Debt management plan help! So worried and ashamed

amfox_2

Hello

absolutely ashamed and terrified to be writing this but have created a lot of debt of form on loans and credit cards over the years so now around 28k. With cost of living etc I’m meeting payments but living in overdraft and just constantly worried. Nobody knows about this - my husband especially. I have contacted Steochange filled in all financial info and they have recommended a debt management plan clearing debts in 3 years but with a large payment each month so no really sure what to do. I’m really worried and not sleeping any advice would be great

sourcrates

Hi,

Welcome to the forum.

No shame when life takes a nosedive, its just money, if you ain`t got it, they can`t take it can they, best mantra to live by.

Are you a homeowner or do you rent?

Relax, debt management is like American Express, its accepted everywhere, so no need to be terrified either.

amfox_2

Yes im a homeowner and recently moved and had lots to do hence the increase in debt

Vitor

I think OP really need to consider involving her husband, assuming she feels safe doing so. Carrying an enormous emotional burden on your own, and trying to maintain a debt management plan in secret could make matters considerably harder.

You may find that tackling the problem together opens up options you haven't considered.

sourcrates

As a homeowner then, you have two choices when it comes to problem debt.

There`s debt management, which is the informal solution, and there is an IVA, with is a formal insolvency option.

If a DMP will clear your debt in 3 years then that is likely the better choice for you, as an IVA would be 6 years in total.

You say your proposed DMP payment is quite high, you do know that its you who decide how much you want to pay, and not stepchange, if you think its too much say so, and instead suggest a lower amount you are more comfortable with.

It may increase the length of your plan, but would make budgeting easier.

fatbelly

Overdrafts are an expensive form of borrowing so you need to get out of that quickly either by (a) walking away and adding it to your debts, getting a new account, or (b) stopping paying the others and clear the overdraft. Which route you choose may depend on whether you already have other debts to the bank.

If you are uncomfortable with Stepchange's proposal then consider self-management. Either way, don't rush to start payments.

amfox_2

thanks everyone im just so ashamed and worried what my husband will say ive had an eventful few years with some grief in my life snd feel ive compensated for that by spending to make myself feel better.

RAS

Your husband probably already senses that you are hiding information from him.

Based on other threads, most partners are relieved when they learn the problem is just debt rather than another. So bite the bullet.

And accept that the biggest issue will be lack of trust. It will take time for him to trust you fully. Offer full transparency including joint financial budgets, monthly financial check-ins and joint decisions on purchases above an agreed limit.

Go with a solution, or a choice of solutions. He may be angry short-term but the sooner you share with him, the sooner you can work together.

Rob5342

This comes up a lot here, and in the vast majority of cases when people tell their partners it's nowhere near as bad as they feared it might be. I was in the same situation with my wife, it was a very hard conversation to have and things were difficult between us for a while, but she was disappointed and upset that I hadn't turned to her for help rather than feeling any sort of anger. Once I'd told her we started working together to sort things out and really turned it all round,

With a DMP you have to flip your mindset which can be difficult after you have been in debt for so long. You work out how much you are sustainably able to pay and your creditors just have to live with it. As time goes on you can increase your payments if you situation improves or reduce them if they get worse. Stepchange can be useful but they can also create lots of unnecessary complication, you don't have to use them and it's very easy to manage a DMP yourself. All you do is pay your debts like you are doing now, but ignore what they say is the minimum payment and pay what you can afford instead.

If you decide to start a DMP then it's important that you stop paying and wait for everything to default before you make any payments. It's very counter intutitive but it's much better for your credit report if you do that than if you engage with your creditors. The reason for that is that once defaulted a debt with drop off your credit report six years after the default was applied regardless of anything else. If you engage with them then you'll get an arrangement to pay on your credit report which stays for six years after the debt has been paid off, which is potentially much longer.

amfox_2

my plan says 4 years and debt paid off so will this be worth defaulting or should I just go straight into paying

Grumpelstiltskin

OK do you fully understand Debt Management? I don't think you do.

If you start paying now before a debt defaults you credit report is marked Arrangement to Pay, that stays on your credit report for 6 years after your final payment so 10 years. With defaults they stay for 6 years from that date even if you never pay another penny off it.

No one has mentioned joint accounts you may have with your husband, if you have any go you realize he will be affected too, you must get your name off any joint accounts and how will you explain that to him?