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My Debt Experience - Learn from my pain
Hi All - Heres my debt story...........
Apologies for the rather long thread but thought I would brain dump my experience of the last 18 months in the event anyone else is in the same position I was. We all have our own different reasons for falling into debt, mine were quite trivial. There was no 'big event'. It was just a nasty combination of increasing overheads (food, petrol, heating, credit card interest, insurance etc) which in turn led to missing the odd payment, resulting in further charges, which led to missing more payments........
I made some rather basic mistakes (and I know seasoned debt free advisors's will be smiling grimly here) and tried to borrow more to pay off my debts including taking out payday loans, before I knew it I was in serious trouble but the important thing to me is that the why doesn't really matter the end result is the same. It certainly didn't seem to matter to my creditors who once they got wind I was in trouble acted like sharks smelling blood in the water circling in to bite the biggest chunks out of me they could before anyone else got in there.
So my my first word of advice to anyone who is struggling is DON'T take on further borrowing.
If you are struggling now taking on more debt is only likely to make things worse. There may be the odd person out there who this worked for but they are few and far between. If you're in trouble face up to it NOW and it will make things a lot easier in the long run and will also mean you will pay off your debts in less time. Once I started falling behind with repayments the phone calls and harrassment started. I have a total of 17 creditors so most days 6-8 calls an hour was normal. This is where my lurking on forums helped me, and I refused to accept these calls by not answering security questions and just asked for everything to be put in writing. The odd occasion I did try to resolve things on the phone resulted in pressure tactics, spurious claims, lies and threats. I took the slightly drastic action of changing my phone number as this was also disrupting my family. Yes this is slightly inconvenient and I had to inform friends and family of my new number but a quick text sent out to everyone on my mobile and job done! This is a lot less inconvenient than having the phone ring every 5 minutes and having to answer it as it may just be from someone I want to speak to
You don't have to speak to your creditors on the phone. You have a choice on how your creditors should communicate with you and they know it. They also don't like it and will try to insist that you phone them. Don't. Ever. Never - Keep everything in writing and keep in control - If your creditors ignore this request (many of mine did) and you feel you are being harrassed there are lots of steps you can take. There are many threads in this forum on this topic, read them and take back control of your phone!
The next big step I took was to understand and accept that being in debt doesn't make you a bad person, a failure, scum etc. This very old fashioned view of being in debt is what your creditors rely on to apply pressure. This is absolute bovine excrement! I know this isn't easy to do, I've been there, I felt I had let myseld down my family down etc, but all thats really happened is that you've tripped up over one of lifes perils and you need to pick yourself up and learn from the experience. Theres lots of people in the same position as you, and consequently lots of support too. The important thing is not to feel ashamed. This is what your creditors will rely on to put pressure on you.
The next thing I had to do was acknowledge and understand exactly how much debt I had. This was not an easy thing to do as I didn't really want to face up to the grand total. But I had to and if you're in the same position so will you! The simplist way is to put in black and white. Do not 'forget' any creditor no matter what the debt or how small - Get a pen and paper/excel spreadsheet, whatever floats your boat and write down every single creditor, the balance of each account and the grand total. When I did this myself it was a real shock but also really helped me focus, I didn't let it get me down.
Instead I now had something tangible to deal with rather than the month to month getting by, robbing Peter to pay Paul etc, just to meet minimum payments. I then got together my income/expenditure sheet. Again there are lots of really good resources out there to help you do this. I had already being doing this for the last 12 months but just wasn't being realistic and consequently couldn't understand why I wasn't meeting my budget - Don't make my mistake - be realistic and include everything.
Also just because you are in debt it doesn't mean you can't live. In my budget I hadn't factored in things like clothes, entertainment, school trips, pocket money etc. Even the debt charities CCCS, Payplan insist you have to live. Some of your creditors though think you should live in a cave until your clothes are threadbare on your back to pay their balances... This is an example of why you shouldn't ever phone your creditors and have everything in writing When I first did this one of my creditors actually stated that I couldn't include haircuts and clothing in my expenditure and that their debt was equal in priority to council tax as they could force me to sell my house! When I asked for him to place that in writing he slammed the phone down on me. That was the last call I ever made to one of my creditors.
So after being realistic with my I/E I am left with £300 a month to pay back £19,000 with 17 creditors. None of these are huge amounts individually which is where I came unstuck. There was no 'shock' factor arriving in the form of a single statement every month so I ignored the problem until it got to the point where I had no money to buy food for my family or fill the car up with fuel 3 weeks into the month as I was paying the minimum balance, or loan repayment. I chose to go down the debt management plan route. I could have gone with Payplan or CCCS (CCCS helped me with my I/E and prorata payment plan) but have decided to to approach my creditors myself as I want to keep responsibility for my liabilities.
If you do choose this route be aware that your creditors will almost certainly default you the second they receive your offer which will then remain on your credit file for 6 years, however, this is something else your creditors will use to apply leverage on you, which is your fear of screwing up your credit file. Personally I came to the conclusion that as I was already in arrears (and had already defaulted on one credit card) that my credit score was FUBAR anyway and that I was never going to take credit again (I have learned my lesson!) this didn't bother me. I wrote to all my creditors with my prorata offer (some of them being less than £2 a month) and already have had 5 accept, also agreeing to freeze interest and charges.
Only 1 creditor so far has outrightly refused my offer. This was in fact a DCA acting on behalf of my creditor so I am sure there are things I can do to apply pressure on them, especially as other creditors accept my plan. Regardless I will only pay them what I have proposed. I have now learned to never agreem to pay more than I can afford as this is partly responsible making the situation worse. Something I also have done is open a new current account with another bank (not linked to any of my creditors) and have my wages deposited into there. I have contacted all my priority outgoings (mortgage, council tax, utilities etc) and am now making payments via standing order not Direct Debit. This again ensures that I stay in control of my finances. This is not a big deal at all and setting up SO's rather than DD's took a couple of hours.
If any of you out there have payday loans I can only emphasise you have to do this. If you don't they will bleed your account dry by continuing to attempt taking payments at different dates and for smaller amounts until they get their payment. I am only on the start of my journey but I feel much more in control now and am much more relaxed than before. I know a debt mountain can seem impossible to manage but its not. The first thing to do is relax, there are loads of people out there to support and help you.
Your creditors will get nasty, they will threaten, they will harrass but stay firm but polite, never offer more than you can afford, and they should eventually back down and accept. Better for them to get some money than no money at all. Your creditors will most likely threaten you with court action but if you have been reasonable, realistic and honest in your proposal and your creditors have taken things that far then a judge is not going to look favourably on them and will likely only award them what you offered and possibly less. Your creditors know this, what they rely on is you not knowing this!!
Knowledge really is power when it comes to dealing with your creditors. They hate forums like this one as they can't divide and conquer and play on our ignorance of the law and our rights. Most of the threats are exactly that - threats. They 'may' take further action or things could 'possibly' go to the County Courts. There are actually ways you can fight this as some credit agreements as I've found are unenforceable.
Again knowledge is power!
Finally remember this - the majority of your creditors do not have your best interests at heart and are only going to look out for themselves. Don't let them get at you, the majority have no moral high ground to be beating you from, they themselves were grovelling for handouts from the government only 18 months ago! Don't be afraid of that first step - I know its tough but once you've taken it life really does start to have some meaning again!
SNV
******* EDIT - Since writing this I have made the decision to move from a DMP to taking the UE approach to dealing with creditors and DCA's. You can see the results on my UE diary********
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k so it is ready for the blog. In case you've not seen, we've a new blog and this is a great starter story: 
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