HELP! DEBT OUT OF CONTROL

Kazzaa_2

Without going into too much detail, my husband and I have so much debt we can't keep up with, even though he earns a very good salary, our debt is around 90,000 and out of control. We are now at a point where we can't get the 0% credit cards, and are paying so much interest and no-body is keen to help! (Why should they, it is all our own fault). So we have decided to sell our house and use the equity to pay off our debt and go into rented accomodation. We have been through all our options and this is the only one we can come up with. Would be grateful for any other ideas.

k......

johannamse

Hey,

Are you sure you have exhausted all avenues? Have you read Martins book? Myself and my partner had total debts of £70k in Jan 04, from failed business, overspending etc... We were going to sell. The sleepless nights and sweating were too much. But after much hell and rearranging, believe me it takes a long time - It took until August until things were all sorted and in the right place (I don't mean paid off! - just not all over the place) - we are now on the road to recovery. My hubby was the one who wanted to sell, and I kept saying, but we'll be back at square one. Well the problam was that he just didnt want to face the debt,and actually thought it was unsortable. On reflection ,a year later, he is glad we have done it this way. AND I'll tell you why he said this, because it has made us reexamine WHY we spent so much, and it has changed our life completely. We were very materialistic, and into "things". If we had sold up, we would have got into the same mess again. If you feel that you are beyond rearranging and are not meeting min payments then maybe selling up is the only option, but if you sit down and try to come up with a plan you will feel a real sense of achievement this time next year/ 2/ 3 years time. I really do know how it seems that you will not be able to get out of this, but IT IS possible. You say that you earn good money, so it is also likely that you will get good pay rises. If you have not got the book - GET IT. I remember when we were in the crazy preiod, I did not want to read other peoples success stories, but that was because I did not believe I was capable of change. I hope you can come up with a solution. I am thinking of you, and I hope you can somehow have a relaxing xmas.

If you look at Martins guides on the left hand menu, there are lists of all the Debtlines and Councellors. I have never spoken to them, but they have a very good reputation.

Rafter

If there is sufficient equity in your house to pay off your debt then it may be possible to remortgage to reschedule your debt over a longer period and get your average interest rate down.

Option 1 is to take out a mortgage to release equity.

Option 2 is to take out a secured loan against the property (which will allow you to borrow up to 125% of value) and pay off the debt over a longer period than the average credit card or unsecured loan. Companies like firstplus or ocean offer this type of product.

Agree with the other comments though - a big lifestyle change is probably going to be needed to avoid the situation happening again. Is there anything you have bought with the 90k debt that you could sell to at least make things a bit more manageable? Could you get a cheaper car? Have you got your life running costs (utility, phone, car, insurance bills down as far as you can?)

Good luck.

R.

Kazzaa_2

Thanks for all your replies, we have tried to release the equity and a consolidation loan, but because my huband is self emplyed we are quite limited to what we can do, these companies promise you 125% of the value of your home but when they find out you are self employed they take a step back. Maybe I should buy the book, and take a serious look at my life....... I tried to ring debt buster direct and they advised us to go bankrupt - good advice!! NOT. I really do appreciate yuo both taking time out to try and help tho, thank you.

k.....

Jen_Jen_5

If you put some more specific details, debts, amounts etc, i am sure you will get some more specific advice.

Edinburghlass_2

Thanks for all your replies, we have tried to release the equity and a consolidation loan, but because my huband is self emplyed we are quite limited to what we can do, these companies promise you 125% of the value of your home but when they find out you are self employed they take a step back. Maybe I should buy the book, and take a serious look at my life....... I tried to ring debt buster direct and they advised us to go bankrupt - good advice!! NOT. I really do appreciate yuo both taking time out to try and help tho, thank you.

k.....

K, I don't think there should be a maybe in your post about buying Martin's book (ask for it for Christmas still available in most supermarkets as well as book store) and taking a serious look at your life, just do it

Spend a night on this board reading all the threads where you will find loads of good advice. If you don't want to put up your own problems there will be someone else in a similar position.

There are charity based Debt Organisations that will help you for nothing, sorry I don't have the links to hand but you will find them in lots of the posts here.

Also take a look further down the boards at the How Much I Have Saved board where you will find some heart warming stories where people have turned their debt lives around.

Its all about one step at a time, your first step has now been taken by posting here. Spend a bit of time over the holiday period by looking at your utilities to see what you can save on telephone, gas and electric then you can get onto to switching after the holidays.

