Trying to become debt-free!

liberty_lily

Hi folks!

I am hoping to become debt-free/find ways to manage our finances better -

Unfortunately DH had to give up a well paid job 3 years ago after pressures (both at work and financial) drove him to attempt suicide. After a break of some 18 months during which time we survived on a very small Ebay generated income (registered as a business with HMRC), handouts from family and no benefits (as DH was too proud to claim anything), he is now in a new job, but on a salary one third of what he was previously earning.

I am unable to work as I have to help my elderly Father take care of my Mother who has Alzheimers, but I do Ebay in the evenings to make some extra cash.

We opened a parachute account for day to day use but have a previous account with an outstanding overdraft balance of £4000 which is frozen and not attracting further charges/interest.

Unfortunately due to a misunderstanding (my naivety) over Child Tax Credits, not only did we lose two years worth of payments (only £40 per month but still useful) when our Son went straight from GCSEs into his school sixth form to do 'A' levels, but also another years worth was paid into our bank account after the bank had closed it when we reclaimed bank charges - we thought payments had ceased when he reached 18, when in actual fact he was still entitled as he was in further education.

Luckily we sold a large, expensive property 3 years ago, buying a smaller/cheaper one, since which time we have been mortgage-free.

We have one Son who has just taken his university finals and who is currently still living in his uni digs. He plans to spend the next year travelling with his G/F (he is to finance this) and we are not sure whether he intends to live at home on their return at which point he will enter the workplace/continue his studies.

For the last year I have been reclaiming mis-sold PPI and have recently had six complaints upheld by the FOS totalling approximately £15,000 (none of which has been received as yet). During that time we have not made any payments on DH's credit card debts, but we intend to utilise at least £10,000 of the refunds to either make F&F offers or else significantly reduce the balances on the two credit cards and two unsecured bank loans.

We also obviously need to address the outstanding overdraft balance of £4000. There are approximately £10,000 of bank charges on that account but since the OFT test case was lost I have discontinued my court claim for these.

Here follows my budget calculations -

Household information

Number of adults in household...................2 (3/4 when Son/GF come home from uni)
Number of children in household.................0
Number of cars owned.............................1

Monthly income details

Monthly income after tax.........................£1200
Partner's income after tax........................0
Benefits................................................0
Other income.........................................£300 (Ebay - registered with HMRC)
Total monthly income...........................£1500

Monthly expenses

Mortgage..............................................0
Secured loan repayments.........................0
Rent.....................................................0
Management charge (leasehold property)....0
Council tax............................................£180
Electricity..............................................£105 (repaying arrears)
Gas......................................................£105 (repaying arrears)
Oil........................................................0
Water...................................................£34 (bill paid twice yearly)
Telephone (land line)...............................£33 (bill paid quarterly)
Mobile phone..........................................£20 (pay as you go)
TV licence.............................................£11 (bill paid in one yearly instalment)
Satellite/cable tv.................................... 0
Internet services.....................................£23.50 (bill paid quarterly)
Groceries etc..........................................£250 (bill increases when Son home from uni - although he contributes)
Clothing..................................................0
Petrol/diesel.............................................£400 (husband has 3 hour daily commute to/from work)
Road tax..................................................£20
Car insurance............................................£25
Car maintenance (including MOT)..................£41
Car parking...............................................0
Other travel..............................................0
Child care/nursery......................................0
Other child related expenses........................0
Medical (prescriptions/dentist etc)................0
Pet insurance/vet bills.................................0
Buildimgs insurance.....................................£5 (paid in one yearly instalment)
Contents insurance.....................................£5 (paid in one yearly instalment)
Life insurance.............................................0
Other insurance..........................................0
Presents (birthday, christmas etc)..................0
Haircuts.....................................................£7
Entertainment..............................................0
Holiday.......................................................0
Emergency fund...........................................0
Total monthly expenses.............................£1264.50

