Newbie - please help 80k debt

Delboyuk_2

First of all i would like to say a big hello to all members, i have read many of the threads and comments that you have made.:T

i was hoping that someone could help me i am a family man with 2 children that has slowly been falling further and further into debt.

I have always been a proud man, and find it so hard to talk to ppl about my problems, i am hoping that you will make me feel welcome and share some advice.

i have completed the SOF:

Statement of Affairs and Personal Balance Sheet

Household Information
Number of adults in household........... 2
Number of children in household......... 2
Number of cars owned.................... 1

Monthly Income Details
Monthly income after tax................ 1950
Partners monthly income after tax....... 600
Benefits................................ 112
Other income............................ 0
Total monthly income.................... 2662

Monthly Expense Details
Mortgage................................ 690.3
Secured/HP loan repayments.............. 483
Rent.................................... 0
Management charge (leasehold property).. 0
Council tax............................. 123
Electricity............................. 80
Gas..................................... 50
Oil..................................... 0
Water rates............................. 23
Telephone (land line)................... 10
Mobile phone............................ 26
TV Licence.............................. 13
Satellite/Cable TV...................... 35
Internet Services....................... 17
Groceries etc. ......................... 270
Clothing................................ 20
Petrol/diesel........................... 40
Road tax................................ 15
Car Insurance........................... 30
Car maintenance (including MOT)......... 10
Car parking............................. 0
Other travel............................ 0
Childcare/nursery....................... 0
Other child related expenses............ 0
Medical (prescriptions, dentist etc).... 0
Pet insurance/vet bills................. 10
Buildings insurance..................... 10
Contents insurance...................... 15
Life assurance ......................... 0
Other insurance......................... 0
Presents (birthday, christmas etc)...... 10
Haircuts................................ 10
Entertainment........................... 40
Holiday................................. 0
Emergency fund.......................... 10
Total monthly expenses.................. 2040.3


Assets
Cash.................................... 0
House value (Gross)..................... 175000
Shares and bonds........................ 0
Car(s).................................. 2800
Other assets............................ 0
Total Assets............................ 177800


Secured & HP Debts
Description....................Debt......Monthly...APR
Mortgage...................... 90220....(690.3)....5.4
Secured Debt.................. 40620....(483)......9.9
Total secured & HP debts...... 130840....-.........-

Unsecured Debts
Description....................Debt......Monthly...APR
Egg............................4950......134.......19
TSB............................9840......200.......19
Barclaycard....................1681......50........19
Barclays2......................9705......221.......18
Barclays1......................2752......127.......11
Northern Rock..................14565.....164.......7.9
MBNA...........................965.......37........19
Black Horse....................2010......106.......NaN
Total unsecured debts..........46468.....1039......-


Monthly Budget Summary
Total monthly income.................... 2,662
Expenses (including HP & secured debts). 2,040.3
Available for debt repayments........... 621.7
Monthly UNsecured debt repayments....... 1,039
Amount short for making debt repayments. -417.3

Personal Balance Sheet Summary
Total assets (things you own)........... 177,800
Total HP & Secured debt................. -130,840
Total Unsecured debt.................... -46,468
Net Assets.............................. 492

As you can see i have ALOT of debt, my question is - Is selling my family
home the best way to get out of this problem?

so far i have been struggling to pay all the bills, although i am not
in any arrears at the moment i am not sure that i can carry on.

any help / advice will be greatfully received.

thanks to all.

lou756

Just wanted to say well done for posting and to reassure you that there are loads of really lovely and knowledgeable people on here who have helped me more than I could ever tell them over the past few weeks.

I'm not very knowledgeable I'm afraid but the thing that occurred to me is whether if you sold your home you could rent/ buy a new home for less than your current mortgage payments, and would you make enough on the sale to pay off enough of your debts to make them manageable? I'm sure you've already thought of this..

All best wishes

wigannwuk

Mate id love to give you the answer but im no expert , one thing though you are not alone.....good people on here and good advice will follow. Yes you have a lot of debt but as ive read on here many times there is always a solution....Good Luck

Jacks_xxx

Honey I'm just off to bed cos I'm cream crackered, but my post will keep this bumped for the night owls and I'll check back in with fully functioning brain cells tomorrow.

My initial reaction is to say that selling the family home could be the answer to paying off the debts - but what then? Your family still need a place to live. How much equity do you have in the house? and how much will it cost to set up in a new home?

Do you get tax credits? Check here to see that you're getting all you should be,

http://www.entitledto.co.uk/Default.aspx?AspxAutoDetectCookieSupport=1

Talk to you in the morning hon,

Love Jacks xxx

Eyesparky

[FONT=&quot][/FONT] [FONT=&quot]Well done for taking the step to post your SOA. I hope you don't mind but I have made a few comments in red (don't worry, I am not grading you or anything ). As others have said, selling the house may be a possible solution at some point but regardless of if this step is ultimately taken, taking control of your finances now in the smallest detail will ultimately be an empowering experience (but hard work to start with).

