Debt Crisis Please HELP!!

BoxMan_2

PLEASE HELP!!

I’m new to this but here goes…

I’m hoping there maybe someone out there who can give me some much needed advice, We really don’t know what to do we are in a debt crisis…

I’ll just try and highlight my position, to make it clearer, we are two 28yr olds and have a joint interest only mortgage of £207,000 taken out in June 2007 which is 5 months in arrears (£4800) we also have a joint secured homeowner loan of £33,000 on top of that and we bought the house for £215,000. That pretty much covers the secured debt…

Onto the unsecured I have loans of £6800 & £2500 and 3 credit cards with balances of £3800, £2800, £1500 while my wife has a loan of £2000 and a credit card of £1500.

Between us we have 3 overdrafts on two single and one joint current accounts these are £1400, £2000 & £2500.

What makes it worse is I told my Dad that we were struggling financially and he helped by getting a loan in his name (£20,000) at a much cheaper interest rate to pay off some of our other loans more quickly so I now pay my father the repayment of £500 per month for the next 4 years of the loan. He isn’t in a position to pay that every month without the money from me so in total are debt position is this

Secured (Joint)
£207,000 interest only mortgage 5 months in arrears (£4800) monthly payment £960
£33,000 secured homeowner loan on the house monthly payment £480

Joint current account overdraft £2000

Unsecured

Me:
Personal Loan £6800 outstanding monthly payment £210
Personal loan £2500 outstanding monthly payment of £155
Credit Card £3800 balance monthly payment of £100
Credit Card £2800 balance monthly payment of £80
Credit Card £1500 balance monthly payment of £35
Current account overdraft of £1400

Wife:
Personal loan £2000 outstanding monthly payment of £100
Credit Card balance of £1500 monthly payment £35
Current account Overdraft of £2500

Owe father £20,000 at £500 per month for the next 4 years

Total debt excluding mortgage = £84,600

Total monthly payments excluding mortgage of £1695.

When you include our mortgage payment which effectively is rent as it’s an interest only mortgage (30yrs) and we have no repayment plan in place as of yet we have total out goings of £2655 debt related….

We have cut back on all our spending we now only have other essential costs such as Gas, Electric, Food, TV liecence, Council Tax, House insurance etc etc

Our incomes combined are £3400

We have been able to just about cope but we have just found out that we are going to have a Baby (completely unplanned we have no kids currently) so we will lose my wife’s salary in the next year which is £1200.

I just cannot see where else I can cut costs, my car is fully funded by the company I work for so no tax/insurance I could potential make savings from, they also pay our Broadband bill and my mobile is also paid for. My wife has an 18month contract with her mobile and at less than 30per month is fairly reasonable, we hardly ever go out and its just getting us both very down. I have a decent enough job earning over 40k a year for a 28yr old which isn’t to bad, but to be completely broke 2 days after pay day is ridiculous I need to do something. I’m not sure of the repercussions yet I’m hopeing you guys can shed some light on my situation but if it means handing the keys back and bankruptcy then I guess we have finally learnt a very painful lesson!!

Please can anyone offer us some advice/HELP!!!

Statement of Affairs and Personal Balance Sheet
Household Information
Number of adults in household........... 2
Number of children in household......... 0
Number of cars owned.................... 0
Monthly Income Details
Monthly income after tax................ 2270
Partners monthly income after tax....... 1210
Benefits................................ 0
Other income............................ 0
Total monthly income.................... 3480
Monthly Expense Details
Mortgage................................ 947
Secured/HP loan repayments.............. 480
Rent.................................... 0
Management charge (leasehold property).. 0
Council tax............................. 135
Electricity............................. 32
Gas..................................... 36
Oil..................................... 0
Water rates............................. 22
Telephone (land line)................... 10
Mobile phone............................ 28
TV Licence.............................. 11
Satellite/Cable TV...................... 0
Internet Services....................... 0
Groceries etc. ......................... 280
Clothing................................ 0
Petrol/diesel........................... 0
Road tax................................ 0
Car Insurance........................... 0
Car maintenance (including MOT)......... 0
Car parking............................. 0
Other travel............................ 0
Childcare/nursery....................... 0
Other child related expenses............ 0
Medical (prescriptions, dentist etc).... 0
Pet insurance/vet bills................. 0
Buildings insurance..................... 20
Contents insurance...................... 16
Life assurance ......................... 0
Other insurance......................... 0
Presents (birthday, christmas etc)...... 25
Haircuts................................ 25
Entertainment........................... 0
Holiday................................. 0
Emergency fund.......................... 0
Total monthly expenses.................. 2067

Assets
Cash.................................... 0
House value (Gross)..................... 210000
Shares and bonds........................ 0
Car(s).................................. 0
Other assets............................ 5000
Total Assets............................ 215000

Secured & HP Debts
Description....................Debt......Monthly...APR
Mortgage...................... 207000...(947)......5.52
Secured Debt.................. 33000....(480)......12.5
Total secured & HP debts...... 240000....-.........-
Unsecured Debts
Description....................Debt......Monthly...APR
Nat West loan..................6500......212.......0
Barclays Finance...............2500......154.......0
Egg Card.......................3800......90........0
Overdraft......................2500......30........0
Overdraft......................1400......20........0
Overdraft......................2000......20........0
Loan from father...............20000.....500.......0
Lloyds Loan....................2000......100.......0
Barclaycard-wife...............1500......35........0
Barclaycard-me.................1500......35........0
MBNA Card......................2800......80........0
Total unsecured debts..........46500.....1276......-

