Feel like a failure

Dadbod26

Title: £60k unsecured debt – starting a DMP and need some step-by-step advice

Hi everyone,

I’m 34 and currently living with my parents. I have around £60,000 of unsecured debt, made up of approximately £30,000 in credit cards and £30,000 in loans.

I have a great girlfriend and would really like to move out and start building a future together. The problem is that nobody knows about my debt, and I’m finding it increasingly stressful trying to work out what to do.

I’ve decided that I want to start a Debt Management Plan (DMP) and get my finances back under control. I’m hoping to be able to pay around £1,000 a month towards it.

I’ve been reading through the forum and have seen people mention cancelling direct debits and waiting for accounts to default before setting up a DMP. I’m a bit overwhelmed by all the information and would really appreciate some straightforward, step-by-step advice.

A few questions I have:

1. Should I cancel my credit card and loan direct debits straight away, or is there a better way to approach this?
2. Is it generally advisable to wait for accounts to default before starting a DMP, and if so, why?
3. Should I open a new basic bank account with a bank that I don’t owe money to?
4. One of my loans is a £20,000 loan that I only took out four months ago. Could this cause any problems when setting up a DMP?
5. Is £1,000 a month a reasonable amount to offer towards my debts?
6. What should my first steps be, and is there anything else I need to do before starting a DMP?

I know I’ve made some mistakes, but I really want to sort this out and move towards a more stress-free future.

I’d also love to hear from anyone who has been in a similar position, particularly those who have managed to get their debts under control and eventually move out and start a new chapter in their lives.

Any advice would be much appreciated. Thanks in advance!

Keep_Buggering_On

Whilst I am not able to advise on dealing with the debts or a debt management plan, I hope I can offer some man-to-man support. Firstly you have taken the first step by acknowledging the situation. I would urge you to be honest with your girlfriend and parents if you can and let them know your situation. Firstly keeping a secret like that is hard and us men do have a habit of bottling it up before doing something stupid! Its not good for your mental health to have this weight with no one to talk to about it. The conversation will be difficult, expect tears and maybe some yelling, but your parents will love you no matter what, and your girlfriend, if she's a keeper, will stand by you through it. It will probably be frosty for a month or two, but better than living with the secret. Secondly, it will save you having to come up with excuses why you can't move out yet, go on a holiday, or go out to a restaurant every week etc. where you either have to lie or get yourself into more debt. I think the general advice on the forum is to put together a statement of accounts (there are templates) to show exactly where you are in terms of income, outgoings, debt and assets and then the clever guys in here will be able to advise, there might be some painful home truths, but its coming from a good place.

Grumpy_chap

First, have you prepared a full budget? Use one of the SoA (Statement of Affairs) templates available within this forum. You can share it if you want comments, or just use it as a tool to inform your decision making.

Second, what do you plan to do differently to prevent the same cycle repeating? Living with parents would typically suggest low expenses so do you have an income to support your wish to setup home with your good lady?

Third, what did you spend the £60k on? Are there any resulting assets that can be sold to repay a chunk of the debts?

Title: £60k unsecured debt – starting a DMP and need some step-by-step advice

Hi everyone,

I’m 34 and currently living with my parents. I have around £60,000 of unsecured debt, made up of approximately £30,000 in credit cards and £30,000 in loans.

I have a great girlfriend and would really like to move out and start building a future together. The problem is that nobody knows about my debt, and I’m finding it increasingly stressful trying to work out what to do.

I’ve decided that I want to start a Debt Management Plan (DMP) and get my finances back under control. I’m hoping to be able to pay around £1,000 a month towards it.

I’ve been reading through the forum and have seen people mention cancelling direct debits and waiting for accounts to default before setting up a DMP. I’m a bit overwhelmed by all the information and would really appreciate some straightforward, step-by-step advice.

A few questions I have:

Should I cancel my credit card and loan direct debits straight away, or is there a better way to approach this?

Is it generally advisable to wait for accounts to default before starting a DMP, and if so, why?

Should I open a new basic bank account with a bank that I don’t owe money to?

One of my loans is a £20,000 loan that I only took out four months ago. Could this cause any problems when setting up a DMP?

Is £1,000 a month a reasonable amount to offer towards my debts?

What should my first steps be, and is there anything else I need to do before starting a DMP?

I know I’ve made some mistakes, but I really want to sort this out and move towards a more stress-free future.

