How I went from £36k in debt to being back in black

posted by in Living with debt

Today we’re honoured to welcome Lisa, also known as @CoffeeCurls, to MoneyAware. From the lows of being in severe debt to finally paying the debt off with help from StepChange Debt Charity, this wonderful article about her own debt experience was originally posted on her own blog. It’s well worth reading.

Debt file

If you’re in debt and feel that you need some help, I hope that reading this will reassure you and offer some useful suggestions. It depicts how I went from being £36,000 in debt and on the verge of depression and bankruptcy, to being ‘back in black’.

In the summer of 2004 my husband left me. He left suddenly (the night before our youngest son’s 3rd birthday). I had no warning of this and, although people find it hard to believe, I had absolutely no idea that it was going to happen.

At the time, bankruptcy was completely taboo. I have to say if it happened to me now, rather than then, I would have given serious thought to going bankrupt. Even in 2004 (when the after-effects of bankruptcy were much harsher) every debt advisor I spoke to told me to file for bankruptcy.

I knew we had debts, money had been somewhat scarce for several years as he had been frequently ‘off sick’ with a bad back and depression. I’m ashamed to admit it now but it just became a way of life.

Only a small amount of debt ever got repaid

We had re-mortgaged the house several times, once to consolidate all the debts, except that when the money came through he managed to convince me that he NEEDED some tools (although only expensive ones it seems), that he DESERVED a PlayStation, an Xbox and some games, and some new clothes, and we NEEDED a brand new lawnmower.

His attitude to money was always bad. Even when he wasn’t working he would think nothing of spending £5 on a PlayStation magazine and then say that we couldn’t afford branded nappies.

I stood at the checkout in Tesco more times than I care to remember with flaming red cheeks when my debit card was rejected, having to then try and work out how much to ask the checkout lady to take off before the card was tried again.

Once when I stood there having given back bubble bath, washing powder and tea bags, I was still £1.27 short. As I looked at the rest of the shopping trying to work out what else I could live without, the man behind me paid the difference. I was so embarrassed that I don’t even know if I thanked him.

My mum set up a bank account

She started paying £20 a month into it and said it was for me to treat myself with. I didn’t tell him about it. It didn’t seem deceitful as I only ever spent the money on food shopping anyway. Once when I went to withdraw the £20 to use for shopping I was stunned to see there was no money available – when I checked further I saw that the £20 had already been withdrawn.

I asked him about it, he said that found the card in my purse and we’d needed milk so he took the money out. The pin was my birth date – he had guessed it. From then on he would wait for that £20 to land and whip it out straight away. He often drove to the cashpoint at just gone midnight to make sure that he got the money.

Debts

Below is a list of the debts I was left with (and how much it actually cost me to repay them). This is just from the paperwork that I can find now. I think there were more:

  • Nationwide negative equity £12,000 (paid £4,600)
  • Halifax overdraft £1,555.54 (paid £1,150)
  • Barclays business overdraft £1,840.69 (paid £921)
  • Barclays overdraft £974 (paid £750)
  • Barclaycard £2,292.35 (paid £1,375.41)
  • Debenhams store card £2,635 (paid £2,355)
  • Dorothy Perkins store card £1,435 (paid £910)
  • Capital One Visa £879 (paid £425)
  • Capital One Visa £1,529 (paid £1,100)
  • Business loan £5,000 (paid £2,000)
  • Woolwich overdraft £1,841 (paid £1,400)
  • Alliance & Leicester Loan £1,428.71 (paid £800)
  • M&S store card £893 (paid £715)
  • Thames Credit £932 (paid £800)
  • Welcome financial services £781.20 (paid £781.20)

As you can see, even with just the debts that I can remember, I was left with £36,016.49 of debt. By negotiating with each creditor it only cost me £20,082.61 to pay off. (Although I’m pretty sure the total amount I spent paying off debts was closer to £28K so there must be a few that I’ve missed.)

It took me 6 years – the last debt was cleared in February 2010

My divorce solicitor told me that I wouldn’t be able to assign any of the debts over to my ex. She advised me to go bankrupt. In retrospect I should have sought more advice on this. The Citizens Advice Bureau (CAB) were very helpful, utterly non-judgmental and helped me set up a payment schedule, paying £1 a month to each company.

StepChange Debt Charity agreed with CAB. I was embarrassed about speaking to them as I thought they would ask me what I’d spent the money on but they didn’t, they just listened and helped. It was like a weight being lifted off my shoulders having someone listen to my dreadful secret and not deem me to be a bad person.

