Debt Help

granite785

Hi, I’m not sure if this is the right thread to post on but I’m really looking for advice – I use the forums alot to look for advice but have never posted before so bear with me!

Our mortgage has £245,000 outstanding – house value is approx £340,000 - £350,000 – getting it valued next week. We have huge credit cards debts totalling £76,000 across 9 cards between us – we’re just about managing to meet the monthly repayments on everything but most months we’re juggling between credit cards and using them to get the best rates etc. – real credit card tarts but we’re now pretty much maxed out and can’t get any more credit/loans etc.

I’m in full time work on a decent salary but my wife is running her own business (for about a year now) and we halved our household income to do that – hoping things would pick up quicker than they have. We want to keep the business going as we’ve put so much in to it now and it’s now kind of holding its own but paying back the debts we owe seems almost impossible.

We’ve got a couple of options really ... firstly keep going as we are but this is stressful and we don’t seem to make a dent in the amount owed – in fact at the moment it just goes up each month. The other option we can see is to sell the house and use the equity to pay off all our debts and ‘start again’ in effect – but this would mean renting for a while until we can save up a deposit again. We couldn’t really downsize and get another mortgage because we couldn’t get anywhere with just my salary and wouldn’t have enough to put a deposit down and pay off the debts – it would be one or the other really.

We’ve thought of the IVA route but would rather not go this way – mainly because of the business and what effect that might have on it – and perhaps also that we do want to pay it off ourselves somehow.

Any advice would really be great as there might be other options we haven’t considered or people who’ve been in the same boat.

As so much of the debt is unsecured what impact would it have if we asked the credit cards to freeze the interest. I'm scared to ask them incase the bank holding the mortgage decide that we are too much of a risk for them now.
Are credit card companies sympathetic to your debts or would this just make matters worse?

Can any one offer some advice?

Thanks for any help.

cavework

are you in any arrears with any payments so far?

Tixy

Hi and welcome

Have you sought any professional advice about your possible options? This is a good idea (especially if you are even remotely considering an IVA) - here is the list of recommended people to talk to.

Have you worked out a detailed monthly budget to see just how close you are to not being able to make repayments? This is a good starting point and this form here - http://www.makesenseofcards.com/soacalc.html - gives a full picture of your financial situation. Completing might help you see things clearer, plus if you post the results on here then we might be able to make more suggestions for you.

I would sort out the budget before you start approaching your creditors.

granite785

cavework wrote: »

are you in any arrears with any payments so far?

No, currently all payments are up to date.
However the credit cards are soon to be out of their low rates and then the interest will mean that we might not be able to meet them.

Tixy Thanks I'll fill out the form and see how things look.

granite785

Done the form, any advice would be appreciated.
The shortfall is going to be more of a problem when the credit card rates revert to normal.
Currently we're breaking even as this shortfall is made up of using credit cards to pay for shopping and petrol.

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.................... 2

Monthly Income Details
Monthly income after tax................ 2700
Partners monthly income after tax....... 1000
Benefits................................ 0
Other income............................ 0
Total monthly income.................... 3700

Monthly Expense Details
Mortgage................................ 1276
Secured/HP loan repayments.............. 300
Rent.................................... 0
Management charge (leasehold property).. 0
Council tax............................. 191
Electricity............................. 100
Gas..................................... 50
Oil..................................... 0
Water rates............................. 68
Telephone (land line)................... 48
Mobile phone............................ 60
TV Licence.............................. 12.12
Satellite/Cable TV...................... 0
Internet Services....................... 0
Groceries etc. ......................... 500
Clothing................................ 20
Petrol/diesel........................... 400
Road tax................................ 20
Car Insurance........................... 60
Car maintenance (including MOT)......... 40
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...................... 0
Life assurance ......................... 52
Other insurance......................... 0
Presents (birthday, christmas etc)...... 100
Haircuts................................ 15
Entertainment........................... 0
Holiday................................. 0
Emergency fund.......................... 0
Total monthly expenses.................. 3332.12


Assets
Cash.................................... 0
House value (Gross)..................... 350000
Shares and bonds........................ 0
Car(s).................................. 6000
Other assets............................ 0
Total Assets............................ 356000


Secured & HP Debts
Description....................Debt......Monthly...APR
Mortgage...................... 245000...(1276).....0.94
Hire Purchase (HP) debt ...... 3600.....(300)......0
Total secured & HP debts...... 248600....-.........-

Unsecured Debts
Description....................Debt......Monthly...APR
Virgin ........................8400......25........15
Egg............................14221.....284.......26.9
HSBC ..........................8000......200.......11.9
Virgin ........................15293.....25........15
HSBC ..........................9850......246.......11.9
MINT...........................6669......153.......17.9
Halifax........................2000......40........15.9
Santader.......................5199......117.......14.9
M&S............................6631......165.......18.9
Total unsecured debts..........76263.....1255......-


Monthly Budget Summary
Total monthly income.................... 3,700
Expenses (including HP & secured debts). 3,332.12
Available for debt repayments........... 367.88
Monthly UNsecured debt repayments....... 1,255
Amount short for making debt repayments. -887.12

Personal Balance Sheet Summary
Total assets (things you own)........... 356,000
Total HP & Secured debt................. -248,600
Total Unsecured debt.................... -76,263
Net Assets.............................. 31,137

strictwithmoney

granite785 wrote: »

Done the form, any advice would be appreciated.
The shortfall is going to be more of a problem when the credit card rates revert to normal.
Currently we're breaking even as this shortfall is made up of using credit cards to pay for shopping and petrol.

