Drowning in debt. Please help.

[Milkycocopops]

I'm a fool with money. Always have been but never to this extent. Two years ago I had a reduction in salary but continued to spend and I've ran up £15, 000 in credit card debts. They've been interest free and ice been paying them but now I can't get them transferred interest free because they're too big. The interest on top will cripple me financially. I have a reasonable income. I have a flat I rent out. It doesn't make me any money. It costs me an additional few hundred a year. I have a stable tenant. I rent somewhere because we outgrew the small flat. I have around £35k equity in it. I would have to pay a significant early repayment charge if I sell so it's not really an option. I don't have any family. I'm not sure where to go from here. Can anyone help with possible next steps? I don't live an extravagant lifestyle. I've just been ridiculously stupid. I can't stop crying and I'm feeling so overwhelmed by it all. Any guidance would be really gratefully received.

I was where you are earlier this year.

Had gotten credit on top of credit and then a situation which made my income drop a couple of hundred a month meant i was skipping payments.

I went onto stepchange and started a debt management plan. It was the best thing i could ever do. I can no longer get credit but that it good. I now am learning to live within my means.

Its hard. There's a lot of things i can't do anymore like getting hair done regularly, buying clothes etc but it's short term and with Christmas and my birthday round the corner i feel i am in for a real treat getting those kind of things as presents when it feels like so long since ive been able to do that.

I'll be glad when its over but i will have learnt a huge lesson and will hopefully never end up in that position ever again. Seeing statements come in and balances actually going down is a great feeling.

Call stepchange for advice on paying off the debts and budgeting.

Unless the significant early repayment charge is 20 grand you have enough assets to pay off your debts ? 35k equity, 15k debts plus early repayment charge.

Sell the flat. Any investment which is actually costing you money every year is a poor investment anyway.

Don't cry. You have the flat as an asset - and in the current economic climate, I'd also sell it and pay off the debts.

Can you remortgage the flat? I remortgaged last year to pay off £32k unsecured debt and started my mortgage term again from scratch. You aren't stupid and you aren't alone. Maybe speak to a debt charity for advise?

My posts aren't posting. I'll try again.

I spoke to mortgage company today and they couldn't even offer me the minimum amount of 5k. I don't have enough equity.

I think selling might be my only option. I'll take more advice where I can. I'll call step change tomorrow to see if they can offer further advice.

I used to use Stepchange, but I did find it was just as easy to deal with my creditors directly.

I drew up a budget and emailed it to all of them explaining my circumstances and that I wanted to go onto a payment plan. I left it a bit late, though, at this point I already had a CCJ.

Anyway, that was a few years ago and I managed to live the last few years without credit and, to be honest, learning to respect money again! I was able to start borrowing again this year, and have done so out of necessity only as I hate using my credit cards.

Whichever option you choose, there is a way through it. The most important thing is to be honest with your creditors, do not bury your head in the sand like I did.

Can you get a bank loan and pay of the cc with that? Even if it's over 5 years that would be better than selling your flat?

I would sell the flat, pay off debts and tax. Then start again.

The flats your get out of jail card. Anything left over can go on your mortgage.

This tells you how to deal with your Creditors yourself.

Hi OP head over to the money saving expert "debt free wannabe" forum.

They're great in advising posters in situations like this.

Sorry, here.

Hi have you thought about doing an IVA??

You get to write a lot of debt off

That's true, dhs colleague did that.

www.mumsnet.com/Talk/legal_money_matters/2465435-Drowning-in-debt-and-cannot-talk-to-people-in-Real-Life-A-problem-shared-is-a-problem-brought-into-perspective-come-and-join-the-lens

Ask for advice here there's lots here. You could come out without dmp/Ivan intervention. Good luck

IVAs can be a good solution but they do impact on your life quite a bit and I'm not sure whether you have enough debt for one.

Having one saved me from complete financial disaster but it wasn't easy either.

Op you are in a better situation than most people in debt. Your equity is worth more than the debt, even with repayment charges I am sure.

You have the option of selling the flat and repaying the debt.

You may also be able to get a personal loan to pay off the credit card - lots of them are very low interest at the moment. As with any borrowing however you need to sit down and work out a proper budget and make sure you stick to it otherwise you are likely to end up in debt again.

I've been in 26k of debt before and had to downsize considerably to sort it all out and then I stupidly made more debt. I then had an issue with my roof and no savings so borrowed to sort that out. I am back to 15k on a personal loan at 3% interest. This time however I am not feeling worried- I've worked out a proper budget, I know how much I can spend and I'm sticking to it. I feel more frightened of debt now which is a good thing and I think people have to get to that point to come out again.

If it were me I would definitely sell the flat.

I am lucky I have the flat. I appreciate not every one has that as an option. I can get out of my mortgage early 2018. I don't want to come off the property ladder. It's not for me. It's to have something to give to my child. I think I need to manage this debt better. I'm having a cull of my outgoings. I've cut out things like Netflix. Our phone contracts are up early next year. I'll get cheaper deals. I've cancelled my hair appointment. I'll make do. If I really budget I can get through until next year. I think. I should probably look for a better paid job. I like my job but I guess its the logical next step. I'll speak to the bank to see if they will extend my personal loan and at least bring down a bit of the credit card debt. Thank you for being so kind. I keep reminding myself that there are worse things than money worries.

OP as you don't want to sell the flat can you put the rent up a bit? I know a few BTL landlords in our area who are wary of losing stable tenants therefore have put up rent for several years. However rent prices have increased considerably in the area during that time

Its a good idea. It's not really an option. The tenant is a family member and although they pay under the going rate they are a good tenant. I don't need that extra stress. I'll visit at as a last resort. I'm spending some time today looking for a better paid job. I think that's my best option.

Still worth speaking to Stepchange to get creditors to freeze the interest so at least you can start to address to amount owed without it growing further.

Ok. Thank you Lizs.