Debt advice

[ROB-THE-BLUE]

Guys, advice if I may?

 

I've had a couple of years of bad luck (illness, injury and car repairs) and obviously the cost of living hasn't helped.

I'm drowning in debt. What I earn in a month from 2 jobs doesn't cover what I need mainly because of loan and car finance repayments resulting from my marriage separation and being lumbered with everything in my name as well as keeping up with my parental duties. I'm not shirking my responsibilities or trying to get sympathy... But I cannot carry on like this. I've nearly maxed out my credit card and next month will be no easier.

 

I did an online thing on Stepchange and after filling in all my details, it suggested bankruptcy was my best option. It terrified me. Would it be THAT bad? I'm not likely to ever have a mortgage anyway so that's not an issue... But what would the ramifications be? Will I literally have bailiffs coming to take my daughter's TV etc?? Has anyone been through this?

 

Any help or advice would be massively appreciated. I know some people will say I've brought stuff on myself, and you're right... But trust me, I wouldn't be writing all this if I wasn't at a point where I need some guidance.

 

Much love all

[StanSP]

Firstly, you've done the right thing in reaching out (to Stepchange, not just on here!). 

 

Secondly, have you considered contacting Citizens Advice Bureau? There's various options you can undertake but it may depend on the full debt level - https://www.citizensadvice.org.uk/debt-and-money/. They can help you go through the process and double-check it actually is the right option for you and guide you through what you need to do before, during and after whichever option you choose. 

 

Bankruptcy is never taken lightly but it is possible to get back on track afterwards. It'll affect your credit rating but go through the right channels and still have support afterwards and you can still open some kinds of new bank accounts or take out phone contracts etc. There's usually a 12 month period for bankruptcy that you have to endure before you're 'discharged'. In that 12 months though you have to legally declare you have been made bankrupt to any company you look to borrow/take money from i.e. banks/building societies. 

 

You go through an interview for your bankruptcy application. It can be very stressful on top of the actual reality of being in the debt position you're in, but it's the process that has to be completed from the official receiver itself. Everything after bankruptcy is basically managed by a trustee, so all decisions on what you do financially goes through them. Anything sold is decided by them to then pay off your creditors.

 

Other options may have included a Debt Relief Order but as you have a car on finance I believe that counts as an 'asset' so you may not be eligible. If you have an accumulated debt of over £50k you're also not eligible.

 

 

[RobHawk]

What stan said above, go to the cab and go through things with a debt expert who can actually advise you properly. 

 

I used to do some basic debt counselling in a previous job, even then, if it was a more severe situation such as yours we would always refer to CAB as they have staff with much more expertise. 

 

Whatever you do, don't fall for one of these 'we'll put all your repayments into one easy and affordable repayment' jobs, won't actually help you get out of debt and take their cut out of any payment you make, prolonging the issue. 

 

What I used to do is act on behalf of people in debt, create a budget which detailed their income and outgoings, and whatever was spare would essentially be shared around the creditors, if they couldn't afford anything we would offer £1 a month token payment. Whilst this wouldn't necessarily help clear the debt, it would stop it getting any bigger as interest would also be stopped. 

 

It's been a while since I did this, and I worked with students, so the expections were that they would end up in a situation where they could afford to pay more in the future but my point is, speak to an expert and you'd be amazed what they can help with. 

[RobHawk]

Also...

 

"I know some people will say I've brought stuff on myself, and you're right... But trust me, I wouldn't be writing all this if I wasn't at a point where I need some guidance."

 

**** those people. Shit can happen to anybody in life and sometimes finances can spiral out of control. Don't be ashamed, just get yourself back in the best place you can 👍

 

[Grebfromgrebland]

Yeah get some advice but maybe an IVA would be better. Still screws your credit rating but it's a bit less bad. 

 

https://www.citizensadvice.org.uk/debt-and-money/debt-solutions/individual-voluntary-arrangements-ivas/

 

[marbles]

Dont know the law in your country - but I went through a bankruptcy almost 20 years ago

There was an informal hearing where the debtors could step forward and object - none showed up so the judge granted it.

No one showed up to take anything - not sure that's even legal EXCEPT if you write off a vehicle or house you're still paying for. They damn sure will come get that.  But items like your fridge or TV - nope. 

 

Funniest part was, I started getting flooded with credit card and new car offers.  Apparently they liked the fact that I owed no one at the time (other than my mortgage,  which was not part of the bankruptcy).

