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    • survivor84
    • By survivor84 18th May 19, 7:11 AM
    • 25Posts
    • 5Thanks
    survivor84
    Credit cards - can you ring them and ask to reduce payments?
    • #1
    • 18th May 19, 7:11 AM
    Credit cards - can you ring them and ask to reduce payments? 18th May 19 at 7:11 AM
    Hello,

    I am very new to the forum but am in need of major advice! I have very recently left my abusive marriage and have been left with lots of debt in my name (26,000) on credit cards. I am really struggling to meet the minimum payments each month and pay for everything else in the home. I work full time, the total debt is slightly lower than what I earn a year. I have four children to support. What do I do? I really need to get a hold of my finances. My mum has said if I ring up the card companies and explain my situation and ask to reduce my payments they might let me, what do you think? Thanks so much xx
Page 2
    • sourcrates
    • By sourcrates 19th May 19, 12:11 PM
    • 17,415 Posts
    • 16,417 Thanks
    sourcrates
    Also can you tell me who decides how much you pay back each month in the DMP? The more I read about it the more I like the idea of the DMP. Thank you.
    Originally posted by survivor84

    Payments are decided by the amount of your disposable income, so in your case you would have around 500 a month to throw at a DMP.

    Your options.


    Debt Management Plan

    You would be looking at a period of around 5 years to pay off what you owe, assuming creditors stopped all interest and charges, but there is no guarentee that they will do so, it is a gamble you take, also assuming there were no major changes to your situation.
    That is a pretty reasonable time frame.


    Bankrupcy

    If you went bankrupt, it would cost you 680, and due to your income, there would be an IPA (income payment arrangement) for up to 3 years.
    After 12 months you would be discharged, your debts extinguished, and you would be free to start again, the IPA would continue for a further 2 years, and that would be that, so 3 years in total.

    Both options would see defaults on your credit file, obviously a bankrupcy too, if you chose that option, but the good news is after 6 years, all would disapear from your file, as though it was never there.

    So your choice, 5 years for a DMP verses 3 years for bankrupcy.
    Last edited by sourcrates; 19-05-2019 at 12:24 PM.
    I'm a Board Guide on the Debt-Free Wannabe, Credit File And Ratings, and
    Bankruptcy And Living With It, boards. "I volunteer to help get your forum questions answered and keep the forum running smoothly".

    Board guides are not moderators and don't read every post. If you spot an abusive or illegal post then please report it to forumteam@moneysavingexpert.com. Any views expressed are mine and not the official line of MoneySavingExpert.com.

    For free debt advice, contact either : Stepchange, National Debtline, or, CAB.
    • survivor84
    • By survivor84 25th May 19, 5:37 AM
    • 25 Posts
    • 5 Thanks
    survivor84
    Thank you for this. So in theory the bankruptcy is less time and I pay back less? Thanks so much for your help x
    • survivor84
    • By survivor84 25th May 19, 5:46 AM
    • 25 Posts
    • 5 Thanks
    survivor84
    Right, wanting to open new bank account today. I am a teacher and thus it's half term so wanting to get everything sorted while I've got some time. I am a little confused about the bank accounts. I have tried looking on the money saving expert website about the best deals. What I'm worrying about is switching accounts and them transfering the overdraft I owe as well, which I don't want to do. So should I just open a basic bank account and not switch? Sorry!! xxx
    • survivor84
    • By survivor84 25th May 19, 5:52 AM
    • 25 Posts
    • 5 Thanks
    survivor84
    At the moment thinking either the first direct or marks and spencer one? x
    • Willing2Learn
    • By Willing2Learn 25th May 19, 7:09 AM
    • 3,255 Posts
    • 2,829 Thanks
    Willing2Learn
    It all depends. If you decide on bankruptcy, then you will need a Basic account as most banks won't allow undischarged bankrupts to have a standard current account. The one that most people here recommend and use is the Nationwide FlexBasic account


    If you decide on a DMP, then you can choose from any bank current account that does not belong to any banking group with whom you have debts. Both First Direct and M&S are part of the HSBC banking group.

    I work within the voluntary sector, supporting vulnerable people to rebuild their lives.

    I love my job

    • onwards&upwards
    • By onwards&upwards 25th May 19, 8:08 AM
    • 477 Posts
    • 854 Thanks
    onwards&upwards
    Don’t switch if you have an overdraft, you would just end up with your new bank one of the creditors for your DMP!

    Your new account is there to get your salary paid into and pay your bills out of and should have absolutely nothing to do with your debts.

    Co-op also do a decent basic bank account.

