Loan - Unable to afford repayments

sandiejannorman

Hi Everyone

Please can you offer me some advice.
I am 12 weeks pregnant and it wasn't planned but I am very excited.
I currently have a loan with LloydsTSB that I pay £220 a month. I have about 2 years left to pay it but once I have the baby I will no longer be able to afford £220 a month to pay it back as I will be going back to work part time. My partner and I are unable to afford childcare for 5 days a week and I want to look after my baby myself for 2 days a week.

I'm not sure what my options are and need to either see if I can reduce the payments without the bank taking advantage of my situation by adding more interest on or paying over a longer period.

I really won't be able to afford to pay the loan at £220 and my partner is taking on most of the rent, bills etc and after that he can't afford to help with my loan.

Please can you offer me some advice and let me know what my options might be.

Tammer

Hi,

I'm sorry to hear that. I'm sure that if you post an SOA showing all your income and expenditure in a typical month, people will be able to suggest ways you can reduce your outgoings so that you can afford your loan (and baby!).

marywooyeah

If you both work at least 16hrs a week you will qualify for the childcare element of working tax credit to meet up to 80% of your childcare costs. This will enable you to go back to work part time after your maternity leave runs out. I would speak to the bank and try and negoiate lower monthly payments over an extended period.

Tixy

Hi Congrats on your pregnancy.

Is this the only unsecured debt you have? You probably have a couple of options - trying to negotiate with the bank to extend your loan or try to get repayment holiday with them whilst you are on maternity leave.
Or you could work out what you can afford (after basic living costs) and offer to pay that amount each month (although they will default you and it will impact on your credit rating). If your loan is from your current bank and you intend to do the second option you need to move your current account (and salary/benefits etc) across to a new bank that you don't owe money to.

Like Tammer says though - it might help if you write out a detailed statement of affairs based on what your income & expenditure will be after the birth, so you can work out how far short you are of making your repayments.

viktory

sandiejannorman wrote: »

reduce the payments without the bank taking advantage of my situation by adding more interest on or paying over a longer period.

That's a little naive. If you are unable to make the payments and need them shrunk then of course the length of the loan will extend. You still owe the same amount of money, but paying less each month means it will take longer to pay it back - and will cost you more in interest.

Talk to your bank now and see what sort of arrangement you can come to.

kindofagilr

If your combined wages (yours and your OH) are under 60k a year then you will get about £160 every 4 weeks, will this not help with the loan payment?

You will be entitled to £20 a week CHB an £20 a week Tax Credtis till baby is 1.

ALS1971

We had similar problem when baby number two came along. £220 is quite a hefty loan and the extra tax credit you get definitely wont be the answer. You get more in the first year of birth, but then you will only get around £41 per month if you earn less than £60k (plus about £60pm child benefit)As you are just 12 weeks pregnant, speak to lloyds tsb now - see what they can do. I agree - reducing the payments will cost more in the long run and you could then be struggling for ages. Try and find ways to save a little on other things now while you can. Things will work out im sure, but act on it now. Good Luck

Dr.Shoe_2

I echo everyone else really. Go to the bank and talk to them, I'm sure they'd help you out.

Could you not transfer to a 0% credit card?

Congratulations anyway.

kindofagilr

ALS1971 wrote: »

We had similar problem when baby number two came along. £220 is quite a hefty loan and the extra tax credit you get definitely wont be the answer. You get more in the first year of birth, but then you will only get around £41 per month if you earn less than £60k (plus about £60pm child benefit)As you are just 12 weeks pregnant, speak to lloyds tsb now - see what they can do. I agree - reducing the payments will cost more in the long run and you could then be struggling for ages. Try and find ways to save a little on other things now while you can. Things will work out im sure, but act on it now. Good Luck

Its actually £20 per week Child Benefit making total every 4 weeks for the first year £160

Then it will drop to £120 ish once baby is one.

But I agree with everyone else, speak to lloyds best solution is to extend the loan for lower payments but it will be longer, they were unable to help us (our loan payment is £368) but if that is your only debt then you might be luckier.

Or like someone else suggested would it be possible for you to get a 0% CC? if you get a Virgin one they can balance transfer money into your bank account and you can hopefully then pay the loan off? but you would need a settlement figure

CLAPTON

congratulations on the baby


first thing to do (and today) is for both of you to stop spending money... start saving as much as possible

babies don't need loads of expensive things ; family and friends may well be able to provide most of what you need.

secondly draw up a detailed SOA (budget) format :
http://www.makesenseofcards.com/soacalc.html

and work out how bad/good your finances really are

Then you have options
-although everyone here has said go to the bank; well just remember you will be going to the bank to say you can't pay your debts... maybe they will help but that might also trash your credit rating for 6 years too.

So think very very carefully before doing this.

Without seeing your detailed SOA and knowing your full circumstances it's not possible to give further advice... if you want to post up the SOA then it will be possible to advise further.

sandiejannorman

Thanks everyone for your help.

I have made an appointment with the bank to discuss this with them, so I am very nervous.

You have all made some valid points and given some great advice.

Fingers crossed thinks may look up soon.