At breaking point

SleepyPanda85

Hi all - I am finally facing my debts head on and want to take meaningful action. I'm at my breaking point, my mental health is suffering and I have never felt anxiety or stress like this before. I'm looking for some advice on what the best option is for me.

I have completed a SOA which is showing a monthly deficit - will post as a response to this initial post. I have tried to include an accurate budget of expenses however I do not always incur these each month, clothes for example. For the past few months I have been selling bits on ebay/vinted just to get by.

I have minimal assets and don't own a home. Due to living situation (living with a parent), my monthly outgoings are quite low which affords me to pay more out each month to cover my debt repayments. However, I am finding myself in the cycle of barely covering my minimum payments each month, and then relying on credit throughout the month for living expenses. My credit cards are all maxed out and I am regularly pushed over my limit by the interest charges. Following a divorce from a financially abusive ex, my dad passing and a long period of depression I only have myself to blame for getting into this situation, but I am tired of living like this.

I contacted Step Change a few weeks ago who suggested a DMP over 20 months. Although after completing the SOA I realise I perhaps set my budget too low, so would need to revisit. I have since been reading about self-managed DMPs being better. Would this be the most appropriate path for me to take? Would this also cover the non-credit card debt? If so, please can you point me to a step by step guide.

I am also considering submitting some affordability complaints, as over the years all credit card companies have offered increases despite me only meeting the minimum payments. Is it better to wait for the accounts to default before submitting affordability complaints?

I bank with Nationwide for bills and Monzo for day to day costs, so I would prefer to keep these accounts in good standing if possible.

Previously I have tried to tackle my debt using the snowball method, but I would try and stretch myself too far and fall into the habit of relying on credit cards throughout the month. It would also take me much longer to clear this debt and only add to the obscene amount of interest I have already paid in interest charges.

I would like to purchase a house at some point, I'm 37 and not getting any younger, but 6 years feels like a long time for my credit to be damaged by defaults which is a scary thought. However, the thought of continuing in this persistent debt cycle is even scarier.

SleepyPanda85

Statement of Affairs and Personal Balance Sheet

Household Information
Number of adults in household........... 1
Number of children in household.........
Number of cars owned....................

Monthly Income Details
Monthly income after tax................ 3139.31
Partners monthly income after tax....... 0
Benefits................................ 0
Other income............................ 0
Total monthly income.................... 3139.31

Monthly Expense Details
Mortgage................................ 0
Secured/HP loan repayments.............. 0
Rent.................................... 450
Management charge (leasehold property).. 0
Council tax............................. 0
Electricity............................. 0
Gas..................................... 0
Oil..................................... 0
Water rates............................. 0
Telephone (land line)................... 0
Mobile phone............................ 25
TV Licence.............................. 0
Satellite/Cable TV...................... 6
Internet Services....................... 0
Groceries etc. ......................... 300
Clothing................................ 35
Petrol/diesel........................... 60
Road tax................................ 1.67
Car Insurance........................... 40
Car maintenance (including MOT)......... 28.48
Car parking............................. 0
Other travel............................ 0
Childcare/nursery....................... 0
Other child related expenses............ 0
Medical (prescriptions, dentist etc).... 30
Pet insurance/vet bills................. 42
Buildings insurance..................... 0
Contents insurance...................... 0
Life assurance ......................... 0
Other insurance......................... 0
Presents (birthday, christmas etc)...... 15
Haircuts................................ 15
Entertainment........................... 150
Holiday................................. 0
Emergency fund.......................... 0
(Unnamed monthly expense)............... 0
Total monthly expenses.................. 1198.15

Assets
Cash.................................... 0
House value (Gross)..................... 0
Shares and bonds........................ 0
Car(s).................................. 6000
Other assets............................ 0
Total Assets............................ 6000

No Secured nor Hire Purchase Debts

Unsecured Debts
Description....................Debt......Monthly...APR
Nationwide CC..................1745.25...46.17.....22.9
Barclaycard CC.................1506.18...87.13.....29.93
MBNA 1.........................2329.29...107.4.....29.31
Very...........................4274.39...244.......59.9
Monzo Overdraft................1497.75...0.........39
Monzo Flex.....................3855.73...338.2.....26
Paypal.........................2879.19...104.9.....23.9
Frasers Plus...................1299......38.45.....29.9
Klarna.........................656.17....155.......0
Zopa...........................1191.5....59.82.....34.4
Fluid..........................5938.69...403.......34.33
Vanquis........................5130.94...195.4.....30.36
Aqua...........................2953.98...219.4.....37.55
MBNA 2.........................3492.24...300.......20.93
Total unsecured debts..........38750.3...2298.87...-

Monthly Budget Summary
Total monthly income.................... 3,139.31
Expenses (including HP & secured debts). 1,198.15
Available for debt repayments........... 1,941.16
Monthly UNsecured debt repayments....... 2,298.87
Amount short for making debt repayments. -357.71

Personal Balance Sheet Summary
Total assets (things you own)........... 6,000
Total HP & Secured debt................. -0
Total Unsecured debt.................... -38,750.3
Net Assets.............................. -32,750.3

Created using the SOA calculator at www.stoozing.com.
Reproduced on Moneysavingexpert with permission, using other browser.

sourcrates

Well OP, if you have 3k plus coming in every month, this should be a doddle for you, as you have tons of disposable income to play with, barely any essential payments, and with a 6k car, debt management is a good choice here.

