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  • FIRST POST
    • periwinkleperkins
    • By periwinkleperkins 8th Jul 18, 6:15 PM
    • 6Posts
    • 0Thanks
    periwinkleperkins
    From managing debts to defaults... a newbies story
    • #1
    • 8th Jul 18, 6:15 PM
    From managing debts to defaults... a newbies story 8th Jul 18 at 6:15 PM
    Everybody has a story about how they got into debt, and mine is probably not that dissimilar.

    My first experience with debt was at university - banks were throwing credit at me, credit card limits doubling every few months, consolidation loans without getting rid of other lines of credit. It took me 3 years to realise I was in a mess and over 40k in debt at 23. I took the advice to go bankrupt in 2004 and started again - I learned how to budget, refused credit when offered and promised myself I wouldn't get into that mess again.

    Then five years ago, I was working in a well paid job but living right at the edge of my disposable income when I met a new partner. In the throws of a new relationship, I took out a credit card to pay for a holiday which was manageable, told myself that would be ok. I then found out that my partner had significant debts at high interest, so I applied for an interest free card in my name and transferred my partners debts onto it. Then my partners car broke down, and I co-signed the HP agreement on a 25% APR deal. A year later, we split and I was left picking up the pieces emotionally and financially. The car went back to the finance company but I ended up having to borrow the money to make up the payments to the termination 50% paid threshold.

    By this point I had a 12k loan and about 10k on multiple credit cards, nowhere to live and no furniture. I borrowed some more on my credit cards to set myself up in a new place and took stock of where I was.... just over 25k in debt BUT it was OK, I could get a consolidation loan at a reasonable APR and everything would be paid off in 3 years.

    I made the first 4 payments and disaster struck - I became ill and couldn't work. For the first few months I used the credit card I had kept to pay for day to day living, and was hopeful I'd soon be back at work. Then came my lightbulb moment - I was now 30k in debt, not working and had no way of paying everything back right now.

    I reached out to StepChange, who were fantastic, and set up a token payment plan for me which is due for a 12 month review this October... luckily my health has improved and I will be starting work next month so here we come to where I need your help....

    My debts are all defaulted on my credit file, due to the TPP, and current balances are;

    Sainsburys Bank Loan 16063
    HSBC Loan 9519
    American Express Card 3632

    Total.... 29214

    I've gone through the income and expenditure forms and set myself a comfortable budget (2173) which leaves me with 1500 to pay to my creditors and will see me debt free in 20months (this is 11 months quicker than the debts would have been paid if I were making the contractual payments as per the agreements before the defaults).

    My question is... will this be acceptable or will the creditors expect me to significantly curtail my entertainment and leisure spending?

    INCOME
    Salary 3680

    HOUSING & UTILITY BILLS
    Rent 650
    Water 32
    Council tax 118
    Electricity 75
    HOUSEHOLD SERVICES
    Buildings & contents insurance 14
    Telephone and internet 28
    TRAVEL
    Spares & servicing 25
    Road tax 18
    Car insurance 54
    Breakdown cover 13
    Fuel & parking 280
    FOOD & HOUSEKEEPING
    Food, toiletries & cleaning products 238
    Pets (food & insurance) 62
    Clothing & footwear 21
    OTHER SERVICES
    Medicines & prescriptions 10
    Dentist & opticians 24
    Hairdressing 13
    PERSONAL & LEISURE
    Sports, hobbies & entertainment 238
    Church or charity donations 25
    Sundries & emergencies 0
    OTHER COSTS
    Dog Grooming 33
    Cleaner 87
    Mobile Phone 25
    Takeaways 43
    Birthdays / Christmas 33
    TOTAL EXPENSES 2,173
Page 1
    • sourcrates
    • By sourcrates 8th Jul 18, 7:01 PM
    • 15,246 Posts
    • 14,347 Thanks
    sourcrates
    • #2
    • 8th Jul 18, 7:01 PM
    • #2
    • 8th Jul 18, 7:01 PM
    Hi,

    Take up running, its free.
    Bin the church donation and the cleaner, put that in the emergency fund.
    Learn to cook.

    Theres 300 plus saved.

    In reality, its none of your creditors business how you allocate your budget, they can expect what they like, its up to you what they get.

    You do need some savings though, otherwise you will resort to credit again, rest of the budget looks fine.
    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 are mine and not the official line of MoneySavingExpert.com.

