60k and counting...

Beddz

Hi everyone,

I’m posting because we’ve reached the point where our £60,000-ish debt is becoming completely unbearable, and I think we need to be brutally honest with ourselves and get some outside perspective on what we should do next.

Our money problems really started towards the end of 2024, when my wife was made redundant just a couple of months after we moved into our first home. From there, things gradually spiralled. I’ll openly admit that we’ve made some stupid financial decisions along the way and, at times, haven’t helped ourselves, but what started as something we thought we could manage has now grown into a level of debt that is causing us a huge amount of stress.

Earlier this year, we sold our house and genuinely thought the profit from the sale would give us the opportunity to make a massive dent in what we owed and finally start getting ourselves back on track.

Unfortunately, the house sale turned into an absolute nightmare. We were repeatedly promised by the solicitors and estate agents that everything was progressing and that the chain was moving towards completion. We got to the point where everyone had agreed a moving date, so we thought we were finally there.

Then the whole thing collapsed.

We're now left in a situation where the opportunity we thought we had to reset our finances has effectively disappeared, while the debts and monthly commitments are still there. To make matters worse, we've had further unexpected costs thrown at us along the way.

We know that ultimately we are responsible for getting ourselves out of this, and I’m not looking for sympathy or someone to tell me that every decision we've made was reasonable. I know there are things we should have done differently.

We’ve now started putting together a proper budget with StepChange, and following their assessment we’ve been recommended a Debt Management Plan (DMP). That has obviously made everything feel a lot more real, and we’re trying to work out whether that is the right route for us and what other options we should be considering.

What I really need is some honest advice from people who understand debt and budgeting: where do we go from here, and what is realistically the best way of tackling £60k of debt without completely drowning in the process?

ArtyJ931

Hi
I am about 5 months into a self-managed DMP. I owe around 68k now (on my own). I would say stop freaking out and panicking. It isn’t a scary process once you get your head round it. Common advice on here is do not go with stepchange until all your debts have defaulted (if at all) otherwise the damage to your credit file will be for a significantly longer period of time.

My plan is 1.stop paying and allow all debts to default, during which time put aside debt repayment money into building an emergency fund and sorting out my budget, planning for expected outgoings.

2. make affordability complaints - full information on the debt camel website - to try to reduce the amount I owe.

3. When debt has defaulted i will start to pay what I can afford to each lender by standing order.

4. Put aside money in a “full and final settlement” pot - save as much as possible to make offers to repay my debt at a reduced rate in future years.

5. Live my life not crippled by debt repayments that I can’t afford so have to live on endless cycles of credit.

edit - so far, 5 months in, affordability complaints are at the financial ombudsman, no debts have yet defaulted by have received some default notices in the last fortnight so expecting them to soon, I have built up a decent emergency fund and have pots for all irregular but predictable events (eg new shoes, car repairs, household maintenance, gifts, holiday etc)

HTH

Beddz

Thank-you for your reply, I think the biggest thing scaring me is the possibility of CCJ's? We have around £65K equity in our house and are making the contractual payments and minimums at the moment but sooner or later it's going to completely drain all of our savings. None of our debts are secured to our house but I'm wondering IF creditors don't accept our monthly payments that we can safety afford what happens?

RAS

It's very hard to advise on the basis of the information you have provided but there are a few general comments.

1. Affordability is now a big issue. There are still a few less-compliant debt collectors but stuff they got away with a decade ago would get them in trouble now. So they use weasel words. You just need to spot them.
2. Around 90% of debt never attracts any serious action like a letter before action. That's more likely towards the end of the 6 year period for limitations, if you've never paid anything. You get warning so read your letters and engage.
3. Amex and credit unions can be more problematic, so in both cases, engage and let them know your plans for future payments. And if you are self-managing you may be able weight your payments a little in their favour and keep them at bay.
4. If you start your own DMP, your credit record will improve sooner than if you use Stepchange.
5. You owe no creditor an SOA, unless court ordered. There are informal limits which aren't made public but the expectation is small amounts for entertainment, hobbies etc, a modest holiday and decent clothes. We sometimes discover people not buying or cooking decent food, struggling to afford clothes and footwear. The expectation today is not luxury but starting with a reasonable living standard and paying what's left towards debt. Rather than enduring poverty. But a £300 a month baccie or wine habit will be hard to fund.
6. Bailiff don't happen for consumer debt. There are a few doorknockers but they have no right to even speak to you.

RAS

Oh, as a follow up. Stop paying your creditors with your savings. You need to protect the emergency fund if you can't get further credit.

New bank account if you owe anything to the existing banking group. Shift salary, then essential DDs, manually.

Cancel all the other DDs, block phone numbers, ignore emails but read letters. Everything legally important has to be sent to the last known address.

Expect it to take 6-18 months for defaults to be issued.

