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    • SusieT78
    • By SusieT78 12th Aug 17, 9:16 PM
    • 53Posts
    • 126Thanks
    SusieT78
    Unable to meet debt repayments - help needed.
    • #1
    • 12th Aug 17, 9:16 PM
    Unable to meet debt repayments - help needed. 12th Aug 17 at 9:16 PM
    Hi all,

    I have been very stupid and got myself into a terrible mess and I can't see any way out of it. I don't expect any sympathy as it's all my own fault, but I'm hoping somebody may be able to offer advice
    I used to be quite good with managing my money until I had children. Since having children I have constantly battled depression, stress and anxiety.
    This has resulted in me leaving work last year to be a stay at home mum, whilst my partner works full time in a minimum wage job and does as much overtime as possible. I was the higher wage earner and I've always worked up until last year.

    Pre-children I took out several credit cards, it was never a problem and if I couldn't clear them in full at the end of the month I would transfer the balance at 0% onto another card until I could clear it.
    However, since the depression hit several years ago I stopped budgeting and managing my finances properly. When I'd feel really low I'd book us a holiday as being away from everything perked me up. The credit card companies kept upping the limits on my cards.
    I'd keep transferring the funds to stay at 0% but was no longer clearing any debt and since having the kids actually started spending more each month than the money coming in.
    I have no excuses, it is entirely my own fault and I'm so ashamed I've acted so irresponsibly and just buried my head in the sand.

    I do shop around for the cheapest insurances and deals wherever possible, we don't have cable TV or any subscription services (we do have internet), mobile phones are PAYG.

    Fast forward to today and I now have just under £45k debt across 5 credit cards and 1 overdraft with nothing to show for it. I also owe a relative £1k.
    My partner is not aware of the extent of my debts (although is aware I have some debt) and I would like it to stay that way, as when I've tried to discuss it previously it has caused arguments.
    We live in a house which I bought prior to meeting my partner. The mortgage and house are in my name only. We have 1 car which is also mine but we have shared use of as he works in a remote location with no public transport, so needs it to get to work.

    House value: £65-75,000 (based on for sale prices locally for similar properties, it's in England)
    Remaining Mortgage: £39,000 (13 years left)

    Car value: £900

    My monthly income:
    Housekeeping from partner: £900
    Child benefit: £149 (£137 every 4 weeks)
    Child/working tax credits: £537 (£495 every 4 weeks)
    Total income: £1586.00

    Based on budget figures stripped back as far as reasonably possible (no luxuries just essential living expenses, which I've shopped around to get cheapest quotes on if possible, and the food budget is much lower than I manage currently but I'll have to stick to it, we haven't put money for socialising or days out in the budget as if it's not free we won't be doing it)
    The total of all household spending in a 'calendar month' including payments to any 'secured' debts and all priority household bills.
    Monthly outgoings: £ 1,556

    This leaves me with just £30 a month to pay back the all the credit cards overdraft and relative.

    My understanding is that if I tried to do a DMP through Stepchange they would prorata the payment of £30 according to how much is owed, excluding the relative who would get nothing.
    But the problem is one of the CCs has about £22.5k on it, so they'd get £15 and then he lowest credit card has £1.5k so they would only get £1.

    What I was thinking of doing was trying to self-manage a DMP (as I've seen posts on here saying people have done this) and offering the 5 credit cards and overdraft £5 per month each for the time being.
    Has anybody ever done this and did the creditors accept this?

    My partner keeps a little bit of his wages for his own credit card / mobile phone, but can the creditors demand he gives me all his wages to go towards debt repayments? Is he liable for my debts as we have children together?
    I pay all the household bills/food/petrol/car out of my account as everything is in my name, but he pays for his own phone and credit card which are in his name.

    If my partner does overtime then possibly he might be able to give me a bit more occasionally, but overtime is not guaranteed. When he has done overtime I can give something to the relative I owe that month.

