Struggling with debt? Ask a debt adviser a question

I'm wondering if there is any help available for me - I'm currently in a debt spiral that is soon going to be unmanageable. To explain how it all started, around 4 years ago my husband lost his job and embarked on a freelance career trading as a Ltd company. More or less this cut our shared income from around £40k per year to around £25k. I already had a £7k personal loan at the time but dipped into credit cards and overdrafts whenever we were a bit short (which ever since has been about every other month). I've been increasing my loan to pay off credit cards year on year ever since.

Currently I have £14k loan and another £5k in credit card and overdraft debt. Husbands earnings are still only covering his company's running costs plus his car tax, insurance and mobile phone, so I'm on my own. Rent, bills, petrol, food and repayments cost around £250 more that I earn each month as I'm doing badly at work so currently not earning commission, just £1,500 per month basic rate.

Added problem is husband suffers from depression. He knows things are bad but if he finds out how bad I'm worried he'll blame himself and do something stupid (this includes selling the kit that his livelihood depends on!). I am the rock and the security in this relationship, the extent of the debt problem is my fault - I need to fix this and I don't know what to do.

I tried taking on a cleaning job after work but already work 8am-5pm with a 2hour round trip commute - I was so exhausted I fell further behind in my day job and was earning only an additional £150 a month when you allow for tax and petrol to get there!

I'm not in crisis yet but will be within three months. Any help would be much appreciated.

Wannabedebtfree18 wrote: »

Hi

I wondererd if I could get some advice. I am stupidly in a lot of debt from 3 years ago when I separated and divorced. My debt total is about 18k all credit cards and catalogue account. I had to rehome myself and my children and start from scratch with furniture etc.

Anyway I have been on a dmp with stepchange since November 2014. I pay £106 per month to step change and they pay the creditors.

I am stuck in rented accommodation and really want to be able to get a mortgage and provide a secure home.

I have one credit card that has a low limit of £500 and I more or else pay in full every month to try and build my credit score. Defaults date back to spring 2015.

My credit score is 277 on equifax so pretty poor. I have no ccjs.

So my question is do I save like mad for a deposit for a house or do I hammer away at the debts to bring the balance down? Ideally I would like to be in a position to get a mortgage in 2019 - is this possible with a sub prime lender? The defaults will be 3-4 years old by then but obviously not settled.

I have a loan for my car which has another 4 years to go - my car is worth £6.5k. One option could be to sell my car and buy a cheap run around and then either use the funds towards debts or a deposit? I'm not sure which is best or if it's even possible to get a mortgage in 2019 with all the defaults (there are about 5)

Thanks

Hello

Welcome to the forum and thanks for posting.

I can understand why the debt arose after you went through a difficult time, but now it's all about trying to get debt free. I can understand why you got a credit card out again to try and improve your credit score, but it's unlikely to help in reality. Whilst all these other debts are outstanding and showing as defaults on your credit file, keeping up to one small credit card will probably not have much of an effect, if any.

I have to add that one of the terms and conditions of your DMP with us is that all debts are included and that you don't obtain further credit whilst on the DMP. This is mainly because if your other creditors noticed you were paying another debt in full every month they could stop accepting your DMP and start adding interest and charges again. If you give us a call we can discuss it and you could add to your plan if you're happy to.

In regard to mortgages, the thing is that there are no guarantees, so it's impossible to say what you might or might not get, or how you should go about it. Many people who have no debts can't get a mortgage as it depends on many other factors including income. With a low credit rating it may be difficult certainly, even with a subprime lender, but nothing's certain.

Generally I'd advise people to clear debt before saving for a house, though I do understand the desire to get onto the property ladder. If you call us up as mentioned above you can discuss everything in more detail with a debt advisor.

Finally, selling the car is completely up to you, it could pay off some debt, but it won't clear it, so it may not change the situation too much.

I hope this all makes sense and helps in some way.

Allen

Moneyproblems36 wrote: »

Hi,
I am 37 and finally trying to face my debts. the problem is I know of details from one debt collector but I know I have other outstanding debts. I cannot get a credit report I think due to gaps in my address history due to being homeless for a few years. how can I find out what I owe in order to deal with my debts?
Thank you so much

Hi there

Welcome to the forum and thanks for your post.

Yes that's a little tricky, I know how awkward it can be sometimes to get hold of a credit report. All I can really suggest is to try and remember who you originally borrowed from and contact them; maybe you still have some of the paperwork? If they've passed or sold on the debt they'll be able to tell you where, and you can try and track it down like that.

The only other option is to wait for paperwork to come through and respond to it as you get it.

It could also be worth contacting the different credit reference agencies and explaining the problem you've had to see if they can help.

I hope this helps a little.

Allen

Hi Steve,

Thanks for your post and welcome to the forum.

Selling assets to pay debts is certainly one option for dealing with debts. However, there are a number of factors to consider if you plan to do this; for example, have you looked into how likely you will be to get another mortgage with a £20,000 deposit?

It would be a good idea if we could look into your full financial circumstances in order to give you the best advice about all of your options for dealing with the debt outstanding. To do this we will need you to create a budget with us.

There are a couple of ways you can access our advice:

Firstly, you can use the Debt Remedy tool within our website at https://www.stepchange.org/Debtremedy. This is an anonymous, self-help tool which will guide you through the process of putting a budget together in your own time and will recommend the right solution for your situation.

Alternatively, if you would prefer to speak to us over the phone, you can call our Helpline on 0800 138 1111 and have a debt advice session with one of our specialist advisors. We are open from 8am to 8pm Monday to Friday and 8am to 4pm on Saturdays. Calls are free from all landlines and major mobile phone networks.

We hope to hear from you soon.

Kirsty

SBrown72 wrote: »

Me and the wife have managed to get about £35,000 in debt, which we are managing to pay off but we would like to get this moose from around our neck and start having a life again.

We are thinking of selling our house, paying off most of the debt, renting and then starting again.
The House has around 55,000 in equity, leaving us with 20,000 to go towards a deposit.
My wife is very keen to do this but I'm a bit nervous about the whole thing as our other financial decisions haven't always been the best.
Does this sound a good idea or can you see any pitfalls that we could have overlooked.

Or could we remortgage the house to pay the debt and then move at a later date.

Any advice would be greatly appreciated as i get myself in a right mess thinking about Money!!

Regards Steve