Almost £14,000 in debt and unsure what to do

Nalf03

What I'm getting from this forumn is to look into debt management plans. Maybe having to sacrifice the next 6 years to clear things up for the future no matter how hard that is for now.

SpireCaptain

https://forums.moneysavingexpert.com/discussion/comment/82164835#Comment_82164835

I'm only a couple of months ahead of you in the grand scheme of things albeit it nearly 6 times deeper in the mire. I've been on here lurking, reading and cleaning all that I can on here- just wish I'd but the bullet £30k ago.

These SOA do feel really granular and down to every detail but if it means you can avoid choosing the wrong debt solution after advice from the sages on here it's worthwhile filling it accurately looking back over 6 months of statements etc and breaking down yearly known spends into monthly totals.

Ideally you'll do a SOA with your current finances and then one when you have stopped paying your unsecured debts (and fine tuned your spending amounts in the other categories) then you can rejig where the money you were spending on debt repayments is assigned. You'll then be able to write an amount in the emergency fund category, entertainment, fighting fund, clothes etc etc.

Be honest with yourself and write up an SOA that you can live with, it may take a few months to titivate it so it's comfortable. And then write up and SOA that you might feel the need to send to creditors if they ask for one to make sure what you offer them is affordable.

I agree a DMP seems drastic for £14,000 debt but if you're struggling now, it's best to stop digging and 6 years poor credit isn't the end of the world if your housing situation is secure and your relationship is strong.

My housing was strong, my relationship not so and we never spoke of money or budgeting and 19 years together we grew apart and I couldn't start a DMP whilst living with my partner so things all came to a head.

Take this early intervention with both hands and talk with your wife. All the best.

QrizB

OP I see this isn't you first rodeo; from your posting history you previously defaulted on a £6k back in 2022 and were looking for advice in 2024.

Is this a continuation of that debt, or did you clear that one and this is new?

Nalf03

I appreciate all the help and advice so far, this forum is just confusing me more though. I really dont understand half of what's being said.

What is a SOA? What is a DMP? Why am i now apparently stopping paying my debts? How does that work, yeah I'd be able to save but surely I'd get in trouble?I'm being given a lot of advice but I still have no idea what half of it is.

Also, why are people talking as if I have no communication with my wife? We talk finances all the time. Once a month we sit down and talk through it all, she's got her stuff pretty much sorted right now. I cant remember her exact numbers because I trust her enough to not have it all memorised and she's a bit busy for me to ask today, that doesn't mean we don't communicate and our relationship is fine thank you.

If a DMP (whatever that is) id the best way forward, am I able to do that this way, with just my income and expenditure. Or will the ask for my wifes full details? I like having our finances separate, it works for us so if it won't work otherwise I might have to try think of something else.

Again, I want to be specific because I am getting some weird responses. I am not scared to talk to my wife, we have open communication and our relationship is strong. This is just the way we prefer to do it and would like to keep it that way if possible.

I really didn't think I'd have to specify that on this.

Nalf03

I think I'm gonna leave this forum here and just try to figure this out myself. Thank you again for the help.

I think I'm just gonna keep trying as I am now, none of this is making sense to me.

Nalf03

https://forums.moneysavingexpert.com/discussion/comment/82164858#Comment_82164858

Same debt, I've been trying to figure this our for years, it's still not getting better. I thought I'd try ask again now but this is all so overwhelming.

Altior

A DMP is what you alluded to earlier ; Debt Management Plan.

A DMP is something specific though, rather than a term that covers all debt management.

DMP's are the only informal debt solution. And as your debt is relatively low (it won't seem like it is right now to you), the informal solution seems the most appropriate.

I don't see any reason from the info provided why a DMP wouldn't be suitable, I don't see how you can carry on paying the extremely high interest rates on some of your debt. So even though your liability is relatively low, it isn't sustainable.

Something to note is that this forum generally recommends a slightly different approach to initiating a DMP to the debt charities like StepChange (it doesn't mean that you can't use StepChange for example for your DMP once all of your unsecured debts have defaulted). I won't overwhelm you with information about that recommended approach now, but you can come back here once you have settled on a DMP as your preferred option.

Nalf03

Okay, I'm sorry for getting overwhelmed, I have to ask what is the alternative approach that is recommended?

Altior

Stop paying your unsecured debts right away. Ensure all of your necessary spending/income/priority debts are separated from the banking groups you owe unsecured debt with. Ordinarily that means moving all of your banking activity (aside from the unsecured payments) over to a fresh bank account (with a bank/app that's not currently connected to your unsecured debt). This means that none of your unsecured creditors will then be able to try and take payments even if they have been cancelled.

Once that has been done, you simply wait for all of your unsecured debts to be formally defaulted. This can take several months, in the meantime use the money saved from cancelling unsecured payments each month to build up an emergency fund.

Once you have reached all of the defaults, you can then go ahead and start the DMP. Either self managed, or set it up via a debt charity (one of the ones that sets them up free of charge).

Once you cancel payments to your creditors, there will be a lot of noise in the form of calls, texts etc but you can simply ignore them all, or use a burner phone number/email address for those contacts. The only communication you need to review carefully is snail mail, as that's how defaults are communicated (or letters before action, which are very unlikely but you still need to watch out for them, just in case, as they need to be addressed urgently). Also periodically review your credit reports for defaults (once you have cancelled payments).

This is the recommended approach here, as it allows you to build up an emergency fund and achieve defaults before starting your DMP. Debt charities want to start the DMP straight away, which means you have little savings when it starts and also it might be more difficult to obtain defaults. You want your defaults through asap as they will then be removed from your credit report after 6 years, even if the debts aren't fully cleared.

Let us know if you would prefer to self manage, or use a debt charity once you have obtained the defaults (if you are going to DMP, but use the approach recommended here).

fatbelly

That's a good summary by @Altior. I'll unsubscribe now