Monthly Budget Summary
Total monthly income.................... 3,480
Expenses (including HP & secured debts). 2,067
Available for debt repayments........... 1,413
Monthly UNsecured debt repayments....... 1,276
Amount left after debt repayments....... 137
Personal Balance Sheet Summary
Total assets (things you own)........... 215,000
Total HP & Secured debt................. -240,000
Total Unsecured debt.................... -46,500
Net Assets.............................. -71,500

WASHER

Welcome to the DFW board and to MSE.

You have taken the difficult step in acknowledging your debts, so well done for that, doing an SOA is never an easy thing to do.

Firstly, can I ask why you are in arrears with your mortgage?

Has your lender stated any action yet as regards to the arrears.

I Cannot really see where you can cut down on SOA, you need professional help and you need it today.

Take a look the CCCS website (a debt charity), read the website and make that call.

Congratulations on the baby news btw.

Martin Lewis said he has never seen a debt problem that can't be solved, and that includes yours.

Some of the other peeps who are far more knowledgeable than I, will be along soon to give you advice.

grastgirl

I was hoping to be able to post something positive while you wait for the experts, but all I can think is WOW! I think you'll find the experts will ask what did you spend it on, can you sell something to start paying it off.

You're in a particularly difficult situation because most of the debt solutions will not allow debts to family members to be included (as far as I know). You definitely need to talk to a debt charity.

Although it might not help with the debt itself, you need to find out if you actually have left what you think you do each month, so a spending diary may be useful. Also I think there may be some leeway in your grocery budget.

BoxMan_2

I contacted the CCCS yesterday and had a chat with them, they are sending some information out in the post for us to read through.

We got married a couple of months ago and basically stuck our head in the sand about the mortgage until 'after the wedding'

I am making payments of £1200 at the moment on the mortgage all other debts have been paid on time so i'm going to make the mortgage the priority and try to get back on terms with them asap.

They have threatened legal action but if we make the next 6 monthly payments on time they will review our situation...

WASHER

Grastgirl, you are correct about the family debt, I do not think you can enter that into a DMP.

Tixy

Hi and Welcome to DFW.

Your information above shows that at the moment you can just make your repayments monthly. However you have said that you are 5months in arrears. If the £947 has not been used to pay off your mortgage what have you been using it for? (this is not meant to be a criticism -just trying to understand your buudget). My concern is whether you are actually spending far more than you realise?

There doesn't seem to be a lot of cutbacks you can make to your expenses with the possibly exception of groceries, you should be able to reduce this easily by £100. Some couples on here manage on just £100 for 2. With meal planning, the drop a brand challenge and batch cooking from scratch you will make savings. The oldstyle board has loads of advice on preparing cheap healthy meals.

Is there any chance you could take in a lodger (even if just for 6months until baby is born). This would help ease things until your wife goes on maternity.

Once her income drops you will certainly not be able to manage. I think you need to speak to a (free) professional debt advisor about your options, which could range from a debt management plan to bankruptcy.
By speaking to them in person they can factor in items such as how long your wife will be on maternity, future earnings of you and your wife etc.
Here is a list of the organisations that will be able to help - http://www.moneysavingexpert.com/loans/debt-help-plan#help

Do you have any assets or items you could sell to repay any of the debt?

Just want to wish you all the best for sorting things out and say congratulations on the baby (even if it wasn't planned).

WASHER

BoxMan wrote: »

I contacted the CCCS yesterday and had a chat with them, they are sending some information out in the post for us to read through.

We got married a couple of months ago and basically stuck our head in the sand about the mortgage until 'after the wedding'

I am making payments of £1200 at the moment on the mortgage all other debts have been paid on time so i'm going to make the mortgage the priority and try to get back on terms with them asap.

They have threatened legal action but if we make the next 6 monthly payments on time they will review our situation...

You must make the next 6 monthly payment on time, no questions asked, otherwise they will start repossession proceedings.

Your other unsecured debts, well you could send them a letter offering them token payments, I'll get you the templete letters, it will affect your credit rating and you may well receive phone calls from creditors (get an answerphone) or write and tell them no phonecalls, dealings in writing only. Again I will get you templete letter. You could offer them say £1 a month, this would enable you to catch up with your mortgage, this isn't a long term solution, you need professional help.

BoxMan_2

We basically over spent on the wedding and honeymoon 6 months ago we had no outstanding credit card balances and no arrears....what a mess 1 'special day' can make

WASHER

http://forums.moneysavingexpert.com/showthread.html?t=963087

Templete letters. Your priority is your mortgage arrears and secured borrowings, everyone else will have to take a token payment.

BoxMan_2

Thanks for the help...i'll look at them now

BoxMan_2

WASHER wrote: »

Templete letters. Your priority is your mortgage arrears and secured borrowings, everyone else will have to take a token payment.

Which ones should I use?? i've looked through but there seem to be a lot of differently worded templates to use...