    If you want to tell us who your debts are with we can help you steer clear of accidentally using a related bank for your new account.
    • survivor84
    • By survivor84 25th May 19, 8:28 AM
    • 25 Posts
    • 5 Thanks
    survivor84
    Have spoken to step change this morning and they have been amazing. Have decided on the DMP, am now cancelling direct debits, I just need to decide on this basic bank account. I have no debt with HSBC so in theory could go for either but I will look at the nationwide one too. Thank you so much for everyone's help and advice it's been amazing. Just need to ring all these cards and explain now. xx
    • Willing2Learn
    • By Willing2Learn 25th May 19, 8:47 AM
    • 3,255 Posts
    • 2,829 Thanks
    Willing2Learn
    Just need to ring all these cards and explain now. xx
    Originally posted by survivor84
    If it were me, I would do it all in writing. It is just so easy to became flustered and panicky if your creditors start to question things when you are on the 'phone. Much simpler to say exactly what you need in a letter.
    I work within the voluntary sector, supporting vulnerable people to rebuild their lives.

    I love my job

    • Willing2Learn
    • By Willing2Learn 25th May 19, 9:36 AM
    • 3,255 Posts
    • 2,829 Thanks
    Willing2Learn
    Have spoken to step change this morning and they have been amazing. Have decided on the DMP...
    Originally posted by survivor84
    Okay, so StepChange won't recommend what I am about to suggest to you, but it is what we recommend to everyone embarking on their DMP journey.

    We recommend delaying the start date of your DMP by six months. This will allow you to save a decent pot of money toward an Emergency Fund (EF). This is because an EF is a vital component of all successful monthly budgets. It would mean you have something set aside for when the unknown happens. Things such as your car breaking down or your washing machine giving up the ghost etc etc. It would mean that when you write to your creditors, to advise them that the DMP start date will be xx November. Some people are nervous about doing this. But as long as you keep your creditors 'in the loop', then they will be satisfied and nothing bad will happen. At the end of the day, it just makes perfect sense to have some money saved up to support you when there is a rainy day event. And most folk end up very grateful for having the cash set aside.
    Last edited by Willing2Learn; 25-05-2019 at 9:39 AM.
    I work within the voluntary sector, supporting vulnerable people to rebuild their lives.

    I love my job

    • survivor84
    • By survivor84 25th May 19, 11:12 AM
    • 25 Posts
    • 5 Thanks
    survivor84
    Thanks so much guys. My debts are with barclays, natwest, aqua, capital one, argos and drafty.

    Step change were very keen for me to start it as of the 1st july. I am currently paying 800-900 back in minimum payments a month. With the budget we've gone through I will only be paying back 62 a month. So with this in view do I still want to delay the start date until November?

    Also is there a letter template to send them? I am worried about becoming emotional and upset when explaining the abuse that has got me to this situation on the phone.

    Thanks so much x
    • Willing2Learn
    • By Willing2Learn 25th May 19, 11:40 AM
    • 3,255 Posts
    • 2,829 Thanks
    Willing2Learn
    Hello again

    Below is a link to a standard holding letter, requesting your accounts are frozen for 30 days whilst you seek advice.

    Does the 62/month allow you breathing space to save up an EF? If it does, then I suppose you could start the DMP on July 1st. If it does not , then I would suggest starting in November, so that you can have the money saved up. It would necessitate amending the letter to reflect the fact that you would be starting the DMP on November 1st instead. You could state your reason for the delay as requiring funds for emergency car repairs or boiler maintenance or something similar. Obviously though, the choice is yours. Whichever way makes you feel the most comfortable, is the right way...

    https://www.nationaldebtline.org/EW/sampleletters/Pages/Hold-action-on-your-account-%28sole-name%29.aspx

    Edit: I forgot to mention. Another good reason to delay the DMP start date, is that it encourages your creditors to default your accounts nice and early. The sooner they are defaulted, the sooner the 'toxic' accounts are removed from your credit files.
    Last edited by Willing2Learn; 25-05-2019 at 11:48 AM.
    I work within the voluntary sector, supporting vulnerable people to rebuild their lives.

    I love my job

    • sourcrates
    • By sourcrates 25th May 19, 11:47 AM
    • 17,415 Posts
    • 16,417 Thanks
    sourcrates

    Also is there a letter template to send them? I am worried about becoming emotional and upset when explaining the abuse that has got me to this situation on the phone.

    Thanks so much x
    Originally posted by survivor84

    Creditors are not your new best friends, you have a buisness relationship with them, accordingly when you write to them, you do so in a buisness like fashion, try and stick to facts, and dont go into too much detail, keep it concise and to the point.
    WTL has provided a link to the National Debtline template letter, but you can also combine it with your own, along these lines.

    There are many reasons why people need debt mangement, best to just put something like "due to circumstances beyond my control" when citing a reason for your situation :


    Dear Creditor,


    I am writing to inform you that due to circumstances beyond my control i find it nessessary to inform you that from (insert date) i will be entering into a debt mangement plan with stepchange.


    My circumstances have changed significantly since my account was opened (you can then add specific reasons should you wish to do so) and they are unlikly to improve in the near future.


