How on earth can I get out of this situation?

emz1907

I have major money problems and feel like I am only just keeping my head above water. I can't see a way out of this and I feel like Im just being dragged deeper and deeper down. We ended up here due to the recession, my husbands income decreasing due to bonus payments redusing at his job, having a baby and finding ourselves in negative equity. We basically kept borrowing to keep ourselves afloat until we got into a situation where our income kept dropping and we couldnt afford basic payments. We have several credit cards, a loan, I live in my overdraft and after bills have about £60 a month to buy food/nappies/supplies to live which for a family of 3 is very little. I went on the cccs website for help and sent my creditors their advice. I am currently on reduced payment plans for both credit cards and my loan but that won't last forever. We had to sell our house and move into rental but now have to pay back the 30k negative equity we were left with. I bank with Halifax and the new overdraft charges are going to cripple me, I have a £1300 overdraft and haven't been in the black for years, I can never see a way I will ever be able to crawl out of that. My gas company is wanting to increase payments too and my little £60 is dangerously close to being swallowed up. Im so stressed, Im not eating at the moment as we can't afford food so I can feed and get nappys for my 2yr old son. I have M.E and struggle massively with everyday tasks, Ive been told I may qualify for disability which would be an extra income but thats not a given and even then I doubt it would ease the noose that much. My husband is working all hrs and I work part time as I cant afford anymore childcare. I feel stuck, how can I ever possibly crawl out of this situation without winning the lottery? When my 6month payment plans run out with my creditors I think I will go under. I really dont want to go bankrupt.

Tixy

Hi

It sounds like when you spoke to CCCS last time you didn't actually enter into a formal DMP but agreed indivdual plans with your creditors, presumably you still pay the creditors directly yourself? Did CCCS discuss a DMP with you? can you remember it wasn't suitable at that time - did you anticipate your situation would improve?

I would recommend you start by writing out a new financial statement of affairs so we can understand your full position and you can see it in black and white.
http://www.makesenseofcards.com/soacalc.html

Have you started your claim for ME? Have you checked you are getting all the other benefits you are entitled to? as OH's income has decreased you may be entitled to tax credits / or more tax credits than previously.

What is the current situation with the £305 negative equity? have you go a repayment plan in place yet?

It sounds like it would be a good idea to set up a new bank account without an overdraft to use as a new current account, then you can treat the overdraft like your other debts and arrange a monthly repayment.

There may well be a way out of this without needing to go bankrupt, so don't panic too much yet. And even if bankruptcy does turn out to be the best option there are some very knowledgable people on here who have been through it themselves and will advise you well.

Good luck

Gottaclearthem

I was in your situation back last year..recently seperated 3 kids and 18k in debt

I opened a basic bank account, cancelled all DD's, and offered token payments to all creditors (8 of them) took awhile to sort out but at least now I can make minimum payments and still feed the kids

Will take a long time to pay it all off, but I'm managing and feel SO much better for it

I'm no good with SOA but maybe if you post yours someone will be able to help

Please don't get any deeper into that black hole, it's not a nice place and my Mothers saying "you can't get blood out of a stone" kept me sane

emz1907

Hi, I just went onto the CCCS website and did the budget forms myself and sent them onto my creditors. I didnt talk to anyone, just used the CCCS letters to help me negotiate with the creditors. Sorry but what is a DMP? Im new to this.

I haven't started to claim for my ME yet, only just found out I may qualify so plan to go to citizens advice asap to help with that. We get child tax credits.

The 30,000 negative equity (not £305, I wish!) is now in a replayment plan of £150 a month as that all we could afford. Obviously we will be VERY old by the time this is paid off unless our circumstances change. Its a very tight noose round our necks.

I have always assumed that I wouldnt be able to get another bank account with my now bad credit rating. When we first got into difficulty there was missed payments on a lot of things and I think being on reduced payment plans for debt will affect it too? Do you think I would still get an account?

emz1907

Gottaclearthem wrote: »

I was in your situation back last year..recently seperated 3 kids and 18k in debt

I opened a basic bank account, cancelled all DD's, and offered token payments to all creditors (8 of them) took awhile to sort out but at least now I can make minimum payments and still feed the kids

Will take a long time to pay it all off, but I'm managing and feel SO much better for it

I'm no good with SOA but maybe if you post yours someone will be able to help

Please don't get any deeper into that black hole, it's not a nice place and my Mothers saying "you can't get blood out of a stone" kept me sane

Hi, thanks for your answer. Have you been able to still make token payments all this time? I was told they would only be set up for 6 months so am panicking what happens after this time.

Tixy

Hi

A debt management plan is an informal agreement where you pay a set amount (what you can afford) to CCCS and they then distribute it to your unsecured creditors proportionatley. They also deal with writing letters/speaking to your creditors on your behalf and ask for interest to be frozen (some creditors will freeze interest others may not).

