Very new here, not new to debt

Verybadwithmoney

Hi,

I think my situation mirrors a few people, high debt, not told my partner etc.

I have 40k in card debt. I have a loan and a loan that due to finish in 6 months with my parents. My outgoings and card payments leave me about £300 short a month. I earn a decent amount which has helped and hindered me having to do something.

That is half the battle, the having to do something, you only react when you hit the brick wall, not before. If anyone is reading this, don’t want until the last moment.

I am typing this under extreme stress and anxiety, as I am going to have to come clean this morning, and I honestly don’t know what the outcome is. I get up every morning, wife goes to work and I sit and the mind races on all the possibilities, losing focus at work, miserable at home. I wish I’d done something years ago. If she kicks me out, I have nothing to use to sort myself.

I will try to remember to update on personal situation, either way once told, it might help people reading in the future.

My question is about the debt plan, not IVA, it does not have to be accepted by the lender? Meaning nothing could change? I understand IVA would not impact both of us or my mortgage right now but might in the future.

Would a better option be a homeowner load or secure loan? We have some equity on the mortgage to house value. But that obviously means she needs to be involved.

Thanks

Verybadwithmoney

Finding this thread really helpful. I have lots of concerns and probably won’t see a response straight away, I am having to divulge my debt this morning. I have 40k on cards, a 1 year old loan.
I have filled in the DMP but concerned about the possible push back, also once I commit, I assume the cards are blocked, which is where my brain struggles as I have relied on them for use. Which I know is why I am where I am.

What is the defaulting thing all about? Is that freezing interest? Or they don’t want it paying back at all? How does this impact you?

RAS

Firstly, do not secure consumer debt against your house. It's far more dangerous. And an IVA is rarely suitable and has longer term impacts. Failing to pay consumer debt has some impact for 6 years but is recoverable. You'll be able to renew with your existing mortgage provider without a credit check.

Very quickly, please tell your partner. Expect the fact that you haven't disclosed previously to have more impact than the actual debt. They'll probably then question a lot of other things and it takes time to regain trust. If there are underlying reasons you got into debt, you need to share those as well.

If you have joint accounts, separate them to protect your partner's credit record. If you owe money to the bank group with whom you've got your main account, get a new basic one which doesn't require a credit check.

Then do a good household statement of affairs together, taking time to get it right.

You'll need to stop paying your creditors for a while and build an emergency fund to enable you to cover household breakdowns etc. When the debts default interest stops and you start paying an affordable amount. Your creditors don't really get much choice.

Come back and ask as you need to. Will be rootimgrooting for you today.

Emmia

https://forums.moneysavingexpert.com/discussion/6668534/very-new-here-not-new-to-debt

Firstly best of luck.

Secondly, the advice generally is not to turn unsecured debt into secured debt, so don't use house equity to pay this off.

How has the debt arisen? General spending/living beyond your means? Gambling? Shopping Addiction? Something else? Do you have a plan to tackle the root cause?

What's often advised is to post up a statement of affairs (SOA) to see if there are ways of reducing your or the household spending to provide money to help tackle your debt, or at least stop it ballooning further...

https://www.lemonfool.co.uk/financecalculators/soa.php

Fill it in as accurately as possible. You may need to look at bank / credit card statements for this... Format for MSE and post it up if you feel able to. There's no judgement and you should get great advice.

Boabyfromcraiglang

Best of luck to you. I've recently been through exactly the same although I'm based in Scotland so had slightly different options. Feel free to message me directly if you want to chat further.... especially about the hidden side of things. It's a journey. Good luck.

Grumpelstiltskin

OK you have now admitted you have a problem, that is the first hurdle. You can't sort this without your partner's help so you must pluck up the courage and tell her.

This situation does crop up regularly and in the majority of cases the partner will after being upset that you haven't been honest with her accept the situation and as long as you do in the future agree to be completely honest with her and to work together to sort it out she will go along with the solution.

Firstly though you have to work out what got you into this mess and what you can do to not use any credit again in the future.

fatbelly

I'm going to say Hang on a minute.

Your brain is all over the place. Now if you can't afford the contractual payments on nonpriority debts then there is one option, so let's be clear. Stop paying. (You could treat the family debt as priority)

Now what the strategy is, moving forward, is where we need to have a discussion. And we recommend that you tell your partner about the PROBLEM AND SOLUTION.

So calm down, have a cup of tea and give us a statement of affairs

https://lemonfool.co.uk/financecalculators/soa.php

ManyWays

So options… the basic ones are a debt management plan (either through a firm that does not charge any fees OR self managed), an IVA or a secured loan.

In general, a secured loan is a VERY bad idea. And an IVA is hardly ever your best option.

But are you one of the exceptions? If you would like a detailed discussion, this is best based on actual numbers, hence everyone asking for a Statement of Affairs. Please put your creditor names in, not CC1. And get as close to what you are actually spending as possible. Not what you think you may be able to reduce the groceries too, but what you are actually spending.

Rob5342

I was in a similar situation with 44k of credit card debt so I know exactly what it's s like. Partners not knowing comes up quite frequently here, and in the vast majority of cases when people tell their partners it's not anywhere near as bad as they imagined it would be. It will be a difficult conversation but the important thing is that you have faced up to it and are prepared to tackle it, get over this hurdle and you can get on with dealing with everything.

System

This discussion was created from comments split from: DMP mutual support thread part 13 !!.

Grumpelstiltskin

What you have to do is have a complete change of mindset. From now on you don't just put any expense on a credit card, you learn to live without credit.

The way to do this is to have an emergency fund, so should your washer pack up the same week as your car fails it's MOT you have the cash to cover that.

The best way to start an emergency fund is to stop paying your unsecured debts and put as much money as you can into a savings account/cash ISA.

Don't panic thinking your creditors will go for a CCJ within a few weeks, they won't.

Don't rush into a DMP as you need to let the debts default before you start paying, a default will stay on your credit record for 6 years even if you never pay another penny towards the debt. OK defaults make it difficult to get credit but as I have said you should learn to live without it.