 

Like I said - not sure of the laws in your country, but I would suggest at the very least getting a free consultation from a bankruptcy attorney.  That way you can weigh all your options.  

[MPH]

With regards to bankruptcy, they’ll pay very close attention to anything that’s in your name..

[Strokes]

Have you tried contacting your creditors to see if you can alter your payment plan? Tell them of your change in circumstances and financial predicament and that you’re considering bankruptcy. They might be able to restructure things to allow you to keep the assets but in a way that’s affordable.

its in their interest too.

Edited 18 July 2024 by Strokes

[StanSP]

@ROB-THE-BLUE you may have already considered this but you can look into what's called a 'breathing space' while you find out what's going to work best.

 

I don't know the full criteria or if you're beyond that stage due to the level of debt but it may ease the pressure of being chased by creditors for 60 days while you figure out a debt solution. You can still try and make payments where you can, still seek help in that 60 days but it may release some of the pressure, even if just for a little bit if you are eligible. Similar to above, it's something Stepchange or CAB can help you apply for or check if you qualify. 

[Babylon]

1 hour ago, Strokes said:

Have you tried contacting your creditors to see if you can alter your payment plan? Tell them of your change in circumstances and financial predicament and that you’re considering bankruptcy. They might be able to restructure things to allow you to keep the assets but in a way that’s affordable.

its in their interest too.

Rob, 100% should be the first port of call in this situation. It's likely to be advice you are given by CA etc, so I wouldn't hang about. Be armed with the amount you CAN afford to pay them each month to keep your head above water. No point accepting a payment plan that's not actually going to help. 

 

Consider a balance transfer credit card, shifting your debt from one card to another for a fee, usually around 3 / 3.5%. But it means perhaps a year or two without interest payments to give you some breathing space. Obviously check the interest rates etc for when the 0% ends, and it's only a breathing space measure. There needs to be a longer term plan to pay it back. 

 

Are you renting or do you have a mortgage? Whichever it is, speak to the landlord or the bank and be honest. Explain that you are struggling and need a bit of breathing space whilst you discuss the options you have with experts. 

[Guest Lako42]

I don't have any experience with this or better advice than the above but have you made sure you have stopped everything that is considered as a 'nice to have' service? Anything with a monthly payment that just isn't 100% necessary? 

 

I am sure you have but I was gobsmacked when my mate got into difficulty and I sat and went through his monthly outgoings with him and there was endless subscriptions to services, magazines, sky, unnecessary financial services a  beer subscription etc etc. 

 

 

Edited 18 July 2024 by Lako42

[Bazly]

Bankruptcy should be your last option. You could forget credit or loans for a long time and then you will only get offers well above standard interest rates.

There are food banks around that operate like debt relief banks, usually run by religious organisations. Schemes where you pay for the food you take and that money is then directed to service and hopefully pay down your debts. The body effectively helps you manage and get on top of your debts for free (as in there is free advice). If your monthly food spend is sufficient to cover your loans then this would be a sensible solution to investigate if you have local food bank groups that offer this support to those struggling with debt.

[Vlad the Fox]

Are payment holidays an option on anything? I did this once which basically gave me a lump sum to pay off other things which then created breathing space to start paying more stuff off. There will be a slight increase on repayments where you took the holiday but it should be a lot less than the payments you’ve cleared so only do it if it will clear up other debt or significantly reduce the DD. 
 

It’s good that you’ve reached out as shame and fear only stops you getting help and while the problems get worse.

[Greg2607]

@ROB-THE-BLUE, firstly, I'm sorry to hear about your circumstances.  It's a horrible place to be and I have first hand experience of the same situation after the breakdown of a relationship.  Prior to us separating, my other half had been drowning in debt and made redundant due to the financial crisis and also found herself pregnant at the same time. Given that we were having kids together and I was still in work, I did the honourable thing and moved all her debt into my name, and re-financed.  When we then split up, I had assumed all her debt and suddenly found myself having to also pay £600 a month in a child maintenance. (which felt like a big kick in the teeth at the time!) I also had a house which was in negative equity which didn't help at all! 

 

I went down an IVA route, but it did take around 10 years for me to pay back everything that was owed and during that time, I had an annnual appraisal where I had to go through entire household budgets and any "spare" income was taken off of me and passed to my creditors.  As such, anything like pay rises or bonuses in that period, didn't go to improving my "lifestyle" and it felt wholly restrictive. 