Assets

Cash..........................................................0
House value.................................................£300,000
Shares and bonds..........................................0
Car(s)..........................................................£15,000
Other assets.................................................0
Total assets.................................................£315,000

Secured and HP debts

Description................Debt................Monthly............APR
Mortgage.....................0.....................0....................0
Secured debt................0.....................0....................0
HP debt........................0.....................0....................0
Total secured and HP debts.......................................0

Unsecured debts

Description.................Debt................Monthly.............APR
Loan.........................£9500...............£215.................11.9% (to be rescheduled once PPI is refunded)
Loan.........................£6500...............£145.................14.9% (to be rescheduled once PPI is refunded)
Credit card.................£6500.................0.....................0
Credit card.................£3800.................0.....................0
Overdraft...................£4000.................0.....................0
Total unsecured debts.......................£360................£30,300

Monthly budget summary

Monthly income.........................................£1500
Expenses..................................................£1264.50
Available for debt repayment........................£235.50
Monthly unsecured debt repayment...............£360 (will be lower once PPI is removed from loan balances)
Amount left after debt repayment.................-£124.50

Personal balance sheet summary

Total assets (things you own).......................£315,000
Total HP and secured debt............................0
Total unsecured debt...................................-£30,300
Net assets................................................£284,700

I know that savings could be made on phone and broadband services and am about to look into this. Fuel costs are unavoidable whilst DH is in this job - till he can find something closer. Until the £2000 of arrears are paid off on our Gas/Electricity we are stuck paying £210 in total per month - the least we could get away with paying - even when our income was a fraction of this last year they would accept no less and we refused to contemplate a pre-paid meter.

If we could get the bank/credit card company to accept Full and Final offers so we could clear these with the PPI refunds it would be great - even just to reduce the balances would be an improvement! These refunds totalling approximately £15,000 are due by late August/early September.

We are going to treat ourselves to a new bathroom suite - our bath leaks and is unusable - with some of the PPI refund money, after what DH has been through he deserves to be able to have a nice shower before he starts his day, but other than that we want to put it to as good use as possible in reducing our debts!

Any advice would be gratefully received thank you...........and apologies for the length of this post!

Liberty_lily xxx

Moneytroubles_2

Hiya hun, welcome to the board, im not really good with the statment of affairs but im sure people will come along shortly to help out, I just wondered if you had undertaken as carers assessment for looking after your mum, as you may be entitled to some carers allowance? xxxx

liberty_lily

Hi Moneytroubles,

Thanks for your response it's most appreciated!

No, I haven't done that - my Father has just applied for attendance allowance (I think that's what it's called) and I don't know if I'd be entitled to anything if he is classed as her main carer?

Thanks again,

Liberty_lily xxx

liberty_lily

Hi folks,

Just wondering if anyone else could offer advice re: my opening post please - I realise yesterday was a bank holiday and there were less people about, but if anyone is around today that has any opinions I would very much appreciate it thank you

Liberty_lily xxx

Luckystepho

Hi and welcome! Just wanted to say that Attendance Allowance is separate from carers allowance and would be paid to your mum effectively- so it may be worthwhile checking to see if you are entitled to any carers allowance.

Is there a Welfare Rights office attached to your local County Council, they could advise you on this.

pixiechick_2

Hi. Sorry to be the bearer of bad news but you will not receive the PPI refunds, they will go towards the debt on the cards.

Never-in-doubt (on the Unenforceability Templates thread post #3444) says

Regards to PPi reclaim, noooo - don't get confused, all reclaims go toward the debt and reduce the debt balance, it does not get paid to you unless there is a surplus. So lets say you owe £1k but PPi refund would be £3k, then the debt would be cleared and you'd get £2k paid to you. If though, the debt was £5k and reclaim was £3k, then you'd end up owing £2k still - they will not send you a cheque.

So, unless you owe less on the credit card than you are receiving in PPI refund for that card, you won't receive anything.

