At breaking point

SleepyPanda85

I’m now doubting myself that this is the right way to go.

Defaulting and bombing my credit score for the next 6 years feels so reckless, but it doesn’t feel like I have any other options with my current situation

enthusiasticsaver

I do not think you have any option other than to default and go on to a DMP. The monthly deficit is too high. Realistically I am afraid that buying a property in the next 6 years would not happen as not only do you have to clear the debt but you also need to save up a deposit and for fees. It will go quickly. You cannot pick and choose really which debts to keep going and if you have a Nationwide credit card and current account it is best to stop with both. I would move the bills over to a new account with a bank you do not owe money to.

Your credit record will be bombed for 6 years so I would set up a DMP for £1k a month and start to save as you will not have access to credit and you need to get out of this debt spiral. If anything happens to your car you will need a savings buffer. Just paying £1k to the debt will get it repaid in just over 3 years.

MEM62

https://forums.moneysavingexpert.com/discussion/comment/82083409#Comment_82083409

If not, what else are you going to do? Leaving it longer only digs the hole deeper and makes the solution more painful. You sooner you start your debt-free journey you sooner you will be free of it.

RAS

You need to remember that a DMP is an informal debt solution, in England and Wales anyway. Scotland has a formal equivalent.

If you go with a debt charity, the rules agreed with creditors mean that all creditors are treated equally. So they don't like debts outside the framework, although some quietly have them, sometimes to family.

Self-managing is more flexible. Other creditors may be less tolerant if they see you clearing other debts and ignoring them, so get it sorted as soon as possible.

I appreciate that you want to keep Monzo, and that you want to put in an affordability claim. The other side of banking is that providers have the right to decide who they want as a customer. So Monzo could decide to close your account. It would be good to hear from any MSE posters who have made affordability claims against Monzo.

Meantime make sure your salary goes into an account with a banking group to whom you owe nothing. You can get a basic account without a credit check, all the normal functions but no overdraft.

There've been posts since I started this and I'd remind you that if you clear the debt in 3 years, you'll have time to put together a decent deposit and money for fees.

If you've got all the debts settled, you may find that some mortgage providers will accept you before the 6 years are up, perhaps not at the best rate, so choose a short fix.

But who knows what the economy and financial background or housing market will be in 5 years?

WinterWeather

if you set up a DMP plan and pay a £1,000 a month, split between creditors, you’ll be debt free in just over 3 years. Continue to save that 1k you cleared your debt with and you could be debt free and with a 40k deposit at the end of the 6 years. I’d do that for sure, you can turn your life around x

SleepyPanda85

Thank you all, for your invaluable advice.

I agree, I don't have any other choice. I cancelled all my direct debits this morning, have submitted affordability complaints and I'm going to open a new/clean account with Starling. It feels quite freeing, knowing this month I can start to build an emergency fund and not have to worry about making ends meet for the month.

A question re keeping Monzo/Nationwide and not defaulting on them - will other creditors pick up from my credit report if I am clearing those debts and not defaulting?

Rob5342

They could look at your credit report and see you were doing that if they wanted to, but I'm not sure how much they would care. You'd be better off going the whole hog and dealing with everything in one go. Interest gets frozen when you default and it's often possible to settle debts for reduced amounts after they have defaulted and been sold, so you'd be increasing the overall cost of sorting yourself out.

You can keep your Nationwide and Monzo accounts if you want to, just don't keep any money in them. You couldn't use the switching service to transfer the direct debits as that would close the account but you could transfer them manually if you wanted to. Most companies let you do it in their app or on their website, and it doesn't take long to contact the few that don't.

SleepyPanda85

I'm already receiving phone calls/voicemails and texts from MBNA regarding my affordability complaint. I haven't answered as all unknown calls are already silenced - should I answer these types of calls?

Rob5342

https://forums.moneysavingexpert.com/discussion/comment/82084883#Comment_82084883

I would deal with everything in writing. It means you can take you time, come here for advice if necessary, and have a record of everything in case you need to escalate it to the FOS.

SleepyPanda85

https://forums.moneysavingexpert.com/discussion/comment/82085097#Comment_82085097

This is what I was thinking, I shall continue to ignore the calls