 

to this day, I don't have any personal loans or credit cards as I never want to be in that situation again and you very quickly learn how to live within your means.  if I want to buy something, I only do so if the money is already in the bank account / savings account and it's a habit i'll never waiver from. 

 

Bankruptcy wasn't an option for me, as I didn't want to lose my house, but it would have been a sharper, shorter pain and Ironically, I would probably have been back on my feet quicker. 

 

As others have said, speak to citizens advice, reach out to the places you owe money to (they have a legal obligation to help you) and try to avoid a "managed" process, where a firm takes a monthly management fee. It feels like a sensible solution at the time, but the fee's feel heavy for what they actually do! 

 

finally, I wish you the very best of luck.  It can feel overwhelming and it's likely to be a very dark time for you, but lean on those people that care about you and talk when you need to talk or need support. 

[Greg2607]

BTW... I bloody LOVE foxestalk as a community when we all come together to help out like this.... well done everyone! 

[Itsthejoeker]

I've got no advice over and above anything already mentioned on here, but I hope you're able to get things back together. You're welcome to reach out for a chat if you're feeling overwhelmed.

[Scotch]

I'm not sure if they operate in England or if there is an English equivalent but we contacted a company called Money Matters. They changed our lives. 

Not only did they assign a worker who went everything regarding our finances and help organise it in a more manageable way but she went through everything with regards to benefits/grants etc that we were entitled to and didn't know about and even helped us apply for them. It was a game changer for us. 

 

Look into charities and organisations like this. They make a differance. 

[Tommy G]

4 hours ago, Greg2607 said:

@ROB-THE-BLUE, firstly, I'm sorry to hear about your circumstances.  It's a horrible place to be and I have first hand experience of the same situation after the breakdown of a relationship.  Prior to us separating, my other half had been drowning in debt and made redundant due to the financial crisis and also found herself pregnant at the same time. Given that we were having kids together and I was still in work, I did the honourable thing and moved all her debt into my name, and re-financed.  When we then split up, I had assumed all her debt and suddenly found myself having to also pay £600 a month in a child maintenance. (which felt like a big kick in the teeth at the time!) I also had a house which was in negative equity which didn't help at all! 

 

I went down an IVA route, but it did take around 10 years for me to pay back everything that was owed and during that time, I had an annnual appraisal where I had to go through entire household budgets and any "spare" income was taken off of me and passed to my creditors.  As such, anything like pay rises or bonuses in that period, didn't go to improving my "lifestyle" and it felt wholly restrictive. 

 

to this day, I don't have any personal loans or credit cards as I never want to be in that situation again and you very quickly learn how to live within your means.  if I want to buy something, I only do so if the money is already in the bank account / savings account and it's a habit i'll never waiver from. 

 

Bankruptcy wasn't an option for me, as I didn't want to lose my house, but it would have been a sharper, shorter pain and Ironically, I would probably have been back on my feet quicker. 

 

As others have said, speak to citizens advice, reach out to the places you owe money to (they have a legal obligation to help you) and try to avoid a "managed" process, where a firm takes a monthly management fee. It feels like a sensible solution at the time, but the fee's feel heavy for what they actually do! 

 

finally, I wish you the very best of luck.  It can feel overwhelming and it's likely to be a very dark time for you, but lean on those people that care about you and talk when you need to talk or need support. 

Well done for getting back on your feet, that sounded like an absolute slog. 

[Greg2607]

7 minutes ago, Tommy G said:

Well done for getting back on your feet, that sounded like an absolute slog. 

when life gives you lemons mate. you just have to knuckle down and deal with your situation / circumstances don't you.  I'm sure there are loads of people out there with bigger challenges than I've ever had. 

[Daggers]

19 hours ago, ROB-THE-BLUE said:

Guys, advice if I may?

 

I've had a couple of years of bad luck (illness, injury and car repairs) and obviously the cost of living hasn't helped.

I'm drowning in debt. What I earn in a month from 2 jobs doesn't cover what I need mainly because of loan and car finance repayments resulting from my marriage separation and being lumbered with everything in my name as well as keeping up with my parental duties. I'm not shirking my responsibilities or trying to get sympathy... But I cannot carry on like this. I've nearly maxed out my credit card and next month will be no easier.

 

I did an online thing on Stepchange and after filling in all my details, it suggested bankruptcy was my best option. It terrified me. Would it be THAT bad? I'm not likely to ever have a mortgage anyway so that's not an issue... But what would the ramifications be? Will I literally have bailiffs coming to take my daughter's TV etc?? Has anyone been through this?

