Single mum reveals how she paid off £15k of debt in less than two years

Yorkshire Post

A single mum who had racked up £15k of credit card debt by aged 22 has revealed the steps she took to pay it off in less than two years.  Alex Wren, 25, got her first credit card aged 19 - in a hope it would help her build up her credit score, to help get a mortgage in the future.  But before she knew it she was developing bad habits and using most of her up to £3,000 limit to go on birthday and Christmas trips.  By aged 22 she had racked up £15k in debt.

Transcript

00:00At 22 I was in over £10,000 worth of debt, essentially made me bankrupt and the only

00:04option I felt like I had was to take out an IVA. So let me tell you what this is and whether I

00:08regret that decision or not. So at the end of 2022 I was nine months pregnant, had all these

00:13debts whether it was from credit or from loans and I was about to go on maternity leave earning

00:17about £600 a month and I knew I couldn't afford to keep paying these minimum monthly payments and

00:22bring a child into this world and this is where I found myself getting into an IVA. So if you get

00:26accepted for an IVA they look at your income and they decide how much that you can pay per month.

00:31So it essentially wipes off all the other debts and you just pay this monthly sum for five years.

00:35When you open the IVA all these debts that you put into it, all those going to default and obviously

00:39defaults stay on your credit score for six years as well as IVAs. Every year they do an annual review

00:44so if your income goes up you have to pay more. As soon as I signed that and this had got sorted it

00:49gave me peace of mind and for almost two years that was perfect for me. But then my income quite

00:53suddenly changed and I realised that it's better for me to just pay off the full thing because they

00:57were going to drastically up my payments else. With an IVA you can't take out new credit or like

01:01car finance, things like that unless you have permission and an IVA tanks your credit score.

01:06Despite the fact that I paid it off 20 months in it will still remain on my credit score for a total

01:10of six years which is the reason that I do regret it. It was the best decision for me at the time.

01:14If I could have predicted the future I wish I could have just held out for that extra year or so

01:19because it would have meant that I'd have been able to get a mortgage a lot sooner than what I am able to do

01:23now. If I want to get a good rate mortgage I'm going to have to wait until at least 2029.

01:27Debt should be talked about, debt shouldn't be a taboo subject. Many of us have it and so many of

01:31us have a bad credit score and I know a lot of us feel ashamed and embarrassed about it because

01:34that's exactly how I felt. If you are in this kind of situation you don't know what to do you want to

01:38learn more about these type of things that are step change and citizen's advice that can give you

01:42great advice on it. If you have any questions about IVAs or anything like that please let me know.

01:45You've took one out before, was it the best decision you made or do you wish you had more information?

01:49I was in 15k worth of debt at 21 and I worked super hard to get out of it only to be back in

01:55debt again. So let me tell you about it. Back in January 2022 I was in debt and I didn't feel like

01:59there was a way out because I just had a baby and I just didn't have enough money coming in to pay it

02:03off. So I took out an IVA and was paying £100 a month and that was meant to be for five years.

02:08But a year ago now my circumstances suddenly changed quite drastically and I was able to pay that IVA

02:13off in full and the moment that I paid that off I thought to myself I will never ever be in debt

02:17again. So the fact that I'm suddenly paying £6,000 off again is a bit of a shock and I want you to

02:22tell me if you think these are my fault or not. Part of this amount is a British gas bill and the

02:26majority of this bill was already in the IVA but part of it wasn't allowed to be just because of

02:31the date. So it's meant I've been paying that off monthly but that does come to an end in August.

02:35And then the bulk of this amount is DWP and essentially over a year ago now I became self-employed and I

02:40essentially didn't understand that every money that comes into this business account was my money to

02:44declare. Because at the time I was still on Universal Credit and when I got started out it was really

02:48fluctuating. So I paid myself a wage and then Universal Credit was topping it up and this was

02:52going on for like five months. And when I was finally earning a stable amount of money I closed my claim

02:56and got hit with a five grand bill. I am currently paying this off monthly because it's not making a

03:01big difference in my monthly finances. I don't know whether I should just bite the bullet and pay it

03:05all off in full. Let me know what you would do and let me know if you've ever been in a situation

03:08similar where you got out of debt and then unexpectedly ended back in it.

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