There is a post further down the board by Lillekat, My Get Out of Debt Beginnings, where Martin has posted encouragement and to say that in the board reorganisation he wants to set up debt diary threads where you can post how you are going and what particular help you might need at any given time.

Oh and best to start getting in the MSE mindset before you spend too much on Christmas! Also might be an idea to try to get an appointment with the likes of CAB before Christmas as it can be a while waiting on an appointment.

Take care

System

Hi K

Debt_Free_Chick has posted some links to the free debt agencies in my post "My Out of Debt Beginnings" that we are going to investigate in the new year as my beloved iscurrently being managed by Gregory Pennington (who charge).

Good Luck!

Kat

Debt_Free_Chick

Thanks Lillekat

Here they are

https://www.payplan.com
https://www.cccs.co.uk
https://www.nationaldebtline.co.uk

Start with the National Debtline website as they have the most information. Look for the Self Help Pack - download it and work through it. It goes through the whole process - setting your budget*, dealing with your creditors, making them offers to get the repayments reduced, dealing with "hassle & threats" from them etc etc.

At any point, you can phone the National Debtline for help.

All three will manage your debts for you by dealing with your creditors, if you want them to. Note though, that Payplan & CCCS expect you to have a budget setting out what you can afford. So, start with the National Debtliine Self Help Pack.

* Once you've done your budget, come back to MSE and look for ways to reduce your essential bills. We're good at that

Good luck and post back if you need any help.

westernpromise

Without going into too much detail, my husband and I have so much debt we can't keep up with, even though he earns a very good salary, our debt is around 90,000 and out of control.

The interest alone on that sort of amount is probably going to be at least £1,000 a month. That's ignoring the capital amount and also assuming an average APR of 15% or so, which is conservative, if a significant chunk of this debt is on plastic.

Quite frankly, you are not going to make meaningful inroads into that much debt by trimming your phone bill by £50, or shopping around to get your gas bill down by £25 a quarter, or doing the groceries at Lidl, or any of the other cash-saving stuff detailed on this site. It'll help, sure, but nowhere near enough to get you out of where you are. To do that, you would need to pay back £2,000 a month every month for five years. That's roughly what's required to clear £90,000.

It may be doable. It depends what you make now. The challenge is even greater than it appears though. As well as finding someone who'll lend you £90,000, and as well as then paying back £2,000 a month, you also have to stop spending. This is the major challenge you face. Your entire attitude to work, life, and money has to change.

If you don't feel up to that, then selling your house won't help you. You'll clear some debt, but you'll slide straight back into more debt, probably.

I would tend to suggest you make keeping the house your main goal, and start getting used to the idea that the next 5 or 6 years are going to be exceedingly tough. Call one or other of the debt help contacts given in this thread and enlist their help in negotiating with your creditors. I suspect you are going to have to go to them all individually, tell them the problem you face, and make them settlement offers which will entail them writing off substantial chunks of that debt.

Elsewhere on the site there is a thread by someone who did this and got £28,000 knocked down to £11,000.

Your creditors may threaten you with county courts. If so, tell them you'll see them in court. Courts are not always stupid. If you patently can't afford to pay, and you can prove it, the court won't order you to do so. They may also take a dim view of a lender taking you to court for more money even though you've already made a settlement offer that is reasonable given your means.

Lenders know this. They hope you don't. Given where you are, courts are a relatively empty threat.

The catch, and of course there has to be a catch, is that going to court or making a settlement offer will comprehensively trash your credit record. You're going to be poison for a very, very long time to most non-shark lenders. Probably not even Dixons will ever lend you money again for the foreseeable future.

Even if you get 60% of it written off, you're still ~£35k in the hole. So you need to think about flogging anything you can on eBay, buying a cheaper car, going without holidays, etc.

It's going to be grim, but you knew that. I doubt that selling the house or bankruptcy will necessarily help you more. As I said, flog the house and you evade the underlying problem rather than confronting it.

Bankruptcy is a huge personal reverse and entails the sale of pretty well everything you own. If your S.O. is self-employed, it's going to have non-trivial implications for his ability to stay self-employed. For instance, how's he going to work without a bank account? If he buys goods or services as part of what he does, how's he going to do that when he's not allowed credit?

Let us know what you decide to do. It isn't easy but you're not alone.