Beddz

https://forums.moneysavingexpert.com/discussion/comment/82101178#Comment_82101178

Thank you for this, for example loans we have with a couple of companies were only taken out months ago will they be less likely to work with us? I mean we've taken credit out not long ago to pay for bills and other credit monthly payments

ManyWays

If you have taken out recent loans to pay for bills and you had a lot of other debts, these loans may well be "unaffordable" and you may win affordability complaints against the lender.

But if you post a Statement of Affairs here, including the lender names (not "CC2") it is much easier to give tailored suggestions rather than generalities. Here is our preferred format: https://www.stoozing.com/soa.php

I will say that nowadays the large majority of debts in a StepChange DMP will default in 6-9 months. And those that do not, you can complain and ask for a default to be added.

Grumpelstiltskin

OK The first thing you must do is not panic. You should stop paying all unsecured debts NOW.

You need a basic bank account ( no overdraft ) with a banking group you don't owe money to.

You need to manually transfer all vital direct debits ( do not use the banking switch service , it can cause problems )

Nothing terrible will happen when you don't pay, debt collection moves slowly and you will have time to build up an emergency fund.

Let us see an accurate SOA and we can then give you tailored advice.#

Oh and to add you are in charge not your creditors remember that.

Rob5342

CCJs aren't anything to be too worried about, if you do get one you'll be ordered to repay the debts at a rate you can afford which is exactly what you want isn't it. If you are already paying what you can afford then most companies won't bother going for a CCJ that they know will only get them the same amount anyway.

There are lots of things to consider but to start with post a statement of affairs so we can see the specifics.

Rob5342

https://forums.moneysavingexpert.com/discussion/comment/82101192#Comment_82101192

If you start a DMP you need a different mindset. You pay whatever it is you can afford regardless of what anyone thinks, if they don't like it they'll likely just sell it on.

Beddz

Statement of Affairs and Personal Balance Sheet

Household Information
Number of adults in household........... 2
Number of children in household......... 1
Number of cars owned....................

Monthly Income Details
Monthly income after tax................ 0
Partners monthly income after tax....... 1000
Benefits................................ 2400
Other income............................ 108
Total monthly income.................... 3508

Monthly Expense Details
Car Lease………………. 298

Mortgage................................ 738
Secured/HP loan repayments.............. 0
Rent.................................... 0
Management charge (leasehold property).. 0
Council tax............................. 150
Electricity............................. 50
Gas..................................... 50
Oil..................................... 0
Water rates............................. 55
Telephone (land line)................... 0
Mobile phone............................ 25
TV Licence.............................. 15
Satellite/Cable TV...................... 0
Internet Services....................... 34
Groceries etc. ......................... 500
Clothing................................ 80
Petrol/diesel........................... 0
Road tax................................ 0
Car Insurance........................... 60
Car maintenance (including MOT)......... 10
Car parking............................. 0
Other travel............................ 0
Childcare/nursery....................... 550
Other child related expenses............ 50
Medical (prescriptions, dentist etc).... 15
Pet insurance/vet bills................. 0
Buildings insurance..................... 5
Contents insurance...................... 5
Life assurance ......................... 30
Other insurance......................... 0
Presents (birthday, christmas etc)...... 100
Haircuts................................ 10
Entertainment........................... 150
Holiday................................. 0
Emergency fund.......................... 0
Pets.................................... 40
Total monthly expenses.................. 2940

Assets
Cash.................................... 2500
House value (Gross)..................... 200000
Shares and bonds........................ 0
Car(s).................................. 0
Other assets............................ 0
Total Assets............................ 202500

Secured & HP Debts
Description....................Debt......Monthly...APR
Mortgage...................... 135900...(738)......4.68
Total secured & HP debts...... 135900....-.........-

[b]Unsecured Debts[/b]
Description....................Debt......Monthly...APR
Barclaycard....................1800......75........25.44
Vanquis .......................2900......112.......NaN
Fluid .........................3880.11...140.......33.8
M&S............................5000......131.......6.9
Solictors Conveyence...........3500......0.........0
HSBC...........................450.......20........0
MBNA...........................5000......100.......0
MBNA...........................5353.98...133.......0
Monzo..........................5900......112.......18.4
Natwest........................3840......40........0
Tesco .........................5700......60........0
Hastings Direct................10000.....245.......8.19
MBNA...........................10000.....203.......8.09
M&S............................2800......154.......6.9
Halifax........................4800......103.......6.9
Total unsecured debts..........70924.09..1628......

Monthly Budget Summary
Total monthly income.................... 3,508
Expenses (including HP & secured debts). 2,642
Available for debt repayments........... 866
Monthly UNsecured debt repayments....... 1,628
Amount short for making debt repayments. -762

Personal Balance Sheet Summary
Total assets (things you own)........... 202,500
Total HP & Secured debt................. -135,900
Total Unsecured debt.................... -70,924.09
Net Assets.............................. -4,324.09