Statement of Affairs and Personal Balance Sheet

Household Information
Number of adults in household........... 2
Number of children in household......... 2
Number of cars owned.................... 1

Monthly Income Details
Monthly income after tax................ 1950
Partners monthly income after tax....... 600
Benefits................................ 112
Other income............................ 0
Total monthly income.................... 2662

Monthly Expense Details
Mortgage................................ 690.3
Secured/HP loan repayments.............. 483
Rent.................................... 0
Management charge (leasehold property).. 0
Council tax............................. 123
Electricity............................. 80 Shop around for possible better deals and reduce usage where possible
Gas..................................... 50 Same as Electricity.
Oil..................................... 0
Water rates............................. 23
Telephone (land line)................... 10
Mobile phone............................ 26 Could you reduce this (when out of contract) and go PAYG
TV Licence.............................. 13
Satellite/Cable TV...................... 35 This should really go for the moment (£420 a year)
Internet Services....................... 17 There are plenty of deals around which could reduce this
Groceries etc. ......................... 270 There is probably room to reduce this quite a bit. There are lots of tips on these forums on how to radically reduce the amount spent on groceries.
Clothing................................ 20 This seems reasonable but you could try to limit clothes spending to the amount you receive from clearing out clothes and selling them on ebay etc.
Petrol/diesel........................... 40 Cut out any unnecessary travel (even £5 a month is useful)
Road tax................................ 15
Car Insurance........................... 30 Make sure you shop around for the best deal at renewal
Car maintenance (including MOT)......... 10
Car parking............................. 0
Other travel............................ 0
Childcare/nursery....................... 0
Other child related expenses............ 0
Medical (prescriptions, dentist etc).... 0
Pet insurance/vet bills................. 10
Buildings insurance..................... 10
Contents insurance...................... 15
Life assurance ......................... 0
Other insurance......................... 0
Presents (birthday, christmas etc)...... 10
Haircuts................................ 10
Entertainment........................... 40 This may have to take a dent in the short term.
Holiday................................. 0
Emergency fund.......................... 10
Total monthly expenses.................. 2040.3


Assets
Cash.................................... 0
House value (Gross)..................... 175000
Shares and bonds........................ 0
Car(s).................................. 2800
Other assets............................ 0
Total Assets............................ 177800


Secured & HP Debts
Description....................Debt......Monthly.. .APR
Mortgage...................... 90220....(690.3)....5.4
Secured Debt.................. 40620....(483)......9.9 In time, as your credit situation improves, focussing on getting this money financed on a lower APR and applying all savings to debt reduction would help enormously.
Total secured & HP debts...... 130840....-.........-

Unsecured Debts There may be the possibility of freezing these and making arrangement to pay a nominal amount to each allowing you to free up funds to apply to reducing debts. Not an expert on this but I am sure there will be a few along soon.
Description....................Debt......Monthly.. .APR
Egg............................4950......134...... .19
TSB............................9840......200...... .19
Barclaycard....................1681......50....... .19
Barclays2......................9705......221...... .18
Barclays1......................2752......127...... .11
Northern Rock..................14565.....164.......7.9
MBNA...........................965.......37....... .19
Black Horse....................2010......106.......NaN
Total unsecured debts..........46468.....1039......-


Monthly Budget Summary
Total monthly income.................... 2,662
Expenses (including HP & secured debts). 2,040.3
Available for debt repayments........... 621.7
Monthly UNsecured debt repayments....... 1,039
Amount short for making debt repayments. -417.3

Personal Balance Sheet Summary
Total assets (things you own)........... 177,800
Total HP & Secured debt................. -130,840
Total Unsecured debt.................... -46,468Net Assets.............................. 492 At least this is positive, which is a start [/FONT]

Happytogetdebtfree

Hello and well done for posting x I can't offer advice but I didn't want to read and run the experts will be here soon x x

Verbatim

Hi,

If you have no arrears at present your credit score may be good enough to get a zero% cc to which you could transfer some of the higher interest debt. But I'm not sure how you have been keeping up to date as your SOA shows a shortfall. Have you been using credit cards to pay each other off?
The priority debts are the secured ones plus CT then utilities. And of course food!! If you have to make token payments to the ccs then your credit score will be trashed but the interest may be frozen. You could talk to one of the free debt charities like CCCS, link on this site, who will help you for free. Don't use a paid for agency.

you could make savings in your expenditure, on food, getting your tv, landline and internet services as a bundle rather than separately etc but I can't see how you'd get £400+.
Otherwise could you increase the family income in some way, second job, wife increasing her hours or a lodger?

Does your wife know about the situation? You really need her on board too.

