New and in serious debt - Advice on which way to turn please

Bakeybadoo · 11 February 2007 at 7:27PM

Myself and my husband have quite a few debts, we don't know whether an IVA would be better than bankruptcy so would appreciate any advice.

We are paying some bills but we are still struggling.

Debts:

£13745 - Car finance
£1260 - Egg card
£650 - Vanquish card
£780 - MINT card
£683 - Capital One card
£203 - Cabot Financial agreement (for Barclaycard debt)
£679 - Commerical Collection agreement (for old DWP debt)
£659 - Direct Line
£266 - Uni debt
£1255 - CCJ
£1376 - Catalogue
£380 - Provident

= Total £21936

Incomings:

£1156 - Wages
£845 - Benefits (to go down by £100 in May)

= Total £2001

Outgoings:

£450 - Rent
£90 - Council Tax
£100 - Electric
£22 - TV Licence
£70 - Cable tv/phone/broadband package
£70 - Contract phone
£20 - CCJ payment
£15 - Old DWP debt payment
£10 - Old Barclaycard payment
£400 - Food/household items
£100 - Petrol
£80 - Average eBay fees - sometimes nothing, sometimes less
£50 - Bank charges (average, seems every month lately)
£80 - Into kids savings account
£70 - Catalogue payment
£100 - Provident

= Total £1727.

Average spare = £274.

We need to keep a certain cushion as with 2 young children, unexpected expenses do occur and you need some for emergenices also. We don't live it up in any way, shape or form.

Also, in May, our income goes down by at least £100 so any payment plan needs to allow for that also.

Please offer you advice, I'm ready to sort this black cloud over our heads, out.

ETA: I forgot Provident.

GLANDEUR · 11 February 2007 at 7:36PM

sorry to hear about your situation can you go bankrupt?

Bakeybadoo · 11 February 2007 at 7:41PM

Yes, it is an option that we are considering, since our credit is so bad already, we figure going bankrupt can't make it that much worse.

I don't know whether that or an IVA would be better but I don't see how we can pay our debts off if we went with an IVA.

CLAPTON · 11 February 2007 at 7:57PM

could you go back and edit your post and
add the minimum payments on each debts
and add up a total for the monthly debt repayments total.

on the spending, you need to complete this and also

you can't afford 70 for cable/phone/tv package (think 30 max)
neither can you afford 70 on mobile (think 10 for PAYG)

whatever is 80 for ebay fees?

you can't afford to save 80 for the kids when you are presumably borrowing the money at very high rates of interest.

you haven't however included anything for car tax, insurance, MOT etc etc, or clothes or kids activites / school costs , socialising.
your budget really needs to inlcude everything that you will spend over the next 12 months and not just this month (although show the annual cost by dividing by 12).

katecheshire · 11 February 2007 at 8:02PM

The experts will be along soon but welcome to the gang.

I'm pretty new to this myself but the most obvious thing is that you have a LOT of small debt (although I bet it doesn't feel small) and one big one.
You haven't mentioned in your outgoings how you are paying off these debts at the moment? Is that what your 'spare' £370 is going on?

You are saving £80 each month for kids and paying big eBay charges (what for?) when you could put that money to paying off some of the smaller amounts or keep in your current account to prevent bank charges. Shave £100 off your housekeeping NOW as your money is going down in May and use that too.

How long to go on your contract phone - would pay as you go be cheaper? Do you really use up all your 'free' minutes and texts?

Your big debt is your car (cars?). Can you get rid of it/them and buy something cheaper?

TV licence - should only be about £35 per quarter.

Can you balance transfer any of your CC debts to 0% card? You will need the interest rates on your various debts to work out which one to pay the most off first.

Good luck!!

Hi Clapton - we were thinking along the same lines!

Sea78 · 11 February 2007 at 8:06PM

Hi,

Welcome to the board - might it be worth discussing the issue of bankruptcy vs IVA with CCCS/Payplan? They'd be able to look at all your figures and advise on what they think would e the best thing to do
Sea xx

Bakeybadoo · 11 February 2007 at 8:08PM

CLAPTON wrote:

could you go back and edit your post and
add the minimum payments on each debts
and add up a total for the monthly debt repayments total.

We don't pay on all of them every month, most are defaulted and so I have no set monthly payment in process.

you can't afford 70 for cable/phone/tv package (think 30 max)

I agree with that.

neither can you afford 70 on mobile (think 10 for PAYG)

Again I agree but on both, we are tied into contracts now. 9 months more on the cable and 12 more months on the mobile.

whatever is 80 for ebay fees?

When you list stuff, that's what you pay.

you can't afford to save 80 for the kids when you are presumably borrowing the money at very high rates of interest.

