In lots of debt and need help getting out.

RAS

Let's clear up a few major misunderstandings regarding debt.

No-one get a criminal record for debt, certainly never for consumer debt. A very few people who actively defraud on massive commercial scale but not for basic consumer debt.

No-one takes your stuff for consumer debt. You must pay your council tax, as that's the one debt that can lead to bailiffs. It's also why we advise that you sort out the CT and stop paying consumer debt if it gets that hard.

In a very small percentage of cases involving consumer debt, creditors take debtors to court to make sure they are paid. As long as you share finances as required by the court, you'd just end up paying an affordable monthly sum, perhaps less than you've paid voluntarily. So there's little incentive for creditors to go to court. But you'll get loads of messages reminding you it's a possibility.

If you aspire to a future mortgage, you need to bite the bullet. Because once a debt defaults, interest and fees cease and the debt is removed from your credit record after 6 years even if you owe money. Making payments without waiting for a default just means Arrangement to Pay markers which remain on your credit record for 6 years after the debt is paid in full

Grumpelstiltskin

OK As RAS says you are going to get defaults, you must remember that you are going to have to forget applying for credit ( unless you want to approach a Loan Shark ) so getting defaults early means they will be removed from your credit report sooner, OK they will still last for 6 years but that gives you 6 years to completely change your mindset and learn to live on what you have coming in and not jumping to a dodgy creditor everytime you think another £500 would come in handy.

The only way to do this is to stop paying all your unsecured creditors and save some cash in an emergency fund.

13thlegion

https://forums.moneysavingexpert.com/discussion/comment/82018198#Comment_82018198

This is really important. The worst thing that can happen from the perspective of moving on with life is AP markers. Functionally they have the same effect as a default. What makes them worse is that they last so much longer, and come about by trying to be nice to your lenders.

Defaults draw a line in the sand so you get a definite date, the power to pay back the debts at a truly affordable rate, and over time the possibility of settling them for less.

ayupmeduck

You can move house with defaults, a rental check does not show them, I have moved multiple times with defaults. You're going to get defaults if you don't keep up contractual payments anyways. Get them now so they fall off sooner, also, it possible to get a mortgage with older defaults.

Does your role require financial checks to do your job? most don't and have no issue with defaults, they don't even need to know about them.

ohdearhowdidthathappen

you look like you’re on approx £40k with ‘only’ £11k in debt. The main issues are the interest rates(!) and that such a massive chunk of your income is going on rent. It’s just catching a break with one of those…

• Do you have a spare bedroom you could sublet? Could you move in with a friend or family for 6 months to clear debts and save a new deposit? Or move into a shared house for a while?
• Get a second job, bar work evenings/weekends etc
• See if Monzo would lend a bit more to pay off the more horrific interest rates

With no dependents and no massive outgoings, hopefully you’ll find a solution that fits. Short term will be painful though.

vampirotoothus

Hi, also see if Barclaycard are offering you any Balance Transfers, as the interest on that will probably be a lot less. V x

UKSalaryHelper

@spareapenny A couple of things worth checking that could put more money in your pocket right away:

1. Check your tax code on your payslip: if it's not 1257L, you might be overpaying tax. Emergency tax codes (W1, M1, or BR) are really common, especially if you've recently started a job, and can mean you're paying hundreds more than you should. You can check and fix this by calling HMRC on 0300 200 3300.
2. Single person council tax discount: if you live alone, you should be getting 25% off your council tax. You mentioned council tax is tight, so worth checking you've applied for this on your council's website if you haven't already.

Neither of these costs anything and both could free up cash to throw at that Drafty loan faster. Small wins add up.

spareapenny

Hi all,

You took time out of your day to help, so I am going to take time out of my day to let you know how things have got on since.

Since my first message, I have done the following:

• I moved my salary over to Nationwide**, which means I am in control instead of Monzo taking off half of it every month. I repay £200 by standing order monthly to clear my Monzo overdraft of -£1,297 at 39% APR. Expected to clear Feb 2027 (although earlier I hope!) with a total interest charge of £153.80*

• I paid off Drafty completely this morning. Never again, I didn't have any clue what I was getting into.

—

So, I still have two loans where interest is involved, and I'm so lost because honestly I don't even understand what I've signed up to, maybe someone can help me understand what to pay off first?

Monzo

• Current balance: £6450 (After paying since February I might add!!!!)
• Original loan: £7000
• Interest rate (APR): 17.7% calculated daily.
• Repayments: 55 repayments of £180.00 last day of Month.
• Total repayable: £10,000.

Oakbrook Loans

• Current balance (loan + interest): £2750
• Original loan: £2000.
• Original interest added on top at beginning of loan: £1,149.76
• Interest rate (APR): 57.9%
• Repayments: 24 repayments of £131.24 last day of month.
• Total repayable: £3149.76

This loan confuses me, because the interest is baked into the loan? I don't know how exactly it works, they seem to be unique in offering a "Pre-Calculated Interest Loan" so Google is not much help. There is also a clause about early repayment, which seems to suggest that either way you'll pay interest? I don't know I am so confused.

Oakbrook Loan - Early Repayment:

You have the right to repay sums owing under this Agreement early in full or in part
at any time as a result of Section 94 of the Consumer Credit Act 1974.

If you do so you need to give us notice, either orally or in writing, of your intention
to make early repayment and pay us the amount of the early repayment within
twenty eight (28) days beginning with the day after that notice is received by us or
on or before any later date specified in the notice.If you make an early repayment,
you will be required to pay additional interest on the amount you repay early at
the contractual interest rate shown above.

Further details are set out in Condition 6 of our Loan Terms and Conditions.

I don't know whether I should prioritise this loan or the Monzo loan, because in the Monzo loan, the interest grows daily. In this loan, the interest was applied to the balance at the beginning of the loan. I can pay it earlier and pay less of the "balance" but I don't know what to do.

I really need to read what I sign man.

*I know it's still an expensive loan but this like credit from heaven compared to DRAFTY. Not sure why it's legal to lend at more than 50% APR!

**I plan to move to Nationwide for the switch bonus, but I don't think Monzo will be too pleased to write off £1200 so I can move!!

ManyWays

Have you looked at making affordability complaints against Drafty and Oakbrook? Winning one will get a refund of the interest paid to drafty as you have settled it. And for Oakbrook would reduce the balance to the amount you borrowed less what you have already paid, so you repay it without any interest at all

spareapenny

https://forums.moneysavingexpert.com/discussion/comment/82057125#Comment_82057125

Hi, I don't know where I would get started with that. I don't know what counts as "affordable"

Could I make the monthly minimum payments and afford groceries/rent/etc? Yes, and I could have carried on doing that, built a safety net, and paid over £1000 in interest. I decided not to with Drafty. The interest alone would have crippled me come December if I kept going on.

If I were to hold anyone accountable, apart from myself, it would be Monzo, loaning £7000 to someone who has previously disclosed a gambling addiction, and not checking or ensuring what it's going to be used for.