I need to start with disclosing that I am NOT a financial advisor. I am being transparent as possible in my own experiences in the hope that it helps somebody else.
In Part 1 of “what financial abuse was for me” I explained how the finances worked in the dynamics of the relationship I was in. In this part, I want to outline the situation I was left in after the relationship, how I got out of the debt I was left in and how long it all took. I will also be including the links to any resources I used as well as making sure any financial resources I give are up to date as I went through my situation in 2012 and I’m sure things have probably changed since then.
My income – When the relationship broke down I was on maternity leave. My income was Maternity Allowance paid by the government, as I hadn’t been employed with the company I was with at the time long enough before going on maternity leave to be entitled to the Statutory Maternity Pay. I also received Child Benefit, Working and Child Tax Credits. Included in the Tax Credits claim was the childcare element as I had started our son in nursery a few weeks before I went back to work to make sure he was settled and happy. I couldn’t afford to stay on maternity leave for the full 12 months as Maternity Allowance drops after 39 weeks so returned to work at that point. Once I did return to work I was earning around £200/week for 25 hours a week. All in all there was roughly £420/week coming in to my house.
My outgoings – To give an idea of how much was going out, household bills were est. £210/week including food, baby essential etc. On top of this nursery fees amounted to £117/week. To put it simply, my essential bills and living costs were £327/week and I had £420/week to manage this – it should have been so easily done. But given that this is a post about financial abuse I will now be as transparent as I can remember (it was some years ago now) about the debt that I was trying to manage as well.
The debt – As I have explained in a few blog posts and in my book, my ex had a gambling problem. I will admit as well that I was not very financially literate. I understood money, I could add up, but I didn’t understand the full impact that using credit could have and I didn’t know what to do in bad situations. Being raised in a working class household I knew that if the bills were paid then we were doing okay. By the time I was granted a restraining order in July 2012, I had missed 2 mortgage payments as well as a few other bills and had debts of £4,000 in my name directly caused by financial abuse. I would wake up on the day of my wages going into my bank account and my wages would have already been spent on gambling websites. The £4,000 debt was owed to payday loan companies (these are the worst, don’t use these) and a debt collector instructed by eBay. My ex had used my eBay and PayPal accounts to sell good and didn’t physically send the goods to buyers. It sounds very minor but given that the finances I had going into my bank account were getting drained debts built up and snowballed into something far bigger than I could manage. Missed payments came with fees, money was added on to debts passed to debt collection agencies, it became a big mess because I couldn’t catch up in time to stop this happening.
On top of the debt I was left with, I also had to find the funds to use a solicitor in family court. To total that up, I spent just under £4,000 on solicitor fees and mediation. Solicitors are very insistent that you keep their account up to date so payments to them were prioritised over debts – and their fees tend to stack up quite rapidly. So all in all I had a very short period of time to use the £93/week I had after paying bills and buying food etc to pay off roughly £9,000 worth of debt.
Now, I will be the first to admit that I wasn’t very financially literate. I didn’t understand what my options were and my knowledge only stretched to the cycle of; owing money – late payment fees being added – passed on to debt collection agencies – debt recovery (bailiffs) – court action. I wasn’t aware of the flexibility lying in this cycle. That’s what I wanted to share with you because if I can help one person avoid the sheer stress I went through for a lot longer than necessary then it was worth sharing with such transparency. I left my debts to mount up purely because I didn’t know how to communicate with the people I owed money to. Communication will be absolute key here! It got to the point where consolidation didn’t work. I couldn’t borrow enough money to cover what I owed out so I would be paying a consolidation repayment plus the other debts that the consolidation didn’t cover. It eventually reached the point of me having to ignore one bill to pay another and missed payments became such a frequent thing. My credit score was shot to pieces and I couldn’t afford to pay anything above minimum payment so my debts weren’t actually reducing I was just paying off the interest continually being added.
After several months of stress and solutions not really being solutions my mum suggested contacting Step Change for advice. Step Change are an independent charity that help find the best debt solutions to fit your situation. You can find out the many ways in which they help people via the link at the bottom of this post. The solution that best fit my situation was the individual voluntary agreement (IVA). To put this simply, Step Change would take all of my incomings and outgoings information, they then work out what I can afford to pay towards my debts each month and they communicate as a middle man. So I wouldn’t have to speak to the debt collectors directly and I could pay off what it was I could afford to. Anything that is left after 5-6 years is automatically written off. So looking at it long-term, I would have 5-6 years of those payments on my credit score. Once the debt is written off if there is any left, I would have that settlement shown on my credit score for a further 6 years. In all honesty, I didn’t want up to 12 years of bad credit. So I didn’t go with the IVA.
What I did was I contacted the debt agencies directly. I went through my incomings and outgoings with them directly – they do have to do this if you tell them your circumstances have changed and you need to work a payment plan out with them. From there we were able to work out a payment that was suitable. I knew that my credit score would be poor for a while anyway because he got me into debt and that was passed on to debt collectors. I came to the solution that if I can shorten that potential 12 years then I would, which I did manage to. It took me around 4 years to pay off that debt under the agreements that I made with the debt agencies. A further 3 years for missed payments, settlements etc to fall off my credit score.
My circumstances did change throughout those 4 years. I sold the house – more so out of necessity. I couldn’t remortgage because of the missed payments on the mortgage and there wasn’t much equity in the house. I managed to cover the cost of the solicitor fees from the sale and nothing more. I moved in with my now-husband. And we had a baby girl. The number of dependents does affect how much you are expected to pay. If you have a partner that you live with and you don’t want their income involved in the calculations – be clear with your creditors what household finances YOU are responsible for. I also changed employment and eventually came out of employment once the debts were cleared £1,400 a month for two full-time child care spaces was no joke to keep up with!
The biggest factor that helped me was communication! If I had called each company I owed money to straight off the bat I would have saved so much time, money and stress trying to keep up with a situation that was far beyond my means. The best thing to do is tackle the situation early to gain control. Don’t be scared to talk about money with the people you owe money to. They don’t need a big back story of abuse, telling them your situation at home has changed is sufficient enough and they shouldn’t pry into your private life. Sit down and work out every penny you have coming in and every penny you have going out. You don’t know the extent of your situation until you have a very clear picture of where you are.
If you do need to use a service such as an IVA, there are other companies as well as Step Change that can do this for you. I would be cautious of using another company though, as most, if not all companies charge a fee for doing this. The companies you owe money to may look at this in a bad light as they will view the fee as more money that you could be paying them. Step Change is a charity-run, free service and they hold a lot of information on various avenues you can go down to deal with your situation.
I hope this blog post has helped somebody! I often shy away from talking about money because, well, I felt out of my depth. I am not a financial advisor and if you are looking for financial solutions I have listed a few websites below that you can use. These websites are independent and completely non-judgemental. It’s definitely a long road to get out of debt and it feels so unfair if the debt isn’t your own doing. Communicate with your creditors, they’re there to recover their money, not to take you for every penny.