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.................... 2

Monthly Income Details
Monthly income after tax................ 2700
Partners monthly income after tax....... 1000
Benefits................................ 0
Other income............................ 0
Total monthly income.................... 3700

Monthly Expense Details
Mortgage................................ 1276 is this interest only?
Secured/HP loan repayments.............. 300
Rent.................................... 0
Management charge (leasehold property).. 0
Council tax............................. 191 is this over 10 or 12 mths?
Electricity............................. 100
Gas..................................... 50
Oil..................................... 0
Water rates............................. 68 this is high!
Telephone (land line)................... 48 is this for your business ?
Mobile phone............................ 60
TV Licence.............................. 12.12
Satellite/Cable TV...................... 0
Internet Services....................... 0 ???
Groceries etc. ......................... 500 this is high!
Clothing................................ 20 you can't afford this!
Petrol/diesel........................... 400 this is very high! is it for your business?
Road tax................................ 20
Car Insurance........................... 60
Car maintenance (including MOT)......... 40
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...................... 0 ???
Life assurance ......................... 52
Other insurance......................... 0
Presents (birthday, christmas etc)...... 100 too much, you need to reduce this!
Haircuts................................ 15
Entertainment........................... 0
Holiday................................. 0
Emergency fund.......................... 0 ???
Total monthly expenses.................. 3332.12


Assets
Cash.................................... 0
House value (Gross)..................... 350000
Shares and bonds........................ 0
Car(s).................................. 6000
Other assets............................ 0
Total Assets............................ 356000


Secured & HP Debts
Description....................Debt......Monthly...APR
Mortgage...................... 245000...(1276).....0.94
Hire Purchase (HP) debt ...... 3600.....(300)......0
Total secured & HP debts...... 248600....-.........-

Unsecured Debts
Description....................Debt......Monthly...APR
Virgin ........................8400......25........15
Egg............................14221.....284.......26.9
HSBC ..........................8000......200.......11.9
Virgin ........................15293.....25........15
HSBC ..........................9850......246.......11.9
MINT...........................6669......153.......17.9
Halifax........................2000......40........15.9
Santader.......................5199......117.......14.9
M&S............................6631......165.......18.9
Total unsecured debts..........76263.....1255......-


Monthly Budget Summary
Total monthly income.................... 3,700
Expenses (including HP & secured debts). 3,332.12
Available for debt repayments........... 367.88
Monthly UNsecured debt repayments....... 1,255
Amount short for making debt repayments. -887.12

Personal Balance Sheet Summary
Total assets (things you own)........... 356,000
Total HP & Secured debt................. -248,600
Total Unsecured debt.................... -76,263
Net Assets.............................. 31,137

Here are my comments.

Tixy

granite785 wrote: »

Done the form, any advice would be appreciated.
The shortfall is going to be more of a problem when the credit card rates revert to normal.
Currently we're breaking even as this shortfall is made up of using credit cards to pay for shopping and petrol. so are the debts actually going up each month?

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.................... 2

Monthly Income Details
Monthly income after tax................ 2700
Partners monthly income after tax....... 1000 is this after business costs and tax etc?
Benefits................................ 0 child benefit?
Other income............................ 0
Total monthly income.................... 3700

Monthly Expense Details
Mortgage................................ 1276
Secured/HP loan repayments.............. 300
Rent.................................... 0
Management charge (leasehold property).. 0
Council tax............................. 191
Electricity............................. 100 this seems high, do you have arrears/or a correction you are paying? do you give actual readings or has it been estimated? have you looked for a cheaper supplier/cheaper (internet) tariff? Do you think you are heavy users? do you use a lot of elec heaters/tumble driers/water immersion left on all day?
Gas..................................... 50
Oil..................................... 0
Water rates............................. 68 - metered or unmeasured? if metered double check no leak, if unmeasured research to see if you would save.
Telephone (land line)................... 48 is this just landline? broadband as well? have you looked for a cheaper deal? (start at £20 combined I think)
Mobile phone............................ 60
TV Licence.............................. 12.12
Satellite/Cable TV...................... 0
Internet Services....................... 0
Groceries etc. ......................... 500 should be able to make some savings here (£300 perhaps for a family of 4), have you tried the drop a brand challenge or meal planning for the week before you go shopping?
Clothing................................ 20 good to budget something when you have kids (but obviously keep to a minimum -especially for the adults)
Petrol/diesel........................... 400 are all journeys necessary? are they commuting? do you drive 'fuel efficently'?
Road tax................................ 20
Car Insurance........................... 60
Car maintenance (including MOT)......... 40
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...................... 0
Life assurance ......................... 52 have you checked its the best deal recently?
Other insurance......................... 0
Presents (birthday, christmas etc)...... 100 £1200 is a lot a year when you are so far in debt, try to cut down.
Haircuts................................ 15
Entertainment........................... 0 probably need to include a little something here (kids activites etc/family days out/the odd takeaway?)
Holiday................................. 0
Emergency fund.......................... 0
Total monthly expenses.................. 3332.12