It does damage your credit rating but saves a lot of hassle - and it sounds like your credit rating is already bad.

With regards to the bank account - you need to ask for a basic account with a bank you don't currently owe any money to. A basic account has no overdraft and therefore no credit check. http://www.moneymadeclear.fsa.gov.uk/pdfs/bank_accounts.pdf

Gottaclearthem

After the 6 months I sent a new SOA (which was really the first one) and said there was no way I could up payments, as long as your SOA is correct no court in the land would expect you to pay more...and they know this, they really are bullies and you need to stick to your guns with them, I have got stronger over the past year and they don't frighten me anymore, and you will too :A

milliemonster

Hi Em, firstly you MUST eat, you cannot carry on in a situation where you don';t even have enough money to provide food.

Please remember, what matters most is that you can pay your priority debts which are your rent, council tax, and utilities. Everything else can then be negotiated with.

Next on the list is making sure you have fuel to get to work, childcare paid for and importantly food! for the 3 of you you are looking at a minimum of £150 a month I would think, £200 should be better.

Whatever then is left in your income is what can be shared out amongst your creditors and if that's only a few pounds a month then so be it.

Please please fil in an SOA and post up, try not to worry about what happens in 6 months time, if you don't have the money to pay your debts, then they can't have it, it is as simple as that., they may threaten alsorts but even if you were taken to court a court would ask for an SOA and would see reaslitically what you need to live on and would only award your creditors a monthly amount that was feasible for you, even if that was only £1 a month.

At the moment, without seeing your SOA, I'm not sure if Bankruptcy would be an option for you or not, you say you are now having to pay back £30k negative equity aswell, what is the reason why you are so dead set against bankruptcy?, it may not be as scary as you think

emz1907

thank you so much for your replies. Sorry Im not familiar with all the abbreviations, is a SOA like my budget list? Is there a template to fill out?

emz1907

its ok I found it. Ok Ive filled this in for me, my partner and I split bills and he has the majority share as he earns a bit more. So all the sections Ive left blank are the ones he pays, along with his own credit cards and loan. Any spare cash he has at the end of the month goes on food shopping as that is where we are struggling to live day by day.

My repayment amounts are the lower payment plan rates I negotiated with my creditors. Also my gas amount is now going to be increased a lot as I have posted on another section, they want to increase paymenst from £20 to £105!! As you can see this is impossible. So here it is....

Statement of Affairs and Personal Balance Sheet
Household Information
Number of adults in household........... 2
Number of children in household......... 1
Number of cars owned.................... 2
Monthly Income Details
Monthly income after tax................ 820
Partners monthly income after tax....... 0
Benefits................................ 0
Other income............................ 0
Total monthly income.................... 820
Monthly Expense Details
Mortgage................................ 0
Secured/HP loan repayments.............. 166
Rent.................................... 270
Management charge (leasehold property).. 0
Council tax............................. 0
Electricity............................. 35
Gas..................................... 20
Oil..................................... 0
Water rates............................. 26
Telephone (land line)................... 0
Mobile phone............................ 45
TV Licence.............................. 12
Satellite/Cable TV...................... 0
Internet Services....................... 0
Groceries etc. ......................... 60
Clothing................................ 0
Petrol/diesel........................... 100
Road tax................................ 0
Car Insurance........................... 45
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..................... 0
Contents insurance...................... 0
Life assurance ......................... 0
Other insurance......................... 0
Presents (birthday, christmas etc)...... 0
Haircuts................................ 0
Entertainment........................... 0
Holiday................................. 0
Emergency fund.......................... 0
Total monthly expenses.................. 779

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

Secured & HP Debts
Description....................Debt......Monthly...APR
Mortgage...................... 0........(0)........0
Hire Purchase (HP) debt ...... 8000.....(166)......0
Total secured & HP debts...... 8000......-.........-
Unsecured Debts
Description....................Debt......Monthly...APR
tesco credit card..............2500......1.........0
barclaycard....................2500......23........0
halifax loan...................8000......20........0
overdraft......................1300......30........0
Total unsecured debts..........14300.....74........-

Monthly Budget Summary
Total monthly income.................... 820
Expenses (including HP & secured debts). 779
Available for debt repayments........... 41
Monthly UNsecured debt repayments....... 74
Amount short for making debt repayments. -33
Personal Balance Sheet Summary
Total assets (things you own)........... 0
Total HP & Secured debt................. -8,000
Total Unsecured debt.................... -14,300
Net Assets.............................. -22,300

milliemonster

Hi Em, it would be easier if you could do your SOA as a joint effort, its difficult to advise otherwise