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Welcome to the Legal Beagles Debt forum, in here you will find guidelines on how to deal with debt, letter templates and addresses of helpful organisations.
Lots of people are in debt these days, and for all sort of reasons. This problem is not just confined the lower paid amongst us, indeed there are more and more people with highly paid jobs who are equally in debt, unfortunately there does seem to still be a stigma attached to it. Firstly do not be embarrassed you are NOT alone, and do not bury your head in the sand it will not go away and will quite probably get out of control if you do not deal with it.
STEP 1.
Work out your total household income, include any benefits, maintenance etc that you may be receiving, in fact include any money whatsoever that you have coming into your household. Their is a spreadsheet located below.
NEXT:
Work out your total household outgoings. At this state do not include any debts, arrears or credit payments. Keep it to your normal weekly/monthly payments.
These should consist of Mortgage/Rent, Council Tax, Water rates/sewerage costs, Gas and Electricity and Housekeeping. (This includes food, toiletries, cleaning materials, newpapers etc and a small amount for entertainment and miscellaneous expenditure).
As a rough guide:
Single person £35-£45 per week
Couple £60-£75 per week
Each child £20-£35 per week
THEN TOTAL THIS LIST UP (B)
When you have worked this out then take the outgoings figure (b)away from your income figure (a), what you have left over (c) is what you can use to pay your debts. Yes it will be very hard sticking to the budget plan but remember it will be worth it in the end.
STEP 2.
Work out your priority debts as a guide these are as follows:
Mortgage/Rent
Second Mortgage
Council Tax
Gas/Electric
Water Rates/Sewerage costs
Magistrates Court Fines
Maintenance
Hire purchase/conditional sale
Income Tax, national insurance and VAT if you are self employed or run a business.
Add these debts up (d) then negotiate a repayment plan with the individual companies.
Take total (d) away from (c) and this is what is left for your other creditors (e).
Once you have worked out your budget and know what is left for other creditors you can then negotiate a payment offer. Remember most creditors will accept lower payment proposals, but will not tolerate repeated missed payments or no contact from the debtor. So remember keep the payments up regularly and keep talking to them.
As a rough guide these are what are classed as credit debits. These do include lots of different types of debts where the creditor hasn't got extra powers (i.e. they cannot take your home). This means they do not have to be treated as a priority. The most common of them include:
Credit card debts
Personal loans with finance companies
Bank and Building society loans, overdrafts and credit cards
Charge cards
Catalogues
Personal debts to friends and family
Doorstep collected loans
Credit sale agreements and trading cheques/vouchers.
Sit down with a cuppa and work out the how much you owe to these debts and then add them up, dont forget to round each debt up to the nearest pound. The best way to work out how much to give each one is on a pro-rata distribution, this is how it would be done if it did go to court and means that each creditor gets a fair share of the money you have available.
If you have done a weekly budget you need to do this:
To work this out firstly multiply the amount that you have available by 52, and divide by 12. (e)
Add up all the individual debts, to find out how much you owe in total (f)
Then calculate the monthly offer of repayment as follows: look at each individual debt separately again and follow thus :
Debt 1 is owed £268.00 (e) x £268.00 divided by (f) = offer to creditor.
Debt 2 is owed £2,960.00 (e) x £2,960.00 divided by (f) = offer to creditor.
Keep going down the list till you finish and you will find that it will add up to the total amount that you have available.
Next send a letter (# 2 in Debt Letters Thread) to each one of your creditors making your offer of payment, its a good thing to enclose a copy of your income & expenditure sheet, so they can see that you are not trying to fool them.
If you are negotiating a payment offer use (1) in the Letter templates thread.
If you are making a pro-rata offer to your creditors letter (2) in the Letter templates thread.
If you are making no offer of payment or token payments use letter (3) in the Letter templates thread
Next is the hardest bit, cut up all your credit cards (keep one for emergencies, but don't carry it around with you, its much too tempting to put the odd handbag, pair of shoes, shirt etc on it). Always pay with cash, that way you will stick to your budget. Another good thing is to remember this mantra - CREDIT = DEBT, CREDIT = DEBT, I always remember that and it works for me and believe me I have been in serious debt problems.
Find out if you are receiving all/any benefits that you may be entitled to, its amazing what people are entitled to and don't claim.
Check all your loans and and credit cards, if you are paying PPI, check to see if you can get it cheaper elsewhere and make sure that you can claim on it. If you can't and its been mis-sold, look into claiming back your payments, there is a forum for mis-sold PPI Insurance.
Check your bank accounts, loans and credit cards for penalty charges, and claim them back. Use the charges that have been refunded for reducing the balances of your outstanding debts.
If it is at all possible try to transfer any outstanding balances to lower rate loans etc, try for 0% balance transfers, and try to pay above the minimum payment each month.
Make sure you close all paid up accounts, otherwise they will remain actual on your credit record and lenders will see it as available credit to you. Also by closing the account it is less tempting to start borrowing again.