I didn’t answer my home phone for several years unless I was expecting a call, as most of the time it was a debt company chasing money. I still find it hard to answer it even now. Some companies are OK to deal with but some are terrifying.

What makes it even more complicated is that most companies sell on debts, meaning that it was almost impossible to keep track of who I had paid what to – I’m quite sure that I repaid some of the debts twice! For example – the £1,840 debt to Barclays was at one point being chased by five different companies. FIVE! All five companies claimed theirs was a different debt and that I HAD to deal with them.

Sometimes they phoned, sometimes they wrote, sometimes they sent bailiffs round but mostly it was a combination of all three methods. Like most of the debts, this particular one was a joint debt so I gave all of them my ex’s details too. However they very blatantly told me that it was easier to pursue me for the debt as he was hard to get hold of!

Under the rules of joint and several liability the debt companies had the legal right to pursue me for the entire debt. They chose to do that as because as a mother of two young children I was an ‘easy target’, threatening phone calls and visits from big scary men terrified me.

Learn from your mistakes

Now, six years on, all my debts are repaid and my credit file is clean. I can’t tell you how happy I was recently to see that my credit score is now 999!

I would also suggest taking precautions (not that kind…) when you enter into a new relationship. Think very carefully before opening a joint account – do you really need a joint one?

Don’t put credit in your name if it is for someone else, however much you love them. Would you be happy to accept the debt if they left you with it? That may sound cynical but it isn’t. It’s sensible, it’s practical and it will protect you.

A frightening number of people go bankrupt more than once – don’t be one of them. Live within your means, be proud of knowing that you can afford what you buy and teach your children the value of money.

My main message is ‘live within your means’ such a simple concept, yet so many of us fail to do it. Don’t ignore your debts. They truly don’t go away they just get bigger and more unmanageable.

Here are my tips to get you started on the road to debt recovery:

  • Get a copy of your credit file – this is a huge step towards taking control, yes it will probably tell you things that you don’t want to know, but do you know what? The debts are there whether you acknowledge them or not!
  • You can get a free trial from Experian, Equifax and Call Credit so you can view your credit file
  • Get an A4 ring folder and some dividers and make a file for each debt, then make an appointment to see a debt adviser
  • DO NOT PAY ANYONE TO ‘SORT OUT’ YOUR DEBTS! Talk to a FREE advisory service like StepChange. Either phone them or email them ASAP. Tell them you are experiencing financial difficulties. Tell them your income and your outgoings and make sure you include everything that you have to pay out for. They will help you.
  • If you have some money to repay a debt, don’t offer to repay the full amount – always offer a reduced settlement figure – 99% of the time they will either accept it or negotiate.

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Tags Living with debt
  • Snippet

    Hi again

    Just wanted to check back in for updates and to read the new posts – it’s comforting to me to know I’m not alone.

    I started my DMP paying a lowish amount each month in Feb 2010. I didn’t go out and didn’t spend anything unless I really had to. I paid for sky basic package to keep me at least a bit amused in the house on my own. After a while I was used to not being so frivolous with my money and so when after 6 months my DMP was reviewed, I upped my monthly payment.

    The only creditor that wouldn’t accept lower payments and freeze the interest was Halifax (overdraft and credit card). All my other debts were reducing but Halifax was getting higher and higher! Albion took over the debt, and I blocked their number and burnt their letters, as I had already tried hard to get them to agree to a lower amount to no avail. They now only call every 2 weeks or so, and send a letter every month (used to be one every day!).

    Anyway, with all my other debts reducing and having upped my monthly payments 3 times now, the amount going to Halifax is ‘almost’ hitting the expected monthly payment (not including the overdue amount of course). I also noticed when I logged in to CCCS this week that one of my debts will be cleared next month, so from then on, that amount can be added to the other creditors’ payments. Yippee, this is really the first I’ve felt that I really am getting there.

    Over time, one by one, each debt will be cleared, some quicker than others it seems (although it doesn’t make sense, but its working!), so hopefully over time more and more will be paid to the dreaded Halifax.

    Chin up, those on a DMP. There really is light at the end of the tunnel. I do cry myself to sleep a lot of nights still though, possibly out of shame, embarrassment etc, and if only I could pluck up the courage to ask family members that have money to help (so I could offer full and final settlements), but I just can’t!

    Snippet

    • Rebecca

      I started out with about £36000 of debt and I’m now down to about £10 with less than 2 years to go. I still get upset because I’ve missed out on so much because of my debt, but now I feel the end is in site. A few years ago I didn’t think I’d get to this point.