    I suppose my question is, has anybody been in a similar position and what happened? Am I going to lose my house? (Have never missed a mortgage payment). Can the creditors force a sale of the house as there is some equity?
    I cannot get a remortgage as I looked into and I wouldn't qualify, so that's not an option. No relatives could buy a portion of the equity.
    My eldest child has a medical condition which means they struggle with change, moving house could be problematic as they are very attached to this house, even on days out they ask when they can go home to the house, so I would prefer not to have to move if possible.

    I have been making minimum payments up until this month, however in the next few weeks I'm not going to be able to do that any more, any savings I did have are gone now.
    I want to avoid bankruptcy if possible as I would like to pay the debt back one day. My youngest child will start school in September 2018 so hopefully I can get a job to fit in with school hours. My partner works shifts with no set pattern and sometimes only finds out what he's working the week before so that combined with my current mental health issues is making it hard to find a job without incurring childcare costs for the youngest which would take all my wages anyway.
    When the mortgage is paid off in 13 years I will have an extra £400 a month to pay the creditors in addition to any extra wages from me working.
    So, it's not impossible that I'll be able to start paying the debt back one day, it just won't be anytime soon.

    I'm confident my SOA/budget is as tight as it could be it's more the debt side I need help with.
    I'm scared that £5 a month each will not be acceptable due to level of the debt owed and I'll end up in court, with CCJ's and homeless.

    Sorry this is all very waffly. The main point is I can pay the mortgage and bills but I only have £30 a month towards debt repayments (which are currently approx £1.3k per month as the 0% deals ran out so interest is being applied). Thanks for reading if you've got this far! Any help or advice would be appreciated.
Page 2
    • sourcrates
    • By sourcrates 15th Aug 17, 3:54 PM
    • 12,431 Posts
    • 11,836 Thanks
    sourcrates
    The IVA would involve me selling my house to release the equity so I could do a lump sum payment as well as the £30 a month so it's not an option I want to pursue unless I have to, as I'd like to keep the house if I can.
    Originally posted by SusieT78
    You misunderstand the IVA concept.

    IVA' s suit people with property to protect, you don't have to sell your house, in year 5 you have to seek a remortgage, or make an extra year of payments instead.

    But I agree with Fatbelly, an IVA at £30 a month is unheard of and isn't realisticly going to be an option for you anyway.
    I'm a Board Guide on the Debt-Free Wannabe, Credit File And Ratings, and
    Bankruptcy And Living With It, boards. "I volunteer to help get your forum questions answered and keep the forum running smoothly".
    Board guides are not moderators and don't read every post. If you spot an abusive or illegal post then please report it to forumteam@moneysavingexpert.com. Any views are mine and not the official line of MoneySavingExpert.com.

    For free debt advice, contact either : Stepchange, National Debtline, or, CAB.
    For Legal advice see : http://legalbeagles.info/
    • SusieT78
    • By SusieT78 15th Aug 17, 4:14 PM
    • 53 Posts
    • 126 Thanks
    SusieT78
    You misunderstand the IVA concept.

    IVA' s suit people with property to protect, you don't have to sell your house, in year 5 you have to seek a remortgage, or make an extra year of payments instead.

    But I agree with Fatbelly, an IVA at £30 a month is unheard of and isn't realisticly going to be an option for you anyway.
    Originally posted by sourcrates
    Thanks for the further explanation sourcrates, very much appreciated. It was this passage from Stepchange which made me think I might have to sell:
    You have enough equity in your home to make an offer to your creditors in an IVA. Equity is the amount of money you can raise by selling or remortgaging your property. The amount of equity is the market value, less any money you still owe for it. This includes mortgages, secured loans and any legal charges.
    This type of IVA requires you to either sell or remortgage your home to release the money.
    When you enter into an IVA, your creditors will usually let you keep your vehicle but this depends on how much it is worth.
    It's likely that your creditors will let you keep the vehicle you've told us about if the estimated value is
    correct.