Delboyuk_2

Thank you so much for all the responses, i really appreicate all your comments.

the main areas that cause me the headaches are the credit cards, i am only managing to pay the minimum each month.

my wife is fully aware of the situation and has been a rock of support, i was always worried what she would say/do. she has even started working nights to help us get out of this situation.

We spoke about selling the home and start renting, although this will be more expensive than our current mortgage it will allow us to be better off each month (approx 1k)

i just hope that one day i can get back on the property ladder

i do have another question, on one of my secured loans i took out the protection policy (illness + redundancy etc) if i dont claim in 5 years they will pay back the amount - this equates to appox 6k and will finish in July. What happens when i sell the house - does this loan get automatically paid off? am i allowed to continue to pay this without telling them that i have moved? sorry if it sounds daft, just 6k is alot of money and i am not allowed a penny if i cancel before the 5 years

Denis_UK

http://www.moneysavingexpert.com/reclaim/

Check the reclaim site see if you are eligible for any repayments of penalty charges

paybacktime2008

This is what i would do. Ask mortgage company to go interest only. Cut back every single thing you can. Then I'd throw everything i could at MBNA. Remember in Jan/Feb you won't be paying council tax/water so you can throw that money at it too. It is such a good feeling clearing debts. I started on my journey a year ago and thought i was doing well but have just had 2 months on income support and realise now that you can cut back more than you ever realised...example..instead of buying loaves for pack lunch that went off (£1.25) i bought 12 basic rolls for 35p and froze them...will last 2 weeks. I know that sounds really trivial but if you want to keep your house then thats the way its got to go!
Your electric/gas seems really high too and your benefits seem really low...surely you get more for two kids in child benefit a month??

Check out OS board for loads of saving tips.

If you sold the house, yes you would get out of a hole but as someone else said, what then? Look long term and I think you will see that keeping the house is the most sensible option but it will take some serious belt tightening. The decision to make is 'quick' fix or long haul. Only you can make that decision.

Jacks_xxx

Afternoon my lovely, :wave:

So it sounds as if you can't sell the house until July - because you can't sell the thing that the loan is secured on - which means seven more months of debt repayments at least - so lets DFW in the meantime shall we? Because otherwise by the time you move you'll owe more money than you can pay off with the house sale. Please don't use "We're selling the house soon" be a way of avoiding doing anything about your debts now. At your current rate of spending you'll probably owe another ten grand - at least - by July. (And that's if you've been able to continue repayments. By the looks of your SOA the credit will run out soon.)

In preparation for putting your house on the market why don't you have a bit of a declutter and sell off your books and DVDs on eBay or Amazon? The place will look more spacious when you're showing people round, cleaning will be easier with less clutter, and there'll be less to pack when you move.

Have a clear out of the kids toys and clothes and sell what you can on eBay - and have a carboot or two to get rid of the rest.

Gold prices are high at the moment so if your wife has a selection of tarnished and tangled old chains and odd earrings you could get cash for them at www.webuyoldgold.co.uk or similar.

We paid off at least £4k of debt this way. I paid almost a whole credit card off with £3 here and there from Amazon sales - If it's not nailed down then sell it. Turn out teh attic and the garage and let your relations now that you are looking for stuff to sell.

Accept that you are at crisis point - and for a short time at least, from now until you sell the house - the normal rules don't apply - so dump the mobile and the sky and start using your entertainment budget to pay down the debts. promise yourselves that you'll only buy clothes if it's absolutely unavoidable. If you went to a sky basic subscription for TV, internet and phone it would be about £18 per month plus calls. Get whoever does the cooking and shopping over to Moneysaving Old Style http://forums.moneysavingexpert.com/forumdisplay.html?f=33 to learn how to spend less on groceries. If you can shave off a bit here and there you could have that MBNA card - at least - cleared before you move. Throw everything you can at the MBNA and when it's gone close it down and start throwing everything you can at the Barclaycard until it's gone too.

After you move you are going to have to be very careful not to get into debt again so a period of living to a very tight budget will be very good for you. (I assume most of this debt has been run up through over spending?) If you lost your job tomorrow as thousands of people are every week the government would give you about £60 a week for the first 6 months to pay for everything. people manage somehow.

Start keeping receipts and a spending diary to see how out of touch with reality your SOA is . (most people have quite a large gap between SOA and reality at first)

Check out the Snowballer to see exactly how deep in the hole you are, then try adding the mobile phone, entertainment and sky money to the amount available to debt repayments and see what a massive difference it makes:
http://www.whatsthecost.com/snowball.aspx

Finally, you should get over to the bankruptcy board and consider that as an option. Your initial gut reaction may be "No I don't want to do that" but at least find out a bit about it before you dismiss it, so that if you decide against it you're making an informed decision not a kneejerk one. http://forums.moneysavingexpert.com/forumdisplay.html?f=136

That's all I've got for now honeybun, but the above is how we paid off our debts, with two teenage kids, a poorly cat and an income of £2644 a month. (see sig below)

Love Jacks xxx