Another good idea is to keep a log of what you owe and mark it off everytime that you make a payment, there is something hugely satisfying about seeing that BIG FAT ZERO next to a debt that you have paid up completely
Lots of people are in debt these days, and for all sort of reasons. This problem is not just confined the lower paid amongst us, indeed there are more and more people with highly paid jobs who are equally in debt, unfortunately there does seem to still be a stigma attached to it. Firstly do not be embarrassed you are NOT alone, and do not bury your head in the sand it will not go away and will quite probably get out of control if you do not deal with it.
STEP 1.
Work out your total household income, include any benefits, maintenance etc that you may be receiving, in fact include any money whatsoever that you have coming into your household. Their is a spreadsheet located below.
NEXT:
Work out your total household outgoings. At this state do not include any debts, arrears or credit payments. Keep it to your normal weekly/monthly payments.
These should consist of Mortgage/Rent, Council Tax, Water rates/sewerage costs, Gas and Electricity and Housekeeping. (This includes food, toiletries, cleaning materials, newpapers etc and a small amount for entertainment and miscellaneous expenditure).
As a rough guide:
Single person £35-£45 per week
Couple £60-£75 per week
Each child £20-£35 per week
THEN TOTAL THIS LIST UP (B)
When you have worked this out then take the outgoings figure (b)away from your income figure (a), what you have left over (c) is what you can use to pay your debts. Yes it will be very hard sticking to the budget plan but remember it will be worth it in the end.
STEP 2.
Work out your priority debts as a guide these are as follows:
Mortgage/Rent
Second Mortgage
Council Tax
Gas/Electric
Water Rates/Sewerage costs
Magistrates Court Fines
Maintenance
Hire purchase/conditional sale
Income Tax, national insurance and VAT if you are self employed or run a business.
Add these debts up (d) then negotiate a repayment plan with the individual companies.
Take total (d) away from (c) and this is what is left for your other creditors (e).
Once you have worked out your budget and know what is left for other creditors you can then negotiate a payment offer. Remember most creditors will accept lower payment proposals, but will not tolerate repeated missed payments or no contact from the debtor. So remember keep the payments up regularly and keep talking to them.
As a rough guide these are what are classed as credit debits. These do include lots of different types of debts where the creditor hasn't got extra powers (i.e. they cannot take your home). This means they do not have to be treated as a priority. The most common of them include:
Credit card debts
Personal loans with finance companies
Bank and Building society loans, overdrafts and credit cards
Charge cards
Catalogues
Personal debts to friends and family
Doorstep collected loans
Credit sale agreements and trading cheques/vouchers.
Sit down with a cuppa and work out the how much you owe to these debts and then add them up, dont forget to round each debt up to the nearest pound. The best way to work out how much to give each one is on a pro-rata distribution, this is how it would be done if it did go to court and means that each creditor gets a fair share of the money you have available.
If you have done a weekly budget you need to do this:
To work this out firstly multiply the amount that you have available by 52, and divide by 12. (e)
Add up all the individual debts, to find out how much you owe in total (f)
Then calculate the monthly offer of repayment as follows: look at each individual debt separately again and follow thus :
Debt 1 is owed £268.00 (e) x £268.00 divided by (f) = offer to creditor.
Debt 2 is owed £2,960.00 (e) x £2,960.00 divided by (f) = offer to creditor.
Keep going down the list till you finish and you will find that it will add up to the total amount that you have available.
Next send a letter (# 2 in Debt Letters Thread) to each one of your creditors making your offer of payment, its a good thing to enclose a copy of your income & expenditure sheet, so they can see that you are not trying to fool them.
If you are negotiating a payment offer use (1) in the Letter templates thread.
If you are making a pro-rata offer to your creditors letter (2) in the Letter templates thread.
If you are making no offer of payment or token payments use letter (3) in the Letter templates thread
Next is the hardest bit, cut up all your credit cards (keep one for emergencies, but don't carry it around with you, its much too tempting to put the odd handbag, pair of shoes, shirt etc on it). Always pay with cash, that way you will stick to your budget. Another good thing is to remember this mantra - CREDIT = DEBT, CREDIT = DEBT, I always remember that and it works for me and believe me I have been in serious debt problems.
Find out if you are receiving all/any benefits that you may be entitled to, its amazing what people are entitled to and don't claim.
Check all your loans and and credit cards, if you are paying PPI, check to see if you can get it cheaper elsewhere and make sure that you can claim on it. If you can't and its been mis-sold, look into claiming back your payments, there is a forum for mis-sold PPI Insurance.
Check your bank accounts, loans and credit cards for penalty charges, and claim them back. Use the charges that have been refunded for reducing the balances of your outstanding debts.
If it is at all possible try to transfer any outstanding balances to lower rate loans etc, try for 0% balance transfers, and try to pay above the minimum payment each month.
Make sure you close all paid up accounts, otherwise they will remain actual on your credit record and lenders will see it as available credit to you. Also by closing the account it is less tempting to start borrowing again.
Another good idea is to keep a log of what you owe and mark it off everytime that you make a payment, there is something hugely satisfying about seeing that BIG FAT ZERO next to a debt that you have paid up completely
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