£40k of debt

futuremewillthankme

I found myself in an abusive relationship after my marriage ended, which resulted in me ending up on antidepressants, drinking too much and overspending as ways of regaining some control (it made sense to me at the time). This relationship ended almost 2 years ago. I have found myself in a very good place mentally and physically. The debt is the big ‘hangover’ I have from then. Unfortunately it has since increased as by paying all the minimum payments, I didn’t have enough left for day to day expenses. I have reassessed the situation many times over the past few months but reached a point yesterday where I had to admit defeat.

I cannot afford to pay these debts. My minimums were approaching £1000 a month which was impossible as a single parent. I do own my own house (mortgaged).

Yesterday I did some reading. I first filled in an online for with Step Change. They phoned me back quickly. The person I spoke with suggested an IVA for £200 a month. My first thought was that it sounded perfect. But after more thought I’m thinking a DMP would be the right route for me. The conversation moved to Whatsapp. When I asked for more information about a DMP instead of an IVA the person became quite dismissive and refused to give much information, saying ‘I have told you the difference between both, you can make up your mind about the options available and let me know’ (he hadn’t even mentioned a DMP to me at this point). I replied saying I would be phoning up Step Change and requesting a different adviser and the responses were along the lines of telling me he’ll phone me to talk and wasn’t happy I wanted to talk with someone else. After a few messages like this, I had to ask him to stop contacting me which he thankfully did. It has completely put me off Step Change.

I did fill in an online form with PayPlan which moved to whatsapp. Due to the time and no advisers being available the chat bot said they would be back in touch today. I haven’t heard anything further in the past 24 hours. At this point I joined here. I read quite a few threads last night whilst waiting for my account to be activated. I decided to start taking action. I have cancelled all my direct debits to my creditors. I switched from my Nationwide account to my Starling one for my bills because one of my credit cards is with Nationwide. That should be complete by next Tuesday.

I worked through a budget which works for me. I have updated my Starling pots and have started one for an emergency fund which I want to add to whilst defaulting.

I do have a mortgage which is up for renewal in the spring. It is with Natwest and from what I’ve read I should be able to move to another fixed term without issues as I’ll be sticking with the same bank.

My next steps are:

Wait for defaults on all my debts (10 of them). From what I’ve read this could take quite a few months. Once I have a default on one, to contact them to arrange a smaller payment (is this the correct move?).

I do owe money on a phone through a Creation account. If I default on this, will they take the phone back or will it be treated the same way as any other debt….default and then contact them to arrange smaller payments?

Any advice at this point would be great. Thank you so much

kimwp

Hiya, congratulations on having pulled through some pretty horrible situations. When you say switched, do you mean a CAS switch? That will just pull all your payments to your new account, so it might be sensible to cancel that and manually move the payments that you want to move.

futuremewillthankme

Thank you.

I am switching from Nationwide to Starling, using the starling app to do the switch. I have cancelled all direct debits to creditors with Nationwide so I’m assuming only my bills will pull through?

Gandalf644

https://forums.moneysavingexpert.com/discussion/comment/82191325#Comment_82191325

If doing it via the switching service (which it sounds like you have done) the companies you owe monies to may try to reinstate the Direct Debit mandates which will then transfer under switching to your new account.

It is best to open a new totally 'firewalled' account that has no connections to or hang overs from your old account.

Once you open the new account, set up the direct debits you want to continue manually.

That way your creditors will be totally unaware of your new account and have no recourse to it.

futuremewillthankme

https://forums.moneysavingexpert.com/discussion/comment/82191446#Comment_82191446

Ah, I didn’t realise they could do that. I’ll have to look to see if I can stop it now it has started. Thank you.

MasterG83

Just wishing you good luck and a positive start to your debt free journey. You seem to have a good grasp of the process you wish to go down. Dont forget to keep updating this site and maybe start a debt free diary to keep yourself accountable.

As someone who completed the debt free journey, I paid all mine off, looking back, it was the most focused I have been in my life, I'm proud of what I achieved. You will be too.

fatbelly

If you can afford £200 without hardship then a dmp will clear 40k in 200 months. There are a couple of tweaks and tricks that may reduce this a bit but it's still significantly more than the 72 months you would be in an IVA. Hopefully you will get a decent adviser from Payplan and be able to discuss this

ManyWays

Starling is a really nice app. I would go ahead with the switch and just be aware that you may need to cancel again any DDs to lenders that reappear.

ManyWays

This doesn't sound much like Stepchange to me.
Are you sure you were speaking to them? See https://www.stepchange.org/contact-us.aspx

Sunbakedscobble

II can highly recommend Payplan, they were incredible with me and basically saved m life. I competed a DMP with them back in July. I paid back 34k of debt in approx 4.5 years. I tried self managed but I was not disciplined enough and got into more debt. Setting it up with them was perfect, and other than annual affordability review meant I never had to think my debts once in all that time. Well done and starting the steps whichever way you choose to go.