Tixy

Hi

liberty_lily wrote: »

Hi folks!
Here follows my budget calculations -

Household information

Number of adults in household...................2 (3/4 when Son/GF come home from uni)
Number of children in household.................0
Number of cars owned.............................1

Monthly income details

Monthly income after tax.........................£1200
Partner's income after tax........................0
Benefits................................................0
Other income.........................................£300 (Ebay - registered with HMRC) is this the earnings after business costs etc?
Total monthly income...........................£1500

Monthly expenses

Mortgage..............................................0
Secured loan repayments.........................0
Rent.....................................................0
Management charge (leasehold property)....0
Council tax............................................£180 have you done the 5min check to see if you are in the correct band?
Electricity..............................................£105 (repaying arrears) do you know how much is going to arrears and how much current use? how long until arrears are due to be repaid?
Gas......................................................£105 (repaying arrears) as elec
Oil........................................................0
Water...................................................£34 (bill paid twice yearly)
Telephone (land line)...............................£33 (bill paid quarterly) look for a cheaper deal. do you use the phone a lot? cheapest combined phone & internet is around £20 per month.
Mobile phone..........................................£20 (pay as you go)
TV licence.............................................£11 (bill paid in one yearly instalment)
Satellite/cable tv.................................... 0
Internet services.....................................£23.50 (bill paid quarterly) see phone
Groceries etc..........................................£250 (bill increases when Son home from uni - although he contributes) when just the 2 of you aim for around £160, should be plenty for 2 people. Try meal planning before you go shopping and trying cheaper brands/supermarkets
Clothing..................................................0
Petrol/diesel.............................................£400 (husband has 3 hour daily commute to/from work) does he drive efficently and make sure he always fills up at the cheapest place?
Road tax..................................................£20
Car insurance............................................£25 have you shopped around for the best deal?
Car maintenance (including MOT)..................£41
Car parking...............................................0
Other travel..............................................0
Child care/nursery......................................0
Other child related expenses........................0
Medical (prescriptions/dentist etc)................0
Pet insurance/vet bills.................................0
Buildimgs insurance.....................................£5 (paid in one yearly instalment)
Contents insurance.....................................£5 (paid in one yearly instalment)
Life insurance.............................................0
Other insurance..........................................0
Presents (birthday, christmas etc)..................0
Haircuts.....................................................£7
Entertainment..............................................0
Holiday.......................................................0
Emergency fund...........................................0
Total monthly expenses.............................£1264.50

Assets

Cash..........................................................0
House value.................................................£300,000
Shares and bonds..........................................0
Car(s)..........................................................£15,000
Other assets.................................................0
Total assets.................................................£315,000

Secured and HP debts

Description................Debt................Monthly............APR
Mortgage.....................0.....................0....................0
Secured debt................0.....................0....................0
HP debt........................0.....................0....................0
Total secured and HP debts.......................................0

Unsecured debts

Description.................Debt................Monthly.............APR
Loan.........................£9500...............£215.................11.9% (to be rescheduled once PPI is refunded)
Loan.........................£6500...............£145.................14.9% (to be rescheduled once PPI is refunded)
Credit card.................£6500.................0.....................0 has interest been formally frozen on these?
Credit card.................£3800.................0.....................0
Overdraft...................£4000.................0.....................0 are you using this as your current account or is it an old account.
Total unsecured debts.......................£360................£30,300

Monthly budget summary

Monthly income.........................................£1500
Expenses..................................................£1264.50
Available for debt repayment........................£235.50
Monthly unsecured debt repayment...............£360 (will be lower once PPI is removed from loan balances)
Amount left after debt repayment.................-£124.50

Personal balance sheet summary

Total assets (things you own).......................£315,000
Total HP and secured debt............................0
Total unsecured debt...................................-£30,300
Net assets................................................£284,700

Until the £2000 of arrears are paid off on our Gas/Electricity we are stuck paying £210 in total per month Oh dear that is a lot

As said above if the PPI is all in relation to the debts above you won't actually see that money it will go straight off the debt balances.

Are you paying anything towards the credit cards at the moment? even if you just