      • Well done! You’ve done incredibly well and are nearly at the end of it. Don’t waste time worrying about what could have been, just look to the future and it’ll be here before you know it. Being debt free is an amazing feeling.

    • Might be worth thinking about just one family member that you could confide in, especially if you think they would be willing to help you. When it comes to debt problems, a problem shared really can be a problem halved!

    • disqus_0FTyNusXo2

      I have just started DMP and all my creditors have accepted except for halifax. I am lucky I have quite a well paid job so my plan is for two years this seems nothing comapired to others. However Halifax still are not happy with a good payment each month. I’d they sell my debt on will interest keep going up and up? I have been really strick with budget I don’t go out and my treat is sky TV. So I am paying back big sum each month that’s better than sleepless nights. Reading these posts halifax seem to have a real issue with DMP. Also will I get baliffs round ?

      • moneyaware

        Hi there,

        Thanks for posting.

        If a creditor decides to sell on a debt to a debt collection company in some cases the new company will stop adding interest to the debt. This is because the interest rates charged on the debt are part of the original agreement with the creditor.

        It’s important to note though that even on a DMP, the original creditor or the collection company may continue to add interest and charges and no DMP provider can guarantee to stop this happening. In many cases though, creditors do reduce or stop these charges and we’ll always request the company do this for you.

        I hope this helps but if you’ve got more questions please let us know.

        Jen

  • debra jackson

    Catherine Im so happy that you are debt free It must be a liberating feeling Im In debt with a bank loan because my husband of 34 years left me for another woman and the debt was his but was in my name so I cant do anything about It after trying to sort reduced payments out for a year with the bank and to no avail I contacted cccs and they dealt with the bank on my behalf and the payments were reduced dramatically . It has been a horrific two years since my husband left and I wont be debt free until 2021 which seems an endless time span , I dread if the time comes that I have to reduce the payments further incase they sell my debt to a third party I couldnt bear to have other parties knocking at my door as I am still struggling to come to terms with my seperation but at the moment I cant thank cccs enough for their continued help and support

    • Hi Debra, That’s how I ended up in my situation too, it’s bad enough finding yourself suddenly single but the debt hinders you in so many ways doesn’t it. Not only the obvious financial restrictions but I remember being so angry that he could still affect my life after he’d gone because I was the one who had to sort out the debt. Grossly unfair but don’t let it define you. It sounds like you are doing all the right things and making big steps towards being debt free. You never know what is around the corner and you may find that sometime between now and then you will be able to pay the debt of earlier. Don’t think about that end date, just think about each month and enjoy life along the way.

  • malcolm beaumont

    This is an inspiring article and more or less mirrors what my wife and I have been through these past 4 years. CCS are fantastic, of that there is no doubt and we would have had many more sleepless nights without them. What I do find very intersting is the number of creditors who regularly ring me offering to settle at around 50-55% of the outstanding debt. Whilst this is good to know, its frustrating to think that your debt could be cut in half if you had the money to settle.

  • ruth

    we had heaps of debt because of a business liquidation. Our dmp is scheduled to go on for about ten years (i daren’t even think abouth the end date yet, it is so long away!). Is that official advice, though, about paying off one creditor if you can? I thought the other creditors would object if they thought you were “prioritising” on edebt over another. I’m now working full time so might be able to amass enough to negotiate with some of my smaller creditors, if i’m not going to put the rest of my dmp in jeopardy?

    • Hi Ruth,

      I’d suggest you give CCCS a quick ring to ask them, I’d hate to suggest the wrong thing to you and jeopardise your arrangement. Personally though, I think it makes absolute sense to pay off a debt if you can, so long as you’ve a reason for paying that one first, ie oldest debt, highest interest etc.

  • Jacque

    The one thing (oh sorry well done to everyone who has managed to get a rein on things lol ) but I love the settlement idea and a couple of my debtors have actually offered me them at a greatly reduced rate. The only thing is CCCS advise giving an equal and fair amount to each person you owe money to but I think if you can settle one it makes sense to do that and then another etc…. Any thoughts on this people and is it the law that you have to?

    • Hi Jacque, we give pro-rata contractual payments to all creditors because it’s the fairest way to treat all creditors equally. It was a good question though, so we’ve written an entry in our #clearaboutdebt blogpost to clarify.

      If you’re in a position to settle your debts we do have a team who can handle this for you. There’ll be more on the blog and in next month’s email about this new service.

