Really in debt and stressed

indebtandworried

Hi everyone

I am new to this site but have already found some kind of solace in the fact that I am not alone.

I am in 5 figures of non-secured debt and also have a secured loan against my property. I am working on an SOA and will post this later on as soon as it is complete, as I want it to be accurate.

I do have a question that I hope someone can answer. As I mentioned I have a mortgage, which has been interest only for the past two years so the balance is effectively the same. About a year ago I took a secured loan agains the property to try and consolidate.

The value of my home has increased but not enough to cover the balance of the mortgage and the secured loan. I understand the secured loan is paid after the mortgage, so what is the situation if I decide to sell my flat now - what arrangement would the secured lender offer me?

I hope this isn't a question that has been asked time and time before, I have read through as many posts as I can but haven't found the answer yet.

Thanks for reading

CCCS_Sarah

Hello and welcome to the boards.

If there is negative equity in your home and you try to sell it, the remainder of the balance would effectively become unsecured as there would be no home to secure the debt against.

Sometimes if you try to sell the house when there is negative equity the lender may try and cause problems when releasing the charge on the house. If this was the case then I would recommend you give CCCS a call then we could look at your budget in more depth.

peachyprice

Hi IDAW, welcome to the forum,

As CCCS Sarah said above, the remaining amount will become an unsecured debt and the s/loan company can stop you from selling. If you contact them before hand you may well be able come to an arrangement to convert the balance to an unsecured loan, in which case they would not stop the sale.

If you are intending to go bankrupt (I'm assuming you are considering this is an option as you are posting on the bankruptcy forum) any shortfall will be included in your bankruptcy and will be wiped out with all your other unsecured debts.

Anymore questions, just ask :cheesy:

HTH

indebtandworried

Thanks guys that's a great help - CCCS Sarah I will probably contact you in the coming days

CCCS_Sarah

indebtandworried wrote: »

Thanks guys that's a great help - CCCS Sarah I will probably contact you in the coming days

Let me know how you get on

indebtandworried

My partner and I earn well however we have managed to get ourselves into a heavy amount of debt through poor credit management and constant consolidation and re-structuring. Our SOA follows and we would appreciate any advice that can be given. Sure, there are areas where we could cut back but this is an honest assessment of where we are right now and something needs to be done.

I would also like to point out that my salary could well reduce in the coming months as I am currently in a high-stress job for the sole reason that I rely on the income to remain stable and meet my monthly commitments, this position is now becoming untenable for me personally as it is causing personal problems for me and also problems in our relationship, and I need to move on to something less stressful which will undoubtedly result in a lower income, possibly with a pay cut of around 30-40%.

If you have any questions please ask as my partner and I are coming to the end of our tether. Here is the SOA:

Statement of Affairs and Personal Balance Sheet

Monthly Income Details
Monthly income after tax................ 2600
Partners monthly income after tax....... 2778.92
Benefits................................ 0
Other income............................ 0
Total monthly income.................... 5378.92

Monthly Expense Details
Mortgage................................ 939.2
Secured loan repayments................. 600
Rent.................................... 0
Management charge (leasehold property).. 35
Council tax............................. 100
Electricity............................. 80
Gas..................................... 22
Oil..................................... 0
Water rates............................. 34.02
Telephone (land line)................... 32.5
Mobile phone............................ 100
TV Licence.............................. 9.95
Satellite/Cable TV...................... 65
Internet Services....................... 0
Groceries etc. ......................... 500
Clothing................................ 100
Petrol/diesel........................... 200
Road tax................................ 10
Car Insurance........................... 50.53
Car maintenance (including MOT)......... 10
Car parking............................. 50
Other travel............................ 110
Childcare/nursery....................... 0
Other child related expenses............ 0
Medical (prescriptions, dentist etc).... 0
Pet insurance/vet bills................. 10
Buildings insurance..................... 10
Contents insurance...................... 13.94
Life assurance ......................... 0
Other insurance......................... 38
Presents (birthday, christmas etc)...... 30
Haircuts................................ 90
Entertainment........................... 200
Holiday................................. 100
Emergency fund.......................... 0
Car finance............................. 230
Total monthly expenses.................. 3770.14

Assets
Cash.................................... 0
House value (Gross)..................... 185000
Shares and bonds........................ 0
Car(s).................................. 13000
Other assets............................ 0
Total Assets............................ 198000

Secured Debts
Description....................Debt......Monthly.. .APR
Mortgage...................... 153000...(939.2)....7.9
Secured Debt.................. 56000....(600)......11
Car............................16500.....-.........10
Total secured debts........... 225500....-.........-