I’d also love to hear from anyone who has been in a similar position, particularly those who have managed to get their debts under control and eventually move out and start a new chapter in their lives.

Any advice would be much appreciated. Thanks in advance!

ArtyJ931

have a look at my diary - I have logged the process step by step so far. Good luck

gwynlas

You need to complete a SOA which you will find links to on this board.

Have you thought about why you have reached this level of debt?

The more information you give the more relevant advice you will receive.

Don't beat yourself up, we have all been there.

Brie

I agree with others about not bottling things up, communication can be a very positive thing. Also the SOA will help us better understand your situation and we can advise in some detail. The link is in my signature below.

And your questions:

1. Should I cancel my credit card and loan direct debits straight away, or is there a better way to approach this? Cancel your DDs and be prepared to get some cranky letters but don't worry about them too much. Nothing will be happening very quickly, the wording is a bit threatening but they won't be taking you to court or sending bailiffs - certainly not if you proceed in a few months with your DMP plan.
2. Is it generally advisable to wait for accounts to default before starting a DMP, and if so, why? Interest stops being charged. This means that when you start your DMP the money you pay will go to the debts and not interest or fees. It means the debt will drop faster this way.
3. Should I open a new basic bank account with a bank that I don’t owe money to? Yes. Otherwise a linked creditor might raid your account to help clear the debt with them.
4. One of my loans is a £20,000 loan that I only took out four months ago. Could this cause any problems when setting up a DMP? I don't see why. It's not an uncommon thing that someone gets a loan thinking it will help and then realises it just makes the problem worse.
5. Is £1,000 a month a reasonable amount to offer towards my debts? It's your DMP so you get to decide on what amount is doable. And this may change during the course of the DMP - if your income goes up or down you can alter it. That's one reason why you cancel your DDs so you are in control by paying the creditors via standing orders. Setting everything out in your SOA will help you decide what is reasonable. And the creditors are likely to ask for something like that to justify what you tell them you are able to pay. Don't forget that the amounts you pay should be pro rata - so, for instance, the £20k loan will be about 1/3 of the total.
6. What should my first steps be, and is there anything else I need to do before starting a DMP? Talk to people. If you start getting multiple letters from creditors people will notice. If you think you might have difficulty telling others what your situation is you might want to write down the key points so you don't get in a muddle. It will also help set expectations. No you won't be buying loads of pricy presents for anyone or booking lots of holidays as you can't afford it.

Finally - decide whether you want to DIY your DMP or have help with it. StepChange and other organisations can do all the leg work for you, you pay them an amount each month and they make sure the creditors get their share. Use a charity for debt advice and doing the DMP and DON'T use a debt company to do this as they'll take a cut out of the money you pay.

And really finally - well done. You got into a mess but you're mature enough to know you have to sort it out. Your parents and GF should be proud of you.

fatbelly

You don't own property and only have £1000 available. Why are you not going bankrupt? An Income Payment Order only lasts 36 months.

Dadbod26

https://forums.moneysavingexpert.com/discussion/comment/82191809#Comment_82191809

Just read every page, thank you so much it’s been a great read and put my mind at ease. It’s crazy that you can just stop paying debt and putting that money aside for months I just can’t get my head around it!

Dadbod26

https://forums.moneysavingexpert.com/discussion/comment/82191863#Comment_82191863

Thank you so much for the advice. I have filled in the SOA with stepchange and I can afford £1000 towards my DMP and could be paid off in 5 years if all interest is frozen. Would you reccomend I let all my accounts default first before entering the DMP with stepchange? All my disposable income from not paying debts do I just put that into a separate pot as an emergency fund? (Would credits not want this once enter the DMP?)

Dadbod26

https://forums.moneysavingexpert.com/discussion/comment/82191813#Comment_82191813

I have been struggling for years when I moved out renting with an ex, everything just went on credit cards and I have been transferring balances ever since. I also got into a bad gambling habit which I have addressed and put myself on GamStop. I feel like an idiot but my mind is clear, I need to own the situation I’m in. Thanks for the comment any further advice would be appreciated.

Dadbod26

https://forums.moneysavingexpert.com/discussion/comment/82191715#Comment_82191715

Lowish expenses but I do contribute like a regular tennant to the household, my parents are older and have struggled themselves for years. I have a good salary I aim to budget, set up pots of money and try to never lend money again (unless it was a mortgage - however it seems impossible at the minute even for people not with a heap of debt). My lady is in a poor paying job and we are looking for ways to make more money together.