  • Rose

    Oh it made me cry reading your post. Well done, your story is amazing, well done to everyone that are in similar situation. My debt is ‘only’ £13000 all are joint debts = £5000 to buy my ex’s car that ex is still using and £8000 shortfall of a mortgage (I left as social service involved and ex lived there decided not paying it till it was repossessed/It was ex sole house and ex decided to make it joint. Now I know why) Now I am left to pay everything because as your post saying, its easier for the creditors to intimidate single mothers. especially when has clearly said no money will come out of his pocket for these. I am paying a DMP with stepschange at the moment for £30 for each creditor but one is offering me £2400 for the £8000 to settle my part. Every minute of the day I wish to have £2400! The debt collection agency has been reasonable with me because they see that I’m the only one that has been paying the last 3 years, at some point £1 because I lost my job. I cant go into DRO because I have over £50 surplus but I will get there. It is sad that me and my children have to be without while my ex have 4 holidays a year to the far east! (ex live with the parents now) not paying rent or childminders and rushing around to and from work to rainbows, parents evening, swimming, sports day etc. I cant even afford to take my youngest to Legoland for her Birthday as she asked. Such a life xx
    I wish everyone reading this to finally see the light at the end of their tunnels. Good luck!

  • Sade35

    Oh it made me cry reading your post. Well done, your story is amazing,
    well done to everyone that are in similar situation. My debt is ‘only’
    £13000 all are joint debts = £5000 to buy my ex’s car that ex is still
    using and £8000 shortfall of a mortgage (I left as social service
    involved and ex lived there decided not paying it till it was
    repossessed/It was ex sole house and ex decided to make it joint. Now I
    know why) Now I am left to pay everything because as your post saying,
    its easier for the creditors to intimidate single mothers. especially
    when has clearly said no money will come out of his pocket for these. I
    am paying a DMP with stepschange at the moment for £30 for each creditor
    but one is offering me £2400 for the £8000 to settle my part. Every
    minute of the day I wish to have £2400! The debt collection agency has
    been reasonable with me because they see that I’m the only one that has
    been paying the last 3 years, at some point £1 because I lost my job. I
    cant go into DRO because I have over £50 surplus but I will get there.
    It is sad that me and my children have to be without while my ex have 4
    holidays a year to the far east! (ex live with the parents now) not
    paying rent or childminders and rushing around to and from work to
    rainbows, parents evening, swimming, sports day etc. I cant even afford
    to take my youngest to Legoland for her Birthday as she asked. Such a life xx
    I wish everyone reading this to finally see the light at the end of their tunnels. Good luck!

    • moneyaware

      Thanks for the lovely comment Sade35 and good luck with the rest of your DMP.

  • Damien mellors

    Hi there I am over £8000 in debt and have no job I am in an iva but my
    circumstances have changed they said they will look into a payment holiday but I don’t know when I will be back in work would it be work asking my iva advisor about bankruptcy or not…
    Need help..
    Over £8000 in debt all credit cards
    Nearly £1000 phone bill contract

    • moneyaware

      Hi Damien,

      An IVA is a legally binding agreement, which means that any changes to your circumstances must be discussed with your insolvency practitioner (IP) who is dealing with your IVA.

      We’re unable to give you any advice on your IVA outside of your agreement, but your IVA company is there to help so we’d recommend speaking to them.

      I hope this helps,

      Rory

  • Rich E

    does anyone have a list a creditors that wont sell the debt on becasue im prepared to negotiate with them but i dont want ANY people knocking on my door. the main problem is american express, vanquis and the capital one group. thanks

  • CathK

    Thanks for your story, really heart-warming and nice to know there is light at the end of the tunnel! Just wanted to say I am 1 year in with stepchange, original debt of £36k, 5 years left to go and am also called Catherine! Good luck to everyone else on your debt repayment, better to do something sooner rather than bury heads in the sand! 🙂

    • KeiranJ

      Hi there, sounds like you’re on the right road now. I am currently working on a TV documentary series about different way people have managed to get themselves out of debt. It would be lovely to hear your story in a bit more detail. Would it be possible to email me at keiranjones@curevemedia.com – many thanks, Keiran

  • Angie Sparkles

    I have just got a handle on my debts, i have been paying for 10 years a debt company to deal with the wolves to keep the creditors from my door. I have found it extremely refreshing to grab them and face it. I have approached them all directly and they were absolutely wonderful!! Which surprised me. Also it shows how being in debt is being taken much more seriously than it ever used to be in our favour.
    I am going to approach one or 2 of them next month to see if they can reduce the settlement figure.
    Will keep you updated.
    But, believe me, its not as scary to talk to the creditors as i always thought it was, if anything they were easier to deal with the the daylight robbers who i paid every months to pay off very little of my debt!!

