Overwhelmed with debt and no way out

[headtotoe12]

I've name changed as this is very personal although I've been around a long time.

I made some really stupid mistakes 7/8 years ago. Since then I've had a baby and it's made me look at my finances. I have a steady job but nursery costs take all of my income.

I honestly can't see a way out, I can't sleep for fears of someone coming and taking the car, or someone waiting for me to leave the house to take our things. I can't eat, if it wasn't for having DC I think I'd have ended it all by now. I manage to be a happy smiley mummy for them and I doubt my friends would ever believe what I feel like inside as I hide it well.

My debt is too big for a DRO but I can't afford bankruptcy, I don't have enough to offer for an IVA, I don't have enough to offer for a debt management plan. Step change have said they can't offer me any help as I just don't fit in a box. They've said to come back in a year to look at what options are available then but this is going to get so much worse if I leave it a year and I just can't carry on like this any longer.

I honestly don't know where to turn or what to do, I feel completely overwhelmed all of the time, having panic attacks constantly and I cannot see a light at the end of a tunnel. My DC deserve so much better than this.

I can't thank you all enough for taking the time to respond to me. You've really put me in a much positive head space.

I honestly don't think I could not work: it's something that gives me something for me, it means I can contribute to a pension and keep something on my CV to give me more opportunities in the future. I used to earn a lot more than I do now, which is why I ended up getting in a mess. As when I took out the debts I could easily afford them.

I will look into Christians against poverty too, thank you.

On paper, if I ignore the door going and don't let the bailiffs in then no, they can't do a lot. But ignoring the door and ignoring your phone and wondering who's coming isn't a way to live at all. It also won't improve my situation.

Try your citizens Advice. I work at one and we help clients apply for bankruptcy, and can help with applying for grants to pay the fees.

Although CAP may not be able to other you anything different they will offer you emotional support, which is very important.

I don't think you can finance the bankruptcy fee or pay it in instalments. Do you have any family members that might be able to help with that.

CAP or Stepchange should be able to recommend a insolvency practitioner who will advise you on bankruptcy

OK, first, stop paying any of them. If you haven't got it, and it's not secured, they can't take it.

I know it sounds bad, but once you're in this position defaults are actually your friend because 6 years after they appear, they drop off your credit report where they've been paid or not. It also stops interest once the debt has defaulted.

If you want to run your own DMP, go to nedcab.cabmoney.org.uk/dmp.asp for more help. It's what I used to generate letters to send to creditors.

Make a list of all your creditors and send them letters saying you're having payment difficulties and to hold the account for 30 days. The letter is on the above website. Include a line saying something like 'Please do not contact me by phone, I will only correspond by letter.'
You may still get some calls, but don't get drawn into talking, just put it down or tell them to send a letter.

After that, you've got a month of breathing space. You may still get letters but as long as they don't say something like 'Letter Before Action' don't panic. Creditors basically want you to keep in touch and let them know what's happening.

Next, you'll need to do an incoming/outgoings sheet. I think that's also on the above website.

Make sure you include every single thing you have to pay for. Literally everything. Don't put the minimum amount you pay for anything, give a little bit of room for error/changes.

That should do for now, but seriously don't worry, a lot of people have been there before and it'll be fine. (Visit MSE , it's where I got all the info for when I had to do this.)

I just wanted to say, re MSE... no-one will bat an eyelid at that level of debt. You’re REALLY not alone

Purplewave is right. Defaults do drop off your credit report after 6 years.

However, a dmp is not an option for you as your disposable income does not indicate affordability for any type of payment right now. So creditors will not be able to accept a payment that you cannot show affordability for.

I assume you have already completed a breakdown of your income and expenditure with Stepchange. Who have established your disposable income of £30 before creditor payments.

Creditors are obliged to offer breathing space of 30 days when they are aware of financial difficulties. Some offer 60 days.

In this current climate many creditors are offering payment holidays for 3-6 months if you are affected by covid. They will also waive fees and interest.

It is likely that most creditors will be happy to accept a token payment of £1 for a few months to give you time to look into bankruptcy.

It is worth asking them to backdate any refunds of fees for the last 6 mths as some will do this without question. All creditors are different.

Someone mentioned up thread that they work for CAB and that CAB can help with grants for the bankruptcy fees. This is well worth investigating. CAP might offer this too.

There are sample letters on line to use if you want to take this on yourself. Also include your inc/exp breakdown with correspondence to confirm your lack of affordability.

Finally.with all creditor agreements that are registered under the Consumer Credit Act. The creditors are obliged to issue default notices and demands. They don’t necessarily expect you to act on them but they have to issue them. They may also not keep the debt with themselves and it is normal procedure for some to pass it into an internal or external debt collection company.

Are you getting all the help you are entitled to with childcare costs? I would have thought that you were entitled to significant help on your income. Tax free childcare at the very least, but probably some tax or universal credit too?

An IVA is not appropriate as you don't have any significant assets to protect like a house. It looks like bankruptcy is the appropriate solution if you can't get your debt low enough to qualify for a DRO, which might take years if they are adding interest or charges still.

Definitely post on Moneysaving expert. They will probably advise you how to be able to declare bankruptcy and arrange your statement of affairs in the best way so you will have a sustainable budget while you have an income payments order - many people fall into the trap of scrimping on food and other essentials while they are in serious debt so will actually be advised to increase their spending in these categories because they are trying to manage on an unsustainably low budget.

forums.moneysavingexpert.com/categories/debt-free-wannabe

Good luck!

How much is your car worth btw? If you declare bankruptcy and it's worth more than around £1k (not sure of the current amount) they make expect you to sell it and buy a cheaper one.

You’ve had some good advice so I won’t repeat it.

Could you say which companies the debts are with? So you can get more tailored advise?

As others have suggested could you go part time, apply for uc and get help towards childcare costs? Try entitledto or turn 2 us for a calculator.

Money advice service is another great website.

www.moneyadviceservice.org.uk/en

Hold fire on the bankruptcy for now in my opinion. It can have long lasting effects depending on your job.

It's seriously easy to run your own DMP if you use the website I posted upthread. You can literally offer £1 per month if that's all you can afford.

If they don't accept it, they will usually pass the debt onto debt collection companies, and as they buy the debt for so little, they will accept low payments in the hopes that you'll pay it off at some point.

I was similar. So I contacted the credit card company and set up a payment plan, they froze the card and the interest, anyway they passed it to a debt agency. Apparently nobody usually pays them so even paying £1 a month was seen as good. They then contacted me and offered a settlement figure for about 10% of the debt. It was defaulted anyway so didn't affect my credit and even if I didn't take the settlement, I could have carried on paying them monthly and they left me alone

I assume you’re a different take parent, OP? Do you get all the benefits you’re entitled to? And does your DC’s father pay CM? Your income sounds low to not be entitled to more help.

a different take parent = a single parent

No idea what autocorrect thought there!

Hiya.
Not stalking but happened to see what I think was your post over on MSE.
Looks like you've posted on the Debt Free Diaries section on which people who have already have a debt solution support each other through their 'journey' to become debt free.
You'll get more help and advice if you repost on Debt Free Wannabe.
Best wishes and good luck.Mx.