Assets
Cash.................................... 0
House value (Gross)..................... 350000
Shares and bonds........................ 0
Car(s).................................. 6000
Other assets............................ 0
Total Assets............................ 356000


Secured & HP Debts
Description....................Debt......Monthly...APR
Mortgage...................... 245000...(1276).....0.94
Hire Purchase (HP) debt ...... 3600.....(300)......0
Total secured & HP debts...... 248600....-.........-

Unsecured Debts
Description....................Debt......Monthly...APR
Virgin ........................8400......25........15
Egg............................14221.....284.......26.9 did you have an email increasing the rate this week? if so have you thought about opting out (tho it will mean you cannot use the account anymore)
HSBC ..........................8000......200.......11.9
Virgin ........................15293.....25........15
HSBC ..........................9850......246.......11.9
MINT...........................6669......153.......17.9
Halifax........................2000......40........15.9
Santader.......................5199......117.......14.9
M&S............................6631......165.......18.9
Total unsecured debts..........76263.....1255......-


Monthly Budget Summary
Total monthly income.................... 3,700
Expenses (including HP & secured debts). 3,332.12
Available for debt repayments........... 367.88
Monthly UNsecured debt repayments....... 1,255
Amount short for making debt repayments. -887.12

Personal Balance Sheet Summary
Total assets (things you own)........... 356,000
Total HP & Secured debt................. -248,600
Total Unsecured debt.................... -76,263
Net Assets.............................. 31,137

Hi

You do have a large shortfall each month, but I think you could cut back in a few areas to increase the amount you have left for debt repayments. I don't imagine you can cut back enough to mean you can meet them in full though.

You may be suitable for a DMP, or, depending on who owns which debt it may be that you need slightly different solutions for you both. I do think that talking to one of the charities will help you considerably. In the meantime you could also consider filling in the online debt remedy at CCCS. It will be interesting to see what it recommends (although obviously its only a computer calculated opinion - you still need to talk to a real person as well).

Hope some of the tips for cutting costs help a bit.

Tixy

Tixy

http://www.moneysavingexpert.com/travel/cheaper-fuel
Also have a read of this article - I admit its boring to drive slowly but even if you only pick up on some of the tips when you are spending £400 on fuel the savings add up.

granite785

Strictwithmoney and Tixy Thanks for your comments.

Partners income is after tax and all costs
Child benefit – forgot about that £132 a month
The mortgage is repayment with a tracker 0.94% rate
Council tax 10 months
Water rates are high due to the water company not charging us for over a year when we moved in – despite many requests to them! This should revert to about £20 per month once the arrears are paid off.
Telephone includes broadband for home and business use
Groceries – we have reduced this as much as possible but with kids and animals it cant get much lower. We are living off basics items.
Clothing – this is the minimum we can manage on for kids school clothes, my wife and I haven’t had any clothes for a while now and we have been selling stuff we don’t use any more via Ebay just to make some extra cash.
Petrol Business use so hence its high. Both of us have adapted our driving habits to save fuel and I now regularly get 40% more mileage from a tank of fuel which saves a fortune. I used to get about 350 miles per tank but now get over 500.
Buildings and contents are lumped together.
Presents – this was just a ball park figure but probably much lower so maybe only 40, but maybe this offsets against the entertainment for kids activities.

We have spent the last year reducing our outgoings to the minimum we can possibly afford and get away with.
We have cancelled all unnecessary expenses, pet insurance, charity donations, kids clubs and hardly go out.
The last time my wife and I went out was in January for a curry!

Egg card, I did get that email – I am currently utilising a 0% offer until 1st June. If I were to opt out would it be frozen at 0% or my normal rate of 21.9% If they were to freeze it at 0% that would be lovely, but I think that’s just wishful thinking.
We don’t think we can do much more on the outgoings just looking for some advice on the long term outlook

granite785

Tixy wrote: »

Also have a read of this article - I admit its boring to drive slowly but even if you only pick up on some of the tips when you are spending £400 on fuel the savings add up.

You are right it is so boring but I prefer that and the money I am saving - my commute take about 5 minutes longer each way so not bad on a 50 minute journey

Tixy

If you do want to try reducing groceries a bit further I would suggest you perhaps look for advice on the groceries from the 'oldstyle' board here on MSE. There are people on here who feed families of 5 for £200-£250 per month and still feed their families healthy filling meals.
I'm not the best to advise as I live alone but I do know that £80 per head is considered easily doable.
Is there anything non-food that is bumping up your weekly shop (cigs? a lot of alcohol? magazines etc). How many pets are you feeding and what is the rough split for their food?

It sounds like you have done well in reducing your other costs though.