    • moneyaware

      Hi Angie,

      Thanks for your positive message and I’m glad to hear you feel like you’ve got a handle on your debts. That must be a great feeling!

      It sounds as though you’ve been quite successful in approaching your creditors yourself, which is great. However I’d also like to mention that another alternative to fee-charging debt management companies is free debt advice. We offer free and impartial debt advice, as well as a range of debt solutions to help people to deal with their debt. You can read a bit more about how we can help people here: http://www.stepchange.org/Howwecanhelpyou.aspx

      Thanks again for your message, and I wish you all the best for the future!

      Kind regards,

      Laura

    • KeiranJ

      Hi Angie, what a great and uplifting story! I am currently working with Curve Media on a documentary series about people getting themselves out of debt and it would be great to hear your story in a bit more detail. Would it be possible to email me on keiranjones@curvemedia.com – Many thanks, Keiran

  • Maria

    I been handling my debt for the past 5 years. Done ppi claims to reduce.
    But now I am scared to get married as we have a joint account. Xbox stuff seems more important and he moans about working etc.
    they have left him debt and he in a mortgage he can’t get out off. His previous ex just left us her sky bill as its in his name.
    I feel like crying after I read your story as I can see it happening to me.
    I have 2 children and his children get more then mine not sure what to do.
    He in £6000 worth of debt more now then what he thought.
    Even though we pay maintance the exs demand more.
    Now I am looking for full time job and child care for my babies.
    I need help wedding in 3 months.

  • Suzanne Emery

    Hi I don’t know what to do I’m in so much debt I can’t see light end of tunnel

    • moneyaware

      Hi Suzanne,

      If you’re worried and you’re not sure where to turn or how to get advice and help, we’d really recommend getting in touch with us. Our practical debt solutions and advice can help you deal with your debts and move forward. Our advice is free and confidential and we’ll be able to look at your whole situation and make recommendations on what to do next. This will also include debt solutions, that are dependent on your individual situation.

      You can either call us by visiting http://www.stepchange.org/contactus.aspx or if you’d prefer to get advice online, use our Debt Remedy tool at http://www.stepchange.org/Debtremedy.aspx

      Don’t feel like you’re along with dealing with your debts, because we’re here to help no matter what the situation.

      I hope this helps, we look forward to speaking to you soon.

      Rory

  • Lucy McCall

    Hello everyone!

    I am 25 years old and me and boyfriend are getting to the stage we want to settle down. Think about house babies etc BUT I have debt and I’m pretty sure CCj so I am aware my credit will be bad for the next 6 years due to this.

    I was wondering if anyone had any advice on where to start. My main issue is trying to track down my debts, I have tried some free credit reports but they all tell me different thngs.

    I was never bothered by any of it before but it is not starting to keep me awake at night.

    Really hoping someone can help me!

    Lucy

    • moneyaware

      Hi Lucy,

      Thanks for getting in touch.

      I’m sorry to hear your debts are keeping you awake at night, however it’s good to hear you want to take the steps to deal with them.

      You mentioned that the credit reference agencies had different information about your debts. It might be worth noting down what each of them says and getting in touch with the creditors listed to ask for information about your debts. They should be able to provide you with recent statements and can let you know if the debt has been passed on to another debt collection agency.

      If you’d like some free debt advice, I’d suggest you give our Helpline a call. One of our advisors will be happy to chat through your situation with you and they can let you know what options are available to help you deal with your debts.

      You can find out how to get in touch with us here:

      https://www.stepchange.org/Contactus.aspx

      I hope this helps,

      Jen

  • Kieran Jackson

    I’m currently in an IVA, but I intend to pay back my creditors in full. Now my financial circumstances have got a lot better. What would you recommend? Getting in-touch with the creditors myself and arranging a deal off settlement, or continue the IVA and pay their fees?
    Thanks.

    • moneyaware

      Hi Kieran,

      Because you’re already in an IVA, which is a legally binding agreement, we’d be unable to offer any advice or help on what best to do. This is something we’re not allowed to do, but we’d recommend speaking to your Insolvency Practitioner or the company who are dealing with your IVA for advice, as they’ll be able to help you further.

      Kind regards

      Rory

  • Kaley

    I had an iva serveral years ago and I was young and stupid and didn’t keep up to the repayments, now I’ve received a letter from a solicitor chasing me to repay £6360 … I only work 15 hours a week and I’m repaying debits to the council tax I owe and I can only offer to pay £5 a month which is nothing really but I’m 5 months pregnant and not sure what to do?