You have to break the cycle of persistent debt, and the best way to do that is default on everything, keep your bank accounts as long as no debt is associated with them, or prioritise paying off that borrowing first, and you will be surprised how soon 6 years fly`s bye.

If you manage it yourself it takes a little effort on your part, debts will be assigned to collectors, some will be sold, you have to keep track of who is chasing what, and you have 14 separate debts to keep track of, but creditors have to write to you and tell you who is collecting which debts, so like I said, it takes a little effort, but you can run matters how you see fit, so its as flexible as you want to make it.

SleepyPanda85

https://forums.moneysavingexpert.com/discussion/comment/82082447#Comment_82082447

Thank you for making it sound so simple, I'm feeling very overwhelmed this morning when looking at the total.

Whilst my debt is high, I'm very aware that my current living situation and having no children works in my favour and others in this forum have a much more challenging road on their debt free journey.

It's strange to think I'm in debt when I don't really have much to show for it, but that's the reality.

SleepyPanda85

I have tried to outline a simple step-by-step process to understand how to even begin. Is this accurate?

Step	Action
1	Cancel all direct debits
2	Money saved from debt payments to be put into an emergency fund
3	Wait for accounts to default
4	Submit affordability claims
5	Once outcome of affordability claims is received, wait for debt to be sold
6	Once sold, write to creditors with I&E and offer affordable monthly payment

Grumpelstiltskin

You have one problem, you have a Nationwide account and a Nationwide credit card debt. You also have a Monzo account with a large overdraft.

I am afraid you will have to lose both of those accounts and get a basic account, no overdraft, with a banking group you don't owe money to as the banks can take money from your accounts without asking you.

Do this before you do anything else.

sourcrates

Honestly, I have been where you are now, and I have also advised on this forum for 20 years or more, since becoming debt free, and its as hard or as simple as you want to make it.

I do understand all the concerns, but unsecured debts are unsecured for a reason, creditors only recourse is to the courts if you don`t pay, and if they all did that, the system would grind to a halt, so they all use debt collection, along with a lot of mis-information, and lastly threats if you ignore them, you`ll get all of that at some point in the game.

Re: the steps you posted above, I would suggest affordability complaints are sent straight away, as time limits apply to those, also once a debt is defaulted, it may be sold, or it may not, but you will be written too, there is no need to make any offers of payment, it will likely be a debt collector or a debt purchasing company, where you can agree terms on their individual websites, much simpler.

SleepyPanda85

Would it cause any issues if I didn't default on my Nationwide CC, paying that and my outstanding Monzo balances off using some money I am saving from other debt payments over the next few months? Although, Monzo Flex is probably one of the accounts I would want to target with an affordability claim as they increased my balance last year when I was already in persistent debt with them.

Which method is best when it comes to sending affordability complaints; letter or email?

MasterG83

Out of interest where did the money go? What did you buy on credit?

If its clothing, gadgets ( I was a gadget collector, mostly tat) or others then, as you have already been doing, get them listed on Vinted or ebay and use a capsule wardrobe for now.

I used a different method in paying off a substantial amount if debt, after listening to Dave Ramsey one day it hit a chord with me, I got super focused and paid off every penny of consumer debt, I was like a man possessed. It felt good too. Check Out Dave Ramsey, 7 baby steps. I warn you he isn't for the faint hearted but I needed that challenge and accountability instead of dragging it out. I listened to the podcasts whilst travelling and followed the steps.

SleepyPanda85

https://forums.moneysavingexpert.com/discussion/comment/82082852#Comment_82082852

Honestly, I don’t know. A bit of everything; clothes, travelling, eating out, hobbies, emergency bills.

I’ve had a low level of debt for a long time. My ex would regularly use funds from our joint account for his personal expenses meaning we had to rely on credit cards to get by each month. Unfortunately these cards were all in my name, as he had bad credit (they say hindsight is 20/20). Since we split I managed to get some of the balances down quite low. But then life hit me and I went down a depressive spiral and spending money was one way I tried to make myself feel better.

It’s definitely a life lesson for me, my mental health is generally much better now (apart from the stress my debt is causing me). I just need to now financially recover too.

I’ve researched Dave Ramsey previously when I snowballed. Unfortunately, I can’t even meet the minimum payments now let alone try and pull together an emergency fund :(

MasterG83

Whichever way you choose to tackle this you will find 50% of the anxiety removed when you have a plan. Once you start that plan its addictive. Good luck, don't do nothing, get a plan underway.