This is to be used if your caught in a debt cycle. Every month paying off more than you earn. It is not for everyone, but it will change your life, in as much as the calls, letters, sleepless nights and depression will end.
If you are at this point, then you have to drastic steps, there are many secret tips, tricks and loopholes that can be implemented to help achieve this. Loopholes the banks dont want you to know about. Some of you will be able to use some of these, others all of them, depending on your status (single, married, flatsharing). So, if you have been considering IVA, Debt Management, Payday Loans, Bad Credit Loans, Debt Consolidation or simply need Debt Advice – read this.
Cancel all Debit Cards
Cancel all your debit cards. Why? If you are getting charges every month and have payday loans, loans, credit cards etc They have your card details and can use a PDU machine to debit your account anytime without you planning or knowing. A huge part of your salary on payday is being taken every month,never leaving you enough to get out of the cycle. Ever had that feeling of looking forward to the end of the month, then checking at the ATM or online and seeing over half your wages taken on one day, then sinking into depression , when everyone else is going out of the night?
So, cancel them all, ring your bank up and ask to be put through to fraud team (only they have power to completely stop your account) say your cards have been stolen, and someone has your online password and report it (now no company can debit your acc remotely) Now, the same day, walk into another bank and open a basic account. It is the lowest account available and literally, you can only deposit and withdraw money, no overdrafts (they have to legally open it for you with adequate ID, or threaten to go to Financial Ombudsmen).
Now put all available cash and arrange for your wages to put in this account every month, this means you will now get 100% of all your money on payday.
Contact all Creditors
Payday Loan Companies
Ring them all, tell them your losing your job and moving back in with parents, no longer able to afford repayments.. They will know once unemployed they cannot expect you to pay the full monthly repayment. Allowing for such eventualities as pitfalls for being a lender, they will offer a lower amount or simply just paying loaned amount without interest etc. Using some simple template letters you can offer as little as £20 a month repayment to them, sending additional letters, to stop them calling you at work and ringing mobile. Be prepared for tactics such as texts/letters/calls saying your going to court, red letters saying bailiffs are coming, these are used to scare you and mean nothing
Credit cards
Reclaim charges – Going back 6yrs, simple and will give you some cash in your pocket. Withdraw the money from the CashMachine when you receive the charges back and put it in your new account. Then call the card companies and tell them the same as the Payday Loan excuse. Go on a repayment scheme and shoot for the lowest £20 a month of something in this region.
Any other Direct Debits
Now apart from Council Tax/Gas/Electricity – Do you really need the other services your paying for? Calling them or sending a letter recorded delivery citing the same excuse as above and offering a lower amount to them to pay back
Renting / Flat sharing
If you are, one word, MOVE. This may seem extreme, but in the grand scheme of things, is a fantastic strategy. Stay in the same area or somewhere different, if you are receiving dozens of letters, DCA’s, Bailiffs etc there are many letters you can use to stop them ( these have been mentioned in previous articles). However, to get some breathing space, move, then call the Post Office and set up a redirection from that old address to your new one. This means you will receive your old mail, but they will not be able to trace you to new address. Obviously use your old address on all correspondance so you get all mail sent to your new address, without ever having to write new address.
Conclusion -
Spoken to fraud team in your bank and cancelled all debit cards.
Have a new account with your wages going in and only essential direct debits coming out of.
Reclaimed credit card charges and put that money in new account
Spoken and written to all credit card companies and payday loan companies, halting all accounts and are now on a repayment scheme
If needed, moved and have all post redirected.
For the first time ever on pay day have 100% of your wages, now you can start saving again!
In Part 2, I will show you how to make money quickly and kick start your savings, so you never return to this situation again.