    • moneyaware

      Hi Kaley,

      Thanks for posting.

      I’m sorry to hear about your situation.

      If you’re struggling with debts I’d suggest you give our Helpline a call for some free debt advice.

      Our advisors will be happy to talk through your situation with you and let you know about any solutions
      available to help you deal with your debt. As a charity, all of our advice is free and impartial.

      You can find out how to get in touch with us here:

      https://www.stepchange.org/Contactus.aspx

      I hope this helps,

      Jen

  • Annie

    Can’t tell you how much hope has been given to me reading your article, I have been working with StepChange online and have already spoken to creditors and have had payment offers accepted for the time being, foolishly on my part got involved in overspending and credit cards (not for the first time but have always thought I’ve found a way out stupidly taking on more debt in the longrun) I tried to keep a couple of cards going but again had a couple of knocks and out they came, only have myself to blame, will also have to contact these, but where I felt embarrassed a couple of months ago sorting things out it now depresses me to have to speak to someone else (any one I have spoken to have always been very nice), thinks the thing is me admitting and facing up to things, but what really worries me is that a creditor may demand I sell my property total debts probably amount to between 20 – 25k but only a couple being just over 5k couldn’t live with myself if this happened to my family, if I keep paying the amounts as agreed with my creditors would they be likely to try and do this?

  • Ben

    Hi all, Ben here. Just wanted to let you know how I dealt with my credit card debts so that it could help anyone else to stop worrying about theirs. Essentially I created around £70,000 worth of debt on Credit Cards and Personal Loans, when I foolishly got involved with Online Poker, whilst having a bad relationship with my GF at the time and not recognising I was drinking too much to cope. So, I quit the destructive ex (debt not her fault but needed to reduce the stress triggers), stopped drinking, and got healthy. To stay focused it helps to get relatively fit, or do something new (even a 20 minute extra walk per day, to start, so you know you’re on a new path) as it will keep you mentally strong, then you can do anything. So down to the debts; Download a Budget Sheet from one of the Free Debt Helplines, and complete it with your ins and outs. 1) Write one letter to each of your Creditors showing the total debt you owe, and your ins and outs so they can see you have no extra income remaining after you have paid essential bills (mortgage, gas, electricty, water, food, Childrens Presciptions etc). 2) Ask them to Freeze the interest on your account, and confirm this in writing (only ever deal with letters, phone calls are worthless for agreements). 3) Inform them you are happy to set up a nominal payment of £1.00/mth so they know you are still in contact. 4) The ones that agree, set up that payment straight away to replace the existing payment with them, if there is one set up. 5) Have a walk around the block and a cup of tea (not wine) when you get back. Well Done!

    The next part now you’ve managed to control the debt, is not to start any more (that’s a given) but slowly and surely you will be able to pay these off, one at a time for a reduced amount. Essentially the longer you maintain the token payment the less they will settle for eventually once the debt has been sold on a few times. (You be the boss now) I’ve got some debts that are around 8 years old now since the Default, still paying the token payment, but have settled on 6 out of the 10 Creditors for between 25% to 40% of the original debt owed. Trying to get the last few down to 20% but not fussed if they don’t agree, they will eventually. If you do pay any off down the line then make sure you get it in writing that they agree not to chase the outstanding amount and that it’s given as a Full and Final Settlement. There are standard letters you can use on the National Debtline website. Keep copies of all the settlement confirmation letters in case the resell the debt and ‘accidentally’ try to ask you for it again. Had this with an Abbey Loan, but sent them a ‘Copy’ of the original and they said oops ‘their bad’ They’ll try it on, so keep your paperwork safe, once you’ve agreed and settled down the line.

    Anyway, that how I did/am doing it as personal arrangements. You can forget about them then until you have a bit extra saved and then can approach one at a time.

    Hope this helps you to take control. They’ll not try to take you to court to issue CCJ’s if you’re paying a gesture payment already and can show that’s all you are able to. Might be that a standard debt plans is also suitable, so do speak to a free professional if you want a shorter route, just saying what I did.

