DMP or not? See my SOA. Advice needed before it all goes horribly wrong!

chumpycheet

Been lurking for a while here and have posted a couple of times, but now it's time to air my dirty laundry once and for all.

Our situation is thus, both early 30s, 1yr old son, 128k Northern Rock mortgage at end of fixed rate, house value 135k (last week, remortgage surveyor for First Active, so not overly optimistic in current climate).

My income is 2025 a month after tax (i've also included a 210 deduction for my company car in this as it's a mandatory condition of my employment, and there are no other motoring fees in my SOA as a result); otherwise it could be deemed as 2235 I suppose, but there's no way I can remove the car as I need it for work. Same goes for my mobile, landline phone and internet.

My wife also works, but I've left her income off this as she has commitments of her own that take it all up - all of my debts are in my name as is the mortgage.

Her situation is that she has a house from before we met, which has been on the market for over two years. Her income of £1200 is taken up entirely by the mortgage (£600) and childcare (£575) leaving her with £25 a month to live off! If we sold her house, then we'd obviously be in a better situation than now. Indeed, if we'd sold it two years ago for its value then (£130,000) we'd have no debt at all. It's now worth about £95k, which is roughly the value of the outstanding mortgage and we're loathe to get tenants in again as we really want to sell.

Right now, though, as we haven't sold we're stuck and all my savings have gone into a black hole thanks to the monthly shortfall below. I don't want to carry on living on credit as I know that will make things worse (had my LBM about four months ago, but it's taken me this long so far to make light of everything) and I just want to get things moving in the right direction (if only we could sell the other house, as the one we live in was originally supposed to be paid for by both of us...) as I once had five figure savings and can now only manage another couple of months before it all goes pop.

Also, my fixed rate has just expired and I'm trying to remortgage. First Active looks like it failed on LTV grounds, although they 'may reconsider' whatever that means. Is it worth trying for a remortgage before I go on a DMP if indeed this is the best course of action, as Northern Rock's SVR is 7.49%. The 875.75 in my SOA is the SVR figure, as of Nov 1.

Happy to listen to all advice - I think our lifestyle is fairly parsimonious anyway if you look at the SOA and I've tried to make savings everywhere we can, but still struggling. Is it worth going on a DMP now, or holding out in the hope we can sell the other house and have a more realistic income/expenditure balance in the future?

I'm erring towards doing a DMP in my name only while my wife sells her house, then once it is eventually sold doing the remortgage either in her or both our names hoping the DMP won't have too negative an impact. She knows all about the situation and has been very supportive, but the last thing I want to do is drag her through antyhign unpleasant if at all possible, especially as we have a 1yr old son to consider who is our number one priority in everything we do.

I'd just love to get things back on track so I can stop waking up feeling sick every morning, worrying and getting upset and instead focus on the future and expanding our lovely family.

I know we're actually quite lucky, as we have a happy home, a lovely child and are both in good, secure jobs - but even then it's easy to get down sometimes.

Anyway, here goes:

Monthly income after tax................ 2025
Partners monthly income after tax....... 0
Benefits................................ 78
Other income............................ 0
Total monthly income.................... 2103

Monthly Expense Details
Mortgage................................ 875.75
Secured loan repayments................. 0
Rent.................................... 0
Management charge (leasehold property).. 0
Council tax............................. 112
Electricity............................. 39
Gas..................................... 66
Oil..................................... 0
Water rates............................. 29
Telephone (land line)................... 11
Mobile phone............................ 14
TV Licence.............................. 11
Satellite/Cable TV...................... 0
Internet Services....................... 10
Groceries etc. ......................... 150
Clothing................................ 5
Petrol/diesel........................... 100
Road tax................................ 0
Car Insurance........................... 0
Car maintenance (including MOT)......... 0
Car parking............................. 10
Other travel............................ 0
Childcare/nursery....................... 150
Other child related expenses............ 0
Medical (prescriptions, dentist etc).... 0
Pet insurance/vet bills................. 0
Buildings insurance..................... 36
Contents insurance...................... 0
Life assurance ......................... 39
Other insurance......................... 0
Presents (birthday, christmas etc)...... 15
Haircuts................................ 5
Entertainment........................... 0
Holiday................................. 0
Emergency fund.......................... 50
Total monthly expenses.................. 1727.75

Assets
Cash.................................... 0
House value (Gross)..................... 135000
Shares and bonds........................ 0
Car(s).................................. 2000
Other assets............................ 0
Total Assets............................ 137000

Secured Debts
Description....................Debt......Monthly...APR
Mortgage...................... 128000...(875.75)...7.49
Total secured debts........... 128000....-.........-

Unsecured Debts
Description....................Debt......Monthly...APR
CC.............................12000.....184.......19.9
CC.............................3000......66........17.9
CC.............................5850......119.......15.9
loan...........................10800.....324.......8.9
CC.............................2100......45........17.9
Store..........................290.......13........29.9
Store..........................384.......14........29.9
CC.............................1200......40........19.9
CC.............................450.......14........18.9
CC.............................800.......18........18.9
CC.............................2000......66........15.9
Total unsecured debts..........38874.....903.......-

Monthly Budget Summary
Total monthly income.................... 2,103
Expenses (including secured debts)....... 1,727.75
Available for debt repayments........... 375.25
Monthly UNsecured debt repayments....... 903
Surplus(deficit if negative)............ -527.75

All advice gratefully received.

tallyhoh

The first thing that pops out is your life insurance, why is it so high? are you high risk for any reason? Likewise with the building insurance.
I know you would like to sell the house but in current climate it will be very hard but it certainly wont be hard to get tenants which will probably cover the mortage. Have a think about it.

chumpycheet

Sure - should have been a bit clearer. Life Insurance covers both of us and includes critical illness, and the house insurance is combined buildings and contents, best quote I got after comparing the market! We live in a slightly odd house and security isn't great as it's a listed building and we can't change anything.

chumpycheet

Oh, and as for tenants, been there, done that. We had some in until mid-August; rental income was £200 short of mortgage payments so not as bad as no tenants at all, but the house is 160 miles away and managing it is quite tricky. We just want to get rid and shift this millstone from round our necks.

sarriep

Looking at your SOA you cannot meet your minimum payments so a DMP may be a good idea. It does destroy your credit rating though, so as long as you don't want any for the next 6 years or so.... Once you have sold the other house your joint income will allow you to reduce the remaining debts much quicker.
Our DMP budget is MUCH kinder than our pre DMP struggle and there is now an end in sight!
Best Wishes
Sx

chumpycheet

Thank you Sarriep, and good luck with your own journey