 

Any help or advice would be massively appreciated. I know some people will say I've brought stuff on myself, and you're right... But trust me, I wouldn't be writing all this if I wasn't at a point where I need some guidance.

 

Much love all

When I had my breakdown I was left unable to work - and hence meet my obligations.

 

Wife put me into bankruptcy. At the end of the year I was discharged and got a bog standard bank account. A year or so later I changed bank providers and obtained a normal bank account.

 

They took one of my motorbikes away, the one that was on credit. They left my old XJ900S as they told her it wasn't worth their time trying to sell. That was it, the full extent of the inconvenience. They had a poke around the house, wife told them everything belonged to her or the kids. That was it.

 

There's a stigma to it that isn't born out by reality. I went on to get one of those high interest credit cards, did my monthly spending on it and repaid in full every time - my credit rating soared.

 

I can strongly recommend bankruptcy.

[Vlad the Fox]

3 hours ago, Scotch said:

I'm not sure if they operate in England or if there is an English equivalent but we contacted a company called Money Matters. They changed our lives. 

Not only did they assign a worker who went everything regarding our finances and help organise it in a more manageable way but she went through everything with regards to benefits/grants etc that we were entitled to and didn't know about and even helped us apply for them. It was a game changer for us. 

 

Look into charities and organisations like this. They make a differance. 

That’s a good shout, are you (op) claiming any benefits and if so are you getting all you’re entitled to and if not check your eligibility. It could make a big difference. 
 

Check on the .gov site for benefits calculator. (Can’t paste a link for some reason)

 

[ROB-THE-BLUE]

Thank you all so much.

 

Firstly for all the sensible ideas and approaches. I've sat on it for today and read all of the replies and private messages. Secondly, for so much goodwill and no negativity at all, which at the minute means a hell of a lot.

 

I'm going to follow up with a few of these ideas over the next few days and hopefully get some kind of plan in place. Still very open to more advice if anyone else has any thoughts.

 

Thank you again x

[ramboacdc]

I once nearly went under when I had 2 credit cards maxxed out and Stepchange recommended banrkupcy. Instead I called both CC companies and said I couldn't pay. They hit me with a default, went through everything with me (income, outgoings etc) and agreed a new payment plan. I had one at a tenner a month on a £16k debt at the time. 7 year default saved bankruptcy. 

 

Talking to Stepchange is always a good option. My advice from being in this situation before:

1. make a list of debts in interest order (highest first). When you can pay stuff back, focus on paying off the debt with the highest interest or what will be the highest interest once an offer expires.

2. If you have car finance or whatever, get the car sold, pay off the finance and find a run around you can pay for outright. Not always possible I know, but if possible, it gets rid of what may be a large monthly repayment. 

3. Reach out and talk to people like you have. I commend you for it. 

4. Don't feel bad or guilty about any of it. You are doing the right thing in talking to people and sometimes these things can't be helped. 

5. Look at MoneySavingExpert, I used a lot of his Boost your income recommendations. None will clear your problems overnight, but some may get a few extra quid in. 

6. I told my employer about it, but I know that may not be a good move in some cases. 

7. Write everything down, income and outgoings and check your DD's and Standing Orders for stuff you may not realise you are still paying for. I was paying for shit like cats protection and political party memberships when I went through mine that I didn't even know I was paying. I am happy to help you with things like that, even down to switching electric/gas companies to get a cheaper deal, same with Internet etc. Heck, I would share Netflix with you if it helped in some way.

 

Keep talking. That was the best thing you could have done. 

[ramboacdc]

A few other places to try:

 

https://capuk.org/get-help/cap-debt-help - They are called Christians against Poverty, but they don't try and push religion on you. 

 

https://www.moneysavingexpert.com/loans/debt-help-plan/ - This guy literally saved my skin.

 

http://www.nationaldebtline.org/ 

 

 

[Free Falling Foxes]

As some others have suggested, contact your creditors.

In my role with the City Council, I sometimes supported folk with debts to contact those to whom they were debted to.

They often asked me to carry out the call and once they gave the necessary authorisation, I would.

In  every instance but one*, the company/organisation concerned would be incredibly understanding, supporting and offer solutions.

Some of the repayment plans they offered were, in my opinion, incredibly generous.

 

*Post Office. Ironic, given recent revelations.

Edited 18 July 2024 by Free Falling Foxes