Which way to turn?

Stuffed_2

Hi

First of all, let me just say a big thanks to all the contributors to this forum. You guys deserve a pat on the back for spending your own time helping people like me.

OK... Let me begin.

I'm 27, living at home (although moving out in to rented accomodation next month) and have managed to rack up approx' £39,000 worth of un-secured debt. Last week I spoke to Payplan who asked me to collate all my financial info by Tuesday when they'd phone me back.

Break down of approx debt:

Unsecured Loan, Natwest:
Monthly payment: £290.00
O/S Balance: £15000

Unsecured Loan (previously HP on car) GE Capital:
Monthly payment: £160.00
O/S Balance: £5500

CC debts:
HFC: £5400
Barclard: £5000
Monument: £5000
Capital One: £1500
Citi: £1000

All cards are now over their limits and are incurring charges.

My approx monthly rent is £300, food £80.00, phone £20, smoking £50, petrol £80

Basic salary p/m £1050 (not including O/T and/or bonus which is never frequent)

What do you think Payplan will advise? If they suggest a DMP won't it last forever?

What do you guys think I should do? Go Bankrupt? An IVA is out of the question as I have no assets minus a car (although I need this to commute to work so should I consider this?)

Any suggestions?

Stuffed

Edit - Why isn't Payplan listed on the forum banner for "Where to start with debt problems?" Is Payplan dodgy?

fatbelly

Payplan are excellent. See this recent thread

http://forums.moneysavingexpert.com/showthread.html?t=82344

There's probably a technical reason why Payplan can't be included in the header. But rest assured that you are in good hands and will get good advice.

My guess is that they will go for a debt management plan to enable you to have enough money for priority expenditure. But bankruptcy may well be an option and they will be able to assess that in more detail.

I'd be interested to know how you get on

Fran

The first thing that strikes me about your post is do you need to leave home at this particular time as it's much cheaper to live there?

Rikki

Fran wrote:

The first thing that strikes me about your post is do you need to leave home at this particular time as it's much cheaper to live there?

My thinking too. you will have all the extra expenses that comes with your own place. BILLS :eek:

ceegee

That's exactly what I thought, too.

Midas

As previous posters have said, living away from home is going to be much more expensive.

And the smoking will have to go (or at least be drastically cut back) I'm afraid...

System

I wish I could move back home, had it so easy in every repect

Basically moving out is a HUGE financial strain, even if only renting. Unless you are exceptionally good with money you can instantly kiss goodbye to quite a few hundred quid the first few weeks you move in. For example, my ex partners boyfriend moved out from home aged 32 with his SO, and he grossly underestimated how much cash he required, to the point whereby all he could afford to eat was ham sandwitches one week, after begging the bread etc from his mum. Even the petrol to get to work had to be begged and borrowed. He had a lot of debts which he didnt really think about and he didnt curb his spending.

Basically I'm saying sort the debts out first ( I don't mean pay them off, I mean get them under control) The extra cash and the knowledge that you are acknowleding your debts and they are under control is very important and wont play on your mind.

I moved out with about £18ks worth of debt to a new house I bought and tbh it was probabily one of the worst decisions I made, although I do still have the house. Every month I was scratching around to survive, although not as bad as the chap I mentioned before.

mattp_3

A DMP could take you a very long time and could be unrealistic.

Why do you think an IVA would not be possible??

The fact you have no assets is actually an advantage for an IVA as it means you have nothing to loose! You would not be expected to give up your car if you need it for work (unless your driving a Porsche!!) You can still go for an IVA over 5 years, paying as much as you can each month, after which the remainder of the debt is written off.

You might want to read more about it so you know what the assessor is talking about when they next call you:
http://www.payplan.com/individual-voluntary-arrangements.php

If you dont fancy an IVA then bankruptcy will be the next option. Someone recommended another forum (not trying to steal members Martin!!) https://www.debtquestions.co.uk as there are a lot of people who have gone bankrupt who post on that forum and they can give first hand experience of the process.

Good Luck

Stuffed_2

Many thanks for responding guys/gals.

The rent/bills I'll be paying are exactly the same I'll be paying @ home. I'm renting a room in a friends house. Bills etc are all included in the rent of £300 which is what I'm paying at home @ the mo'. I'll have to get my own food but tesco sell a can of beans for 9p so that won't be to bad

jen_jen_2

if i was you, i would go bankrupt but still cut down all expenses and once the bankruptcy over put all money into savings, then when effects of bankruptcy over - 6 years have good savings for house etc.

your credit rating is probably already affected for 6 years and by not paying back the 39K (or some of it in the bankruptcy) you are effectively starting out at zero.

some people disagree with this "fresh start" because they think its getting off lightly - you do what is right for you, the law exists for a reason and if you benefit from it then great. if you want to repay all or most of the debt off then its your conscience and i respect all those people who do do this but dont let others tell you what to do, you have to make your own mind up.

what i would also do is seriously look at your spending habits and budgeting skills - 39K at 27 years old and no assests to show for it - what was it spent on, can you live within your means, was it a business and youve learnt what not to do for next time - this may seem harsh but unless you address the reason for your debt you will be in this situation again.

good luck

Stuffed_2

Hi jen_jen

Looking back I'm still trying to figure out what it all went on.

I bought a couple of cars which were complete money pits and was unemployed a while back for a couple of months. My mother who lives with me was made unemployed for 6 months and I had to cover her outgoings whilst she was out of a job... pay the mortgage, bills etc let alone pay my outgoings.

I was using my credit cards to pay off eachother which was so not the right thing to do. I'd love to say that I gambled it all away or spent it all on lavish holidays/material items but I didn't... and then they just got worse and worse with limits being increased etc etc.

I guess bankruptcy may be the best solution for my scenario... Although I am slightly worried about losing the car as I use it to commute to work. No car, no income. An O.R. would definitley see the car as an asset. I really can't handle cycling 15 miles to and from work every day.