Drowning in debt

[movesyouveneverseen]

I’m certain AIBU isn’t the right place but I’m hoping to get some real help.

Between my partner and I we have around £100k of debt, equates to around £2,000 a month in repayments each month and does NOT include our mortgage.

We cannot add this to our mortgage and wipe the slate clean so to speak because we have help to buy and so adding extra to the mortgage isn’t allowed.

The debt isn’t being added to, we are paying the required amount for loans and any credit cards are being paid the minimum payment - we are just keeping our heads above water.

I feel like I’m drowning, nobody knows any of this except for my partner and I. I just don’t know what to do and am really hoping for some practical advice.

Bless you OP. I’ve been there. I hope by now you’ve spoken to SC and had a little relief cry.

I know Barclaycard does their own Paydown Plan where they reduce the interest massively and work out payments based on a 4 year plan. Doesn’t affect credit rating. Other lenders may do similar.

Not really. I've two cars on my drive worth £200k.

This post shows why understanding and education are as important as debt plans and solutions. Someone working to get out of debt in order to get a clean car score so they can get back into debt is madness.

op. Well done for taking the first steps. You don’t need to share why you got in debt, but please understand it yourself, it’s the only way to prevent it happening again.

Well done 👍

OP please take note, it can work out ok 💐

I got into a bit of debt when I was a mature student. I can't recommend organisations like StepChange, PayPlan and CAP enough - I used PayPlan. They went through all my income and outgoings and came up with a sustainable plan that allowed me to become debt free in 4 years. The relief when they took over and negotiated with my creditors so I didn't get the continuous letters and calls was amazing. Good luck OP, I hope you get something sorted.

I have some debt - I know why and how. I over spend massively. I can cover my repayments and bills, but it stresses me out a lot.

I feel down/sad, I buy something, I'm happy for a bit and then the whole viscous circle starts again.

Also if I buy one thing, say a pair of leggings for the gym and really like them. I then feel compelled to buy them in every colour they do. Like I have to have them.

I wish I could stop. I have managed to cut down. But not stop.

I hope Stepchange can help you!

I wanted to mention that yes using these debt charities / DMPs etc can lower your credit rating BUT it can recover in the longer term (in particular after 6 years)

As I understand it these charities do get funding from the banks to help people. They are really good don't worry

it's all set up!! I have cancelled my direct debits for loan and credit card repayments. I can't believe it. I have been thinking I should do this for months but was embarrassed. thanks OP for starting this thread!! 🙂

Well done, OP.

A family member asked them for help last year when Covid and terrible mental health had racked their own finances and debt was racking up.

They were truly excellent, providing good advice without udging or patronising.

They helped pave a way forward.

Another recommendation for stepchange. I was in a dark place 7 years ago because of the debt I had built up (divorce, house move, single parent of 2) . I took a deep breath, phoned stepchange and it was the best phone call ever. No judgement at all. I'm not debt free yet, I have another 2 years to go but the feeling of relief when I log on each month and see the balance coming down is undesirable.

Undescribable not undesirable

This really helped me some years ago in my 20s, when I graduated and suddenly the banks all started adding lots of interest to my student overdraft etc, and I had some credit card debt as well and was away from work with illness.

Of course its relevant, no point in clearing debt for it all to be racked up again for example!

Seems that being in debt is easily escapable?!
I have never borrowed ( Apart from mortgage) But it seems one can rack up big debt and then be absolved of it all, or pay it off at a fraction of the value?
Is this true?!

I think what really helps is it often freezes interest, so you get away from that idea of it all 'spiralling' out of control. And having one payment is easier than several. One you can afford. And someone helping you with it.

So that is the main thing but yes it can be possible to agree settlements etc with them as well

yes oakleaffy that’s the case for many - however - my husband suffered financially in last recession - s/e electrician - he wanted to sell our house to pay debts - took advice from accountant and took out an IVA - the IVA supervisor ( Dennis Crowe Liverpool) screwed us over and left us homeless - we’d have been better going bankrupt and walking away from debts 🙏🏽👍🏿☘️

www.moneysavingexpert.com/budgeting-debt-help/

Not without huge consequences, your credit rating will be destroyed for years. My father in law was declared bankrupt, he lost everything, he had to put a years rent down upfront because his credit rating was that bad no one would trust him to pay rent, he earnt a lot of money, but couldn’t get a mortgage for many years, he couldn’t get an overdraft, a mobile phone contract, an internet contract, had to pay for electric and gas on a meter etc. He’s fine now, but it took many years to rebuild his life and he was lucky that he was able to get a well paid job fairly quickly after going bankrupt and could live with his parents for a while, so paying for things upfront in cash like cars and rent wasn’t a huge issue, but for people on low salaries especially without family support it would make life incredibly difficult.

I think bankruptcy is different to debt payment plans

Your FIL was very lucky/fortunate he wasn’t self employed - I presume his debts were caused by ‘personal needs’ You need to appreciate that when you’re self employed and your credit rating affects your ability to buy materials / cable etc vans/tools and that’s before fripperies like internet etc 😡

It is, but the person I quoted was seeming to imply that DMP and bankruptcy are get out of jail free cards. DMPs can also ruin your credit rating.

He was self employed, his business got into difficulty during the 2008 recession, to try to save the business he took out loans against it, when he couldn’t take out any more loans he became desperate and took out a huge secured loan against the house. The business continued to suffer and he defaulted on his mortgage and secured loan, he tried to sell the house, but because it was a recession he made a loss, minus the mortgage there wasn’t enough left to pay the secured loan off so he had to declare bankruptcy. He was lucky that he could go straight into well paid employment because of his transferable skills and his contacts.

DMPs do indeed ruin/affect your credit reference, but not forever.
My choice was a DMP, pay it off, get my credit status clear again (it is).
or
pay the min on my credit cards (and still be totally skint) for the next 77 years.

yeah, it's not a choice I expect many people are happy about. but at least it's a (recoverable) option, huh