    All the best, Ben

    • Sueb

      Ben, this has given me real hope. I am in a very similar situation. I have over £30k debts with about 6 creditors, which were taken out around 11 years ago when my then husband persuaded me it was a good idea to go and live abroad with no income. I started paying a nominal £1 payment to each creditor about 6 years ago, when i finally had the courage to through my husband out (we were paying about £50 between them before, interest frozen and living back in the uk). To this day I pay £1 a month each. I work full time, bring up our daughter on my own with no financial support from him and he has moved abroad. I have no assets, pay no pension contributions and live in a privately rented home. Your advice has given me a real feeling that actually I can sort this out once and for all. Thank you

    • moneyaware

      Hi Ben,

      Thanks for sharing your story. It good to hear that things have worked out for you.

      I’d echo the message at the end of your post, where you recommend people get free professional advice before taking action to deal with their debts. We can help with that. There’s more information here: https://www.stepchange.org/Howwecanhelpyou/Debtadvice.aspx.

      One thing I’d like to correct is about CCJs. I’ve spoken to many people over the years that have received CCJs despite making small regular payments to their debts. It’s probably less likely than if you ignored a debt but it is still possible to be taken to court.

      It’s also not usually advisable to pay creditors £1 a month and to save up to make settlement offers. We’d usually only recommend paying your creditors £1 a month if the rest of your money was needed for essential living costs.

      There’s more information about making settlement offers on our main website: https://www.stepchange.org/debt-info/settlement-offers-to-creditors.aspx.

      Kind regards

      James

  • It seems totally overwhelming but that is great advice from Ben. There is a lot of help out there and it is a big burden to carry solo. However, being a tough nut and also I used to be in business, I chose solo. Becoming a christian in May 2007 I have relied on the Lord’s strength to get me through. He even game me a dream about 3 snakes chasing me and one was lying down with me and the next day I got 3 debt collection letters, one really bad! This really helped. It has been a big and constant burden but there is light at the end of the tunnel. In fact, I’ve just about cleared all of it that is reasonable, some I wouldn’t even know who the money is owed to, some is paid back at £1 by a court order (it will be cleared in 2093), some is statute barred. This year £34,004.22 has been settled, largely by paying it off but still there is some remaining.

    I had debts so big and varied I literally found it very difficult to track all of it from multiple sources. Basically I ran a business with my ex and it went under, as did our relationship. I found out I wasn’t even a shareholder director despite thinking I was a partner in the business. This turned out to be a good thing as when she went bankrupt it was all on her. Post the split I still had the house I lived in and my job so I remortgaged the house to get into property. I put £10k on a house that never got built with the company going bankrupt. At the same time I got the stupid idea of buying a house in Spain I was going to rent out to make money. BAD IDEA! I did make some rental but not enough. I had to get 2 further secured loans against the house to pay Spanish IVA tax (didn’t see that coming) and other ongoing expenses. Basically, I was now into debt at 130% of my house value UK and maxed credit cards. I also lost my good job and tried to go into business again, really making a pittance. May 2008 saw everything crash totally – up until this point I was making all the card and loan repayments around £2.5k a month. Totally unsustainable.

    Then it was into hiding basically, big debt collectors knocking on the door, phone calls, virtually daily letters. I did not answer the door to anyone or only took calls from mobile from known numbers. I just prayed on my knees at my bed while debt collectors were at the door. It is frightening and constant pressure, this is what debt collection companies are good at. Some advice: if you do make £1 settlements, which I did, I now have a problem that it is not statute barred. If I had not paid, it would be. However it is a dangerous game to play as some companies will take you to court. One company secured £6k debt against the house, I didn’t even bother going to court (now paid). The other secured loans I tried to work out repayments but didn’t make enough money.

    In 2010 I had a change of career and fortunes. I made a deal with FirstPlus for £5k to settle the debt. They agreed but never took the charge off the house (this came back to haunt me – but nailed them). They still sent letters saying I owed £9k! So don’t think that these companies are going to do what they say. They aren’t. Also moved out of my house to shared accommodation as I’d started living and working elsewhere. Fortunately the companies froze interest. I rented out my house as I couldn’t sell it with all the charges. I had a bad tenant for 4 years with ad hoc rent and the house ended up being badly damaged to add to my woes. Eventually I decided I’d had enough. I was making enough money to live on but not to really clear any debt so I got rid of the tenant after paying for court action.

    This may seem counter intuitive but for this amount of debt I had to think outside the box. I started another career which meant I got some money and a grant (teacher). I decided to put £10k into doing the house up and rent it properly. That was hard going, I originally only budgeted for £5k. Stuck with not being able to sell, I tried renting again but (un)fortunately another bad tenant moved out within a week. By this time the bank on the original and 2nd mortgage decided to pull the plug and repossess. I didn’t fight it. The investment in doing it up made sure it got a good price and to be fair the bank sold it properly. Now if I’d have used the 10k to pay off debts I would still owe around £50k as the house would have sold for a heck of a lot less it was a dump. So you have to be tough and make good decisions.