Unsecured Debts
Description....................Debt......Monthly.. .APR
mandy..........................19232.6...900...... .0
dan............................31381.....660...... .0
northern rock..................30000.....0.........0
dfs sofa.......................255.......51........0
Total unsecured debts..........80868.6...1611......-

Monthly Budget Summary
Total monthly income.................... 5,378.92
Expenses (including secured debts)....... 3,770.14
Available for debt repayments........... 1,608.78
Monthly UNsecured debt repayments....... 1,611
Surplus(deficit if negative)............ -2.22

Personal Balance Sheet Summary
Total assets (things you own)........... 198,000
Total Secured debt...................... -225,500
Total Unsecured debt.................... -80,868.6
Net Assets.............................. -108,368.6

Created using the SOA calculator at www.makesenseofcards.com.
Reproduced on Moneysavingexpert with permission.

Thanks to you all again for reading.

tigerfeet2006

I will make a few comments on how the OR will look at it as it stands. I take it we are looking at just 2 adults in the household.

indebtandworried wrote: »

If you have any questions please ask as my partner and I are coming to the end of our tether. Here is the SOA:

Statement of Affairs and Personal Balance Sheet

Monthly Income Details
Monthly income after tax................ 2600
Partners monthly income after tax....... 2778.92
Benefits................................ 0
Other income............................ 0
Total monthly income.................... 5378.92

Monthly Expense Details
Mortgage................................ 939.2 If you want to keep the house you will have to pay the mortgage and the secured loan. The SL will not go into your BR if you want to keep the house.
Secured loan repayments................. 600
Rent.................................... 0
Management charge (leasehold property).. 35
Council tax............................. 100
Electricity............................. 80
Gas..................................... 22
Oil..................................... 0
Water rates............................. 34.02
Telephone (land line)................... 32.5
Mobile phone............................ 100 Is this 2 mobiles. It is very high and you will probably have to cut this.
TV Licence.............................. 9.95
Satellite/Cable TV...................... 65 You will not be able to put this on your SOA. It will have to come out of your surplus
Internet Services....................... 0
Groceries etc. ......................... 500 Way to high for 2 adults this will be cut to about £370ish
Clothing................................ 100 Leave this as it is. The OR may or may not cut it. Suck it and see.
Petrol/diesel........................... 200
Road tax................................ 10 Is this for 2 cars? If so it is quite low.
Car Insurance........................... 50.53 2 cars?
Car maintenance (including MOT)......... 10 2 cars? if so low
Car parking............................. 50
Other travel............................ 110 what is this?
Childcare/nursery....................... 0
Other child related expenses............ 0
Medical (prescriptions, dentist etc).... 0
Pet insurance/vet bills................. 10
Buildings insurance..................... 10
Contents insurance...................... 13.94
Life assurance ......................... 0
Other insurance......................... 38 what is this?
Presents (birthday, christmas etc)...... 30 Leave this. The OR may or may not allow it
Haircuts................................ 90 £10 per adult.
Entertainment........................... 200 This will not be allowed.
Holiday................................. 100 This will probably be cut to about £50
Emergency fund.......................... 0
Car finance............................. 230 Is this loan or HP.
Total monthly expenses.................. 3770.14


Thanks to you all again for reading.

You need to include an allowance for opticians, dentists and prescriptions. Also if you have any dry cleaning £10

You will probably have to paty an IPA. This is where you pay a percentage of your surplus to the OR. From 50-70% of your surplus. Will just get a link for you.

This is from Fermi's sticky at the top of the page.
Income Payment Agreements/Orders.

IPO / IPA (Income Payment Orders and Income Payment Agreements) (IS)

FAQ - Income Payment Orders / Agreements ( IPO / IPA ) (IS)

OR's Case Help Manual - Income Payments Agreements (IS)

OR's Case Help Manual - Income Payments Orders (IS)

OR's Technical Manual - IPAs Assessment of real disposable income (IS)

Nil tax (NT) coding/IPAs (MSE)

Just a little light reading

Also as your income goes up or down you notify the OR and he will adjust the IPA accordingly.

fudge59

Tigerfeet has done a very good reply and agree with the comments put in red.

If you're considering Bankruptcy, you should think that the OR could/will take the cars away from you (unless you can prove that they're essential) as they will be seen as an asset due to their value, therefore all the payments relating to that (fuel, insurance, tax etc) will be extra surplus (I'm sure someone with more experience than myself will correct me if I'm wrong!).