We aren't borrowing anything right now. Our outgoing are all from our incomings from wages/benefits.

you haven't however included anything for car tax, insurance, MOT etc etc, or clothes or kids activites / school costs , socialising.

Erm, well, we aren't paying car insurance right now, we are waiting on a dispute over the V5 and the credit company.

I only put our monthly expenditure, not annual which MOT/tax would fall under.

The 'food' amount included clothes/food. We have no kids activities or school costs and we don't socialise. Due to my illness.

your budget really needs to inlcude everything that you will spend over the next 12 months and not just this month (although show the annual cost by dividing by 12).

Ok, I didn't think of it like that. I was just trying to show that monthly, we can't afford to pay each and every one of our debts.

black-saturn · 11 February 2007 at 8:12PM

Well here's my four penneth:

£450 - Rent
£90 - Council Tax
£100 - Electric This is high. Switch things off at the plug when they are not being used, plan what you want to watch on TV and switch it off the rest of the times. Sit by candlelight in the evenings. Put a jumper on instead of the heating.
£22 - TV Licence Is this right?
£70 - Cable tv/phone/broadband package This is high. Can you find a cheaper package?
£70 - Contract phone This is also very high. Could you go down to a cheaper tariff?
£20 - CCJ payment
£15 - Old DWP debt payment
£10 - Old Barclaycard payment
£400 - Food/household items This is high too. Look on the Old Style money saving board to see how you can reduce your food and cleaning bill. I feed 2 children aged 12 and 9 and me on £42 a month!!
£100 - Petrol Could you get rid of your car? Walk more, use a bus or cycle?
£80 - Average eBay fees - sometimes nothing, sometimes less If your ebay fees are this high you must be selling a lot. Is this inlcuded in your income at the start of the SOA?
£50 - Bank charges (average, seems every month lately)
£80 - Into kids savings account Priority is to get out of debt at the moment. Stop the kids savings for a while and use the money to get out of debt. You can always start again when you are debt free.
£70 - Catalogue payment Is there any commission you can cash in on this?

Could you pay the average spare off your debts every month to reduce them a bit quicker?

bobbie78 · 11 February 2007 at 8:14PM

Could you sell the car? It is nearly half your debt total, is it a hire purchase loan or just a bank loan for the car? if you got a cheap one for a grand say that would give you a lot more to go towards paying off the other loans really quickly.

Have a play with the snowball calculator to work out which debts to pay off faster to reduce the amount of interest you are paying over all and if you didn't have the car payment any more how much quicker you could pay it all off then save up for a new car.

After you've done all that

you need to get a little note book and write down in it in great detail what every penny is spent on, every tenner from the cash machine, every mars bar. So then at the end of the month you can see if it tallys with what you think you are spending on things, and puts it in black and white as your food budget looks high. Have a look at the Old Style board as people feed small armies on half that amount.

Bakeybadoo · 11 February 2007 at 8:14PM

katecheshire wrote:

You haven't mentioned in your outgoings how you are paying off these debts at the moment?

We are currently only paying a few. The DWP one, the Barclaycard one, the CCJ and the catalogue one.

Is that what your 'spare' £370 is going on?

Not really, since I included the debts we ARE paying, in our outgoings.

We don't get that spare every month and we seem to have had a lot of bad luck lately so haven't had that to spare. We had to pay for a speeding ticket, a new tyre after ours was slashed, a new heater for the kids bedroom.

You are saving £80 each month for kids and paying big eBay charges (what for?)

The kids goes into their Child Trust Fund. We could reduce that amount I agree and are going to do so.

As I mentioned above, eBay is what you pay when you sell things on there. Selling things has kept us afloat most months.

Your big debt is your car (cars?). Can you get rid of it/them and buy something cheaper?

One car. We took it on when we shouldn't have. We needed a car as my husband works quite a way from home, on nights and it's not on public transport route. Also, with my illness, we needed transport.

It's on HP so we can't get rid of it. Unfortunately, although I'm sure they are taking the car back this month but that won't wipe the debt off will it??

TV licence - should only be about £35 per quarter.

I don't know, I do know ours is by DD and is £21.95 per month.

Can you balance transfer any of your CC debts to 0% card? You will need the interest rates on your various debts to work out which one to pay the most off first.

We can't get any cards and we have nothing available on any of the cards we did/do own. They are all defaulted and closed. Yes, it's *that* bad.

Sea78 · 11 February 2007 at 8:16PM

Bakeybadoo wrote:

I don't know, I do know ours is by DD and is £21.95 per month.

.

Hi

I'm on DD and pay 11.47 a month - perhaps ring and enquire why you're paying double?

Sea xx

New and in serious debt - Advice on which way to turn please

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