    For free debt advice, contact either : Stepchange, National Debtline, or, CAB.
    For Free Legal advice see : http://legalbeagles.info/
    • Karonher
    • By Karonher 8th Jul 18, 7:22 PM
    • 512 Posts
    • 2,158 Thanks
    Karonher
    • #3
    • 8th Jul 18, 7:22 PM
    • #3
    • 8th Jul 18, 7:22 PM
    Would they agree to freeze/continue to freeze interest if there was a cleaner, a lot spent on entertainment and dog grooming?

    Its OK saying a company cannot have what you don't have, but when the money is there surely it should come off debt.

    There is no hardship in not having a cleaner and cutting back on entertainment.
    Getting ready for Christmas 2018

    Aiming to make 5,000 online in 2018.
    • periwinkleperkins
    • By periwinkleperkins 8th Jul 18, 8:24 PM
    • 6 Posts
    • 0 Thanks
    periwinkleperkins
    • #4
    • 8th Jul 18, 8:24 PM
    • #4
    • 8th Jul 18, 8:24 PM
    Hi,

    Thanks for the feedback, it!!!8217;s prompted a couple more thought processes for me.

    1. Interest on the loans isn!!!8217;t frozen, both HSBC and Sainsbury!!!8217;s front loaded the interest for the whole of the term and with the revised proposed payments they will be getting paid back at a higher monthly amount than in the original loan agreement - I looked into whether the default should have treated the front loaded interest in the same way as early repayment (ie a rebate) but I can!!!8217;t find any thing conclusive... what are everyone else!!!8217;s experiences?

    2. Dog grooming is essential for his breed type - long haired Lhasa Apso. I can do the washing/drying myself, and regularly comb to stop his fur matting BUT I!!!8217;m not confident to do the trimming/cutting hence taking him to the groomer. Anybody any experience in doing this themselves?

    3. Savings - I was always told pay debt first before savings otherwise you!!!8217;ll be worse off due to interest rates, hence I planned to wait until I!!!8217;m debt free. I!!!8217;ve made provisions in the budget for car repairs and maintenance, white goods in the house are my landlords responsibility and everything else in the house (sofa, beds, furniture) was new after I split with my ex). Do I still need a rainy day fund?

    4. I spent a lot of time thinking about entertainment and I came to the conclusion that I!!!8217;m much less likely to struggle with my budget if I can still treat myself to a few nights out, cinema or day trips but I appreciate it is quite high. I suppose I could divert some of it to a rainy day fund or repaying debt even quicker but first I think I!!!8217;ll see how I manage with the budget !!!8220;as is!!!8221;, especially as I!!!8217;ve been miserable surviving on benefits for the past 8 months.
    • buythedip
    • By buythedip 8th Jul 18, 8:36 PM
    • 22 Posts
    • 25 Thanks
    buythedip
    • #5
    • 8th Jul 18, 8:36 PM
    • #5
    • 8th Jul 18, 8:36 PM
    Decent story. Good to hear your health is on the mend! Is there a chance you could relapse with your illness? I ask because you have a decent income and can make serious inroads if you ditch the cleaner, takeaways and entertainment. Should you unfortunately fall sick again money issues would largely be a thing of the past, especially if you can also build a decent emergency fund.
    • dionysia
    • By dionysia 8th Jul 18, 8:49 PM
    • 79 Posts
    • 154 Thanks
    dionysia
    • #6
    • 8th Jul 18, 8:49 PM
    • #6
    • 8th Jul 18, 8:49 PM
    Is there really, definitely nothing in your life that could go wrong? I think the usual advice is that renters can have less than homeowners but there's still Events. If you've got 1,500/month to pay to debt you could just put aside 500 in the first month for your emergency fund and call it done, it doesn't have to be a 3-6 months of living expenses type of rainy day fund. Hopefully you never need it but if you do you'll be glad it's there.
    June 2017: owe 16,818.
    June 2018: owe 13,263.
    • Pixie5740
    • By Pixie5740 9th Jul 18, 10:07 AM
    • 12,907 Posts
    • 18,555 Thanks
    Pixie5740
    • #7
    • 9th Jul 18, 10:07 AM
    • #7
    • 9th Jul 18, 10:07 AM
    I would be surprised if the loans had front loaded interest.

    Are you sure all the white goods in the property are the responsibility of your landlord to repair or replace? Are they integrated appliances or does it say in the tenancy agreement that he is responsible?

    What happens if your landlord decides to evict you? Where is the deposit, first month's rent plus referencing fees going to come from?
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