It really depends what your OR is like - it seems that everyones are different and some allow some things, whilst others do not.

I know I wasnt allowed anything for emergencies, presents, entertainment, sky - but have read on here that some OR's allow some of them - luck of the draw it seems!

shadowdragon

may I ask about the usecured debts, you have not put a monthly amount for the 30k northern rock! This is squewing (spelling!) your totals. Also are mandy and dan private creditors (borrowed from friends/family).

indebtandworried

Thanks everyone for your posts, they are so helpful. I am going to sit down with my partner tonight and review your comments and then we will post a revised SOA as I am now aware that the previous one isn't complete!

Thanks... again...

indebtandworried

Hi

Here is our revised SOA, I have added some notes where I can, I hope this makes sense, and I have also added in the monthly cost of our unsecured loan.

We are keen to explore the option of IVA or bankruptcy and would appreciate your thoughts and knowledge on this.

Here is the new SOA:

Statement of Affairs and Personal Balance Sheet

Monthly Income Details
Monthly income after tax................ 2600
Partners monthly income after tax....... 2770
Benefits................................ 0
Other income............................ 0
Total monthly income.................... 5370

Monthly Expense Details
Mortgage................................ 939.2 - this has been in place for 2 years and is interest only, this period has just ended but we are having trouble securing a decent rate. As we have only paid interest on this to date there is no equity in the property. We are ready to accept losing the property as part of any BR proceedings.
Secured loan repayments................. 600
Rent.................................... 0
Management charge (leasehold property).. 35
Council tax............................. 100
Electricity............................. 80
Gas..................................... 22
Oil..................................... 0
Water rates............................. 34.02
Telephone (land line)................... 32.5
Mobile phone............................ 100 - this is for two phones and is 80% made up of the monthly charges from the provider (Vodafone)
TV Licence.............................. 9.95
Satellite/Cable TV...................... 65 - should this be shown as 0 and moved into surplus?
Internet Services....................... 0 - included in Satellite/Cable TV
Groceries etc. ......................... 500
Clothing................................ 100
Petrol/diesel........................... 200 - this is for one car
Road tax................................ 10 - this is for one car
Car Insurance........................... 50.53 - this is for one car
Car maintenance (including MOT)......... 10 - this is for one car, it is low because the car is less than a year old
Car parking............................. 50 - this is for one car
Other travel............................ 110 - this is my partners monthly travel card for work (she is not able to claim from employer)
Childcare/nursery....................... 0
Other child related expenses............ 0
Medical (prescriptions, dentist etc).... 0
Pet insurance/vet bills................. 10
Buildings insurance..................... 10
Contents insurance...................... 13.94
Life assurance ......................... 0
Other insurance......................... 38 - this is a joint health insurance policy
Presents (birthday, christmas etc)...... 30
Haircuts................................ 40
Entertainment........................... 0
Holiday................................. 50
Emergency fund.......................... 50
Car Finance............................. 230 - this is for our car which is 4 months into a 3-year Personal Contract Plan agreement. The car is essential for my current job however I am considering leaving this job due to stress (as I mentioned in my first post)
Total monthly expenses.................. 3520.14

Assets
Cash.................................... 0
House value (Gross)..................... 185000
Shares and bonds........................ 0
Car(s).................................. 13000 - not sure if this should be included here - this is the value of the car but it is under a Personal Contract Plan
Other assets............................ 0
Total Assets............................ 198000

Secured Debts
Description....................Debt......Monthly...APR
Mortgage...................... 153000...(939.2)....7.48
Secured Debt.................. 56000....(600)......10.9
Total secured debts........... 209000....-.........-

Unsecured Debts
Description....................Debt......Monthly...APR
Credit cards & loan 1..........19232.6...900.......0 - the sum total of my partners unsecured debt
Credit cards 2.................31381.....600.......0 - the sum total of my own unsecured debt
Northern Rock..................30000.....223.9.....7.48
DFS Sofa.......................255.......51........0
Total unsecured debts..........80868.6...1774.9....-

Monthly Budget Summary
Total monthly income.................... 5,370
Expenses (including secured debts)....... 3,520.14
Available for debt repayments........... 1,849.86
Monthly UNsecured debt repayments....... 1,774.9
Surplus(deficit if negative)............ 74.96

Personal Balance Sheet Summary
Total assets (things you own)........... 198,000
Total Secured debt...................... -209,000
Total Unsecured debt.................... -80,868.6
Net Assets.............................. -91,868.6

I would really appreciate any advice that you can offer, and would like to thank you all again for your help so far.