    As I couldn't get a remortgage at the mortgage I assumed I would have to sell, but also, if I'm not making the full minimum payments to my non-secured creditors I can't see there's much chance of me getting a remortgage in 5 years time as my credit rating will be shot.

    Thank you for all your help so far, I really appreciate everyone that has taken the time to help or comment.
    • sourcrates
    • By sourcrates 15th Aug 17, 5:13 PM
    • 12,431 Posts
    • 11,836 Thanks
    sourcrates
    I think the passage above describes what's known as a "lump sum IVA".

    That involves you making a lump sum offer to your creditors to settle the debt you owe, this type of IVA has no monthly payments, just one lump sum, usually provided by the sale of your house or a windfall of some kind.

    It differs to a normal IVA where any property is protected.
    I'm a Board Guide on the Debt-Free Wannabe, Credit File And Ratings, and
    Bankruptcy And Living With It, boards. "I volunteer to help get your forum questions answered and keep the forum running smoothly".
    Board guides are not moderators and don't read every post. If you spot an abusive or illegal post then please report it to forumteam@moneysavingexpert.com. Any views are mine and not the official line of MoneySavingExpert.com.

    For free debt advice, contact either : Stepchange, National Debtline, or, CAB.
    For Legal advice see : http://legalbeagles.info/
    • nicmalauren
    • By nicmalauren 4th Sep 17, 6:36 PM
    • 37 Posts
    • 21 Thanks
    nicmalauren
    Hi OP,

    Just wondering how you got on, what you decided to do?
    "The future belongs to those who believe in the beauty of their dreams."
    • SusieT78
    • By SusieT78 14th Sep 17, 10:58 PM
    • 53 Posts
    • 126 Thanks
    SusieT78
    I did manage to make all my contractual payments this month but I've prepared a budget and a letter to send to all creditors by the end of this month to let them know I'll be dropping to token payments until I go back to work (which will probably be on a part time basis a year from now).
    I'm going to self manage a DMP with token payments until I'm working. Then once I'm working I'll start paying it back with what I can afford. Once the mortgage is paid off I expect I'll be able to start making larger payments as my children will be in high school by that point so I expect I'll go back to full time hours. I reckon I should be able to pay it off in full within 25 years. Even though at the moment it looks like it will take over 100 years, but that's only because I'm not working right now.
    I have decided not to tell my partner for now. He knows we have a strict budget and let's me handle all the bills, so he's unlikely to ask questions thankfully!
    • fatbelly
    • By fatbelly 15th Sep 17, 7:22 AM
    • 11,518 Posts
    • 8,651 Thanks
    fatbelly
    You have equity in your property. Don't go bankrupt. Don't sell your house, Don't try debt consolidation.

    Keep paying the mortgage. Stop paying non-priority debts (when you're in a hole stop digging).

    Your debt resolution will have to wait. Now you asked some questions in there.

    can the creditors demand he gives me all his wages to go towards debt repayments? No

    Is he liable for my debts as we have children together? No

    Am I going to lose my house? (Have never missed a mortgage payment). No

    Can the creditors force a sale of the house as there is some equity? No

    Hope that helps
    Originally posted by fatbelly
    You'd be better putting your £30 per month into an emergency fund.

    Change bank if you can and pick up a switching bonus - you should never bank where you have debts.
    Originally posted by fatbelly
    Just read this thread again and earlier advice still applies.

    Come back to us if you have any problems with token offers and when you are ready to start a proper debt management plan.
    • Mnd
    • By Mnd 15th Sep 17, 10:42 AM
    • 227 Posts
    • 261 Thanks
    Mnd
    My own personal feelings, is that you and your partner are just that, a partnership and the debts aren't just yours. He should be involved and informed. How are you going to keep this secret for 25 years! The longer he doesn't know the the harder it will be to break this news
    Anyway, I realise it's up to you and I'm only giving my opinion. We operate on this is how much money we have (I don't even work any more) and this is what is going to happen to it.
    Good luck
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