    The money was forwarded on to the chargeholders of the property. Good old FirstPlus came back again and took their share, despite it being settled. I wrote and explained I had settled and threatened to go to the Financial Obmudsman. They agreed to send the money back, which they did, and a small amount of compensation. The second Welcome debt was over £20k but they stupidly sold the debt on prior to this and would not tell the solicitors who they had sold it to. So it was basically stuck in limbo for 6 months. Finally got sorted and the sent it onto the 3rd company. However, they also had the money from FirstPlus which came back still sat in their account for 6 months. I had to complain 5+ times until they actually did what they should have and sent it on.

    So this is how the debt got paid/settled this year of around £34k, I’m free of the primary and secondary mortgages and 3 lots of secured debt. There are still a few old credit cards around, some are now statute barred (which I explained to a threatening solicitors letter – never heard back). Looking back I could have gone bankrupt in 2008. A debt plan was out of the question as it was well over £20k and also secured. I’ve heard every letter/threat/been to court but really you can’t be made to pay more than you can afford despite what companies will try and tell you. However, I did want to try and clear the debt in a reasonable manner it’s largely worked out better than I could have hoped or prayed. I have settled in full on the major accounts, with every penny paid. My credit file is still shot due to repossession etc. but in time it will be better. I’ve learned patience is definitely required I can wait another 5 years to have a good credit rating as I live well below my means now.

    So don’t give up is the first thing. Keep meticulous records and if you send anything, use recorded delivery. Only deal in writing. I have noticed that there is a change in attitude in the industry in general and the collection companies are much more reasonable these days. Get advice and make sure it’s the right advice. I lived with this alone and handled it all myself, I am now married but I’ve never involved my wife with any part of the debt (not incurred by her or with her) but been honest. Live below your means by taking drastic and sustainable action. Be tough and think outside the box. There are lots of stories of people doing additional jobs, there are always solutions to every problem. Be solution focused. If you focus on the debt you will just think ‘I’ll never pay this off’. Don’t. Also think long term – just imagine if you do get to a point where you are paying off debt, once it’s cleared you will have excess money. Don’t spend it, start saving/investing! Lastly my life has really changed from the inside out since accepting Jesus all those years ago. That is the true source of my strength.

    • If you include the 1st and 2nd original mortgage in those figures (around £90k) that means a staggering £124k worth of debt has been settled/paid/finalised this year. A miracle.

    • moneyaware

      Thanks for sharing your story Richard.

  • I was also in credit card debt to the tune of $ 2500. This debt was the reason of more expanding than my limits. Later on I made up my mind to clear all this debt and in future not to depend on this unnecessary headache. So I controlled my expenses and after payment of all the debt amount, I also destroyed my credit cards. Now, I am feeling much relieved and have made up my mind not to get indulge in such debt and to spend more than my limits.

    • moneyaware

      Hi Camila,

      Great to hear that you’re on top of your finances now and things are easier for you.

      I think that getting out of debt can be a chance to learn about managing money, living on a budget and staying out of debt once you’ve cleared off the old debts.

      Kind regards

      James

  • john

    Well after working from leaving school, and never having to worry about money, things turned on there head when I became disabled due to ill health about 12 years ago . This led to a divorce loss of my house car ect.

    This brings it up to present day where I am living on disability and benefits (which is quite an eye opener considering I used to pay more tax and Ni in a week than what I get to live on now for a week) Needless to say I have racked up £10k on a credit card just trying to live.

    I’m trying to keep up my repayments but it’s getting to the stage where I feel like i’m slowly going under and it is starting to effect my life .I dont know which way to turn and feel so stupid for having got myself into this mess……..

    • moneyaware

      Hi John,

      We speak to people in similar situations on a daily basis. Many people think that reckless spending is the main cause of debt, but actually it’s more likely to be unavoidable life-changes like the ones you’ve experienced.

      We can help you work out your options on how to deal with this particular debt and any others you may have. You can get our help by either using our online advice tool, Debt Remedy, or by calling our Helpline. There’s more information here: https://www.stepchange.org/Howwecanhelpyou/Debtadvice.aspx.

      Kind regards

      James

      • john

        Thanks for the reply, due to go into hospital again for yet another op soon.

        As soon as i’m out I will be in touch to try to sort this life sapping debt out. I know it’s my own fault but you have got to eat and pay the bills, shame I have got into debt just trying to live…….

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