    I will be intouch again shortly with further details of new payment amounts etc, until then, i hope you will give due concideration to stopping all interest and charges on my account, as otherwise this will just lengthen the time it takes to repay it.


    Yours sincerely
    Last edited by sourcrates; 25-05-2019 at 11:50 AM.
    I'm a Board Guide on the Debt-Free Wannabe, Credit File And Ratings, and
    Bankruptcy And Living With It, boards. "I volunteer to help get your forum questions answered and keep the forum running smoothly".

    Board guides are not moderators and don't read every post. If you spot an abusive or illegal post then please report it to forumteam@moneysavingexpert.com. Any views expressed are mine and not the official line of MoneySavingExpert.com.

    For free debt advice, contact either : Stepchange, National Debtline, or, CAB.
    • survivor84
    • By survivor84 25th May 19, 12:02 PM
    • 25 Posts
    • 5 Thanks
    survivor84
    Thank you so much for the templates and advice. I do feel that the 62 will allow me to accrue money towards an emergency fund. And yes sorry about the worry about becoming emotional part, step change just said it was worth giving them the background of the situation. Thanks so much xx
    • Socajam
    • By Socajam 25th May 19, 12:34 PM
    • 349 Posts
    • 452 Thanks
    Socajam
    Thanks so much for the replies. Please find my SOA below:

    Household Information
    Number of adults in household........... 1
    Number of children in household......... 4
    Number of cars owned.................... 0

    Monthly Income Details
    Monthly income after tax................ 1901.35
    Partners monthly income after tax....... 0
    Benefits................................ 1216
    Other income............................ 0
    Total monthly income.................... 3117.35


    Monthly Expense Details

    Mortgage................................ 0
    Secured/HP loan repayments.............. 0
    Rent.................................... 925
    Management charge (leasehold property).. 0
    Council tax............................. 158
    Electricity............................. 62.1
    Gas..................................... 53.06
    Oil..................................... 0
    Water rates............................. 41
    Telephone (land line)................... 0
    Mobile phone............................ 106.54
    TV Licence.............................. 12.13
    Satellite/Cable TV...................... 32 - This is a luxury you cannot afford. You also have the Internet
    Internet Services....................... 33
    Groceries etc. ......................... 500
    Clothing................................ 100
    Petrol/diesel........................... 140
    Road tax................................ 0
    Car Insurance........................... 0
    Car maintenance (including MOT)......... 20
    Car parking............................. 20
    Other travel............................ 0
    Childcare/nursery....................... 0
    Other child related expenses............ 200
    Medical (prescriptions, dentist etc).... 10
    Pet insurance/vet bills................. 0
    Buildings insurance..................... 0
    Contents insurance...................... 12.02
    Life assurance ......................... 7.47
    Other insurance......................... 21
    Presents (birthday, christmas etc)...... 30
    Haircuts................................ 50
    Entertainment........................... 50 - Luxury you cannot afford. Children already attend clubs.
    Holiday................................. 30
    Emergency fund.......................... 30 - add entertainment to this, saving 80.00 per month
    Total monthly expenses.................. 2643.32



    Assets

    Cash.................................... 0
    House value (Gross)..................... 0
    Shares and bonds........................ 0
    Car(s).................................. 0
    Other assets............................ 0
    Total Assets............................ 0


    No Secured nor Hire Purchase Debts


    Unsecured Debts
    Description....................Debt......Monthly.. .APR
    credit card....................9990......234.......0
    credit card....................9811......224.......0
    credit card....................2750......115.......0
    overdraft......................3000......0........ .0 - you need to stay away from this, too easy to get trapped
    credit line....................1300......53........0
    store card.....................1800......60........0
    credit card....................3100......173.......0
    Total unsecured debts..........31751.....859.......-



    Monthly Budget Summary

    Total monthly income.................... 3,117.35
    Expenses (including HP & secured debts). 2,643.32
    Available for debt repayments........... 474.03
    Monthly UNsecured debt repayments....... 859
    Amount short for making debt repayments. -384.97


    Personal Balance Sheet Summary
    Total assets (things you own)........... 0
    Total HP & Secured debt................. -0
    Total Unsecured debt.................... -31,751
    Net Assets.............................. -31,751


    Any help or advice you can offer is much appreciated. I am finding that making the minimum repayments on all the cards is crippling me. I'm then having to borrow money to make ends meet and it's such a vicious cycle. Thank you so much. xxx
    Originally posted by survivor84
    Is there any way you can switch the payments around by paying the higher amounts to the lower debts which will reduce them at a faster rate. For example 234 x 10 = 2340 which could wipe out the store card. As you will be paying on the credit line during this time, the 540 could probably wipe that out as well.
    Then you continue working the way up until are able to attack the higher loans which you were paying at a reduced rate.
    Once you got rid of a couple debt, you could get the cable TV back.
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