a real financial mess. This is not the first time. I was married to a man who was financially controlling and I ended up in about 20k of credit card debt. After we separated and sold our house, I used my share of the money to clear everything. But being a single mum is really hard and, for 5 years, I was in another relationship with a man who wasn’t at all controlling, but was as bad with money as I am. I’ve been single again for about 8 months and everything is so expensive. I have 2 children, and I’m AuDHD and very impulsive when it comes to spending. I’ve been burying my head in the sand, but I can’t do that anymore.

I have never missed a payment on anything, ever. But I’ve cancelled my direct debits and payments are going to start to be missed this week. I’m terrified. But I think a DMP is my only option and, from what I’ve read on here, letting everything default first seems like my best option, to enable me to start rebuilding in the shortest time.

These are my debts:

Next - £417.17

Very - £2032.63

Halifax credit card - £1542.21

Tesco credit card - £2400.57

Virgin Money credit card - £3001.73

Asda credit card - £2430.36

PayPal credit card - £2491.42

Barclays Amazon credit card - £6456.47

Sky iPhone device plan - £702

Sky iPad device plan - £418

Sky iPad device plan - £418

Klarna credit card(?) - £589.11

That’s a total of £22899.67, with minimum payments totalling £658.03 every month.

I also have car finance with autolend/lendable with about £13k left to pay (only got the car in October), which is £245.25 every month, but I need my car for my children. My daughter is autistic and often refuses to go to school. I work at their school 3 days a week, so have to get there, and it’s sometimes easier to get her there in the car than trying to make her walk. Their dad also lives over half an hour away and they have clubs and activities that I can’t get them to without a car. So I haven’t cancelled that payment and I intend to keep paying it as normal.

I also owe £891.39 on a credit card in my ex’s name. I’m paying that as quickly as I can (£100 a month) directly to the credit card, to get it paid before the 0% interest period ends.

Am I doing the right thing? The payments I’ve cancelled… are they all ok to be cancelled? The sky plans are just device plans. The iPhone is mine. The iPads were for my kids. We still have all 3 devices. The iPads don’t have SIM cards or data plans. I pay £14.50 sim only with EE for my iPhone. Are Sky going to try to take the devices if I stop paying for them?

Also, klarna. How does that work in terms of defaulting? I’ve got in the rut where I’m spending about £600 on my klarna card every month, paying it off at the end of every month, but then having to use it for day to day purchases because paying it every month means I have no money left. It’s due on the 1st… so I have a few days. Do I pay it? Do I not?

I will post an SOA if necessary, but having gone through everything with Stepchange, they reckon I have about £190 available for a DMP, which I will do when the accounts have defaulted. I just want to be sure that I’m handing this stage correctly.

GreenFrogMum

Completed an SOA, for reference. I haven’t added the interest rates of my debts because I don’t have them on my spreadsheet at the moment and I only have a short time before I have to do the school run.

The SOA doesn’t quite match the one I did on the Stepchange website, so I might have missed something, but I tried to be as accurate as I could. Stepchange said I have about £200 available for my debt, rather than £300.

The Tesco credit card is actually on a paydown plan due to persistent debt, which started in August last year and was a 3 year plan with interest still being added… but I’ve cancelled the direct debit… is that the right thing to do? The payment is due on the 7th of April, so I have time to change my mind if letting it default isn’t the right thing to do.

And the Asda credit card has been suspended because they wrote to me and said the interest rate was going up and I rejected that, which meant I couldn’t use the card anymore but obviously still have to make the minimum payments… the direct debit for that has been cancelled too, so I imagine they’ll put the interest up when payments are missed.

I wasn’t sure whether to add my car as an asset, because I owe more on it than it’s worth, so it’s not really mine.

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

Household Information[/b]
Number of adults in household........... 1
Number of children in household......... 2
Number of cars owned.................... 1[b]

Monthly Income Details[/b]
Monthly income after tax................ 827
Partners monthly income after tax....... 0
Benefits................................ 2473
Other income............................ 500[b]
Total monthly income.................... 3800[/b][b]

Monthly Expense Details[/b]
Mortgage................................ 0
Secured/HP loan repayments.............. 245.2
Rent.................................... 1450
Management charge (leasehold property).. 0
Council tax............................. 177
Electricity............................. 95.68
Gas..................................... 0
Oil..................................... 0
Water rates............................. 61.74
Telephone (land line)................... 0
Mobile phone............................ 14.5
TV Licence.............................. 14.95
Satellite/Cable TV...................... 0
Internet Services....................... 55.99
Groceries etc. ......................... 600
Clothing................................ 100
Petrol/diesel........................... 125
Road tax................................ 17.06
Car Insurance........................... 47.66
Car maintenance (including MOT)......... 15
Car parking............................. 20
Other travel............................ 0
Childcare/nursery....................... 0
Other child related expenses............ 255
Medical (prescriptions, dentist etc).... 10
Pet insurance/vet bills................. 15
Buildings insurance..................... 0
Contents insurance...................... 0
Life assurance ......................... 0
Other insurance......................... 0
Presents (birthday, christmas etc)...... 50
Haircuts................................ 70
Entertainment........................... 35
Holiday................................. 0
Emergency fund.......................... 25[b]
Total monthly expenses.................. 3499.78[/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 ...... 13377....(245.2)....0[b]
Total secured & HP debts...... 13377.....-.........- [/b]

[b]Unsecured Debts[/b]
Description....................Debt......Monthly...APR
Next...........................417.17....21........0
Very...........................2032.63...24.1......0
Halifax credit card............1542.21...63.4......0
Ex’s credit card...............891.39....100.......0
Barclays Amazon cc.............6456.47...98.94.....0
Virgin money cc................3001.73...86.89.....0
Sky iPad device................418.......19........0
Sky iPad device................418.......19........0
Sky iPhone device..............702.......36........0
Asda credit card...............2430.36...93.1......0
Tesco credit card..............2400.57...112.7.....0
PayPal credit card.............2491.42...83.89.....0
Klarna.........................589.11....589.1.....0[b]
Total unsecured debts..........23791.06..1347.12...- [/b]

[b]
Monthly Budget Summary[/b]
Total monthly income.................... 3,800
Expenses (including HP & secured debts). 3,499.78
Available for debt repayments........... 300.22
Monthly UNsecured debt repayments....... 1,347.12[b]
Amount short for making debt repayments. -1,046.9[/b]

[b]Personal Balance Sheet Summary[/b]
Total assets (things you own)........... 0
Total HP & Secured debt................. -13,377
Total Unsecured debt.................... -23,791.06[b]
Net Assets.............................. -37,168.06[/b]

GreenFrogMum

oh, and the benefits I receive are a combination of UC, child benefit and my daughter’s DLA.

GreenFrogMum

god, every time I think I’ve included something, I remember something else 🙈 my situation will get worse in April after I do my tax return. I earned a fair bit from my self employed work in this tax year and I was originally saving for my tax bill, but after my breakup, that all got spent. I’m no longer doing the work I was doing self employed (it was something I’m not really comfortable doing anymore) but I will obviously have to pay the tax bill. I still have a very small, varied amount of money from a blog I run that I publish sponsored posts on and I haven’t included that income in my SOA as I’m planning on using that to pay the tax bill bit by bit each month, but I can’t guarantee it will cover it.

ArtyJ931

I’m still new to all this so can’t give any advice but am at a similar stage of DMP to you. Just cancelled next months DD and moved everything to a new account and now I wait 😬 so I can empathise with how you’re feeling.

Did stepchange ok all the amounts in your SOA?

GreenFrogMum

https://forums.moneysavingexpert.com/discussion/comment/81936013#Comment_81936013

thank you for the reply! Yes, stepchange said my budget seemed reasonable. I haven’t taken anything any further with Stepchange though. I’m going to wait for the accounts to default and then take the next steps. It’s very scary though.

ArtyJ931

I know exactly what you mean. It is! Support on here is invaluable and reading other people’s stories is helping to dampen down the fear …eek

sourcrates

https://forums.moneysavingexpert.com/discussion/comment/81936052#Comment_81936052

What do you find scary, what is it you think they can do to you?

You`ll find its them that are more scared of you not paying your non essential debts during a cost of living crisis, than you are of what action they might take, they know they are last on the list for payment, which is why they shout the loudest.

Default on a £1000 credit card balance, you get inundated with collection letters and calls.

Default on a £200,000 mortgage, you might get a text asking what your intentions are.

Creditors actually have very little re-course to get money out of you if you refuse to pay.

SpireCaptain

https://forums.moneysavingexpert.com/discussion/comment/81936074#Comment_81936074

For me @GreenFrogMum it's scary knowing you don't have that safety net of available credit. Totally illogical as I've not got much credit left available to use if the car needs tyres or the washing machine breaks. As it is I'm making payments but respending available balance to buy food or pay utilities. That's the nonsensical position I find myself in.

I know when I default then that cash will be in my bank account to spend on essentials and not servicing debts. And if you budget correctly you should be able to move forward thriving by saving (Monzo and starling are good accounts to open with savings pots that you can specific direct debits from to help budgeting)

And like others say, debt collections works glacially slowly in the majority of cases so relax, breathe and take each day as it comes. Build up emergency funds and fighting funds when you're happy with what you have got for 3-6 months essential bills. I wish you well and will be cheering from the sidelines as I follow suite.

GreenFrogMum

https://forums.moneysavingexpert.com/discussion/comment/81936074#Comment_81936074

I think it’s just because I’ve never been even a day late on a payment for anything. I’ve always paid the minimum, always kept my credit file “clean” and ticking over. The thought of messing all that up is scary. But I also know that my debt situation is getting worse rather than better and this is the only way to actually break the cycle.

I have a starling account already. I’m in the process of moving everything over to that from my nationwide account, because of the link between nationwide and virgin money.

Rob5342

I found the thought of a dmp scary at first, but once I started it things turned around very quickly and I was soon feeling like I had got on top of things. While it's new for you, for the creditors you are just another one of the thousands of non paying debts they deal with all the time. The letters can seem a bit scary at first but you soon realise that they are all just running through the same sort of process with standard wording etc. They can mention debt collectors which sound scary but they are nothing to worry about, the first contact is usually quite friendly with them saying they want to help, and they'll just take whatever payment you are able to afford.

Yes, definitely wait for defaults as that is much better for you in the long term. You could try living on your budget now to make sure you have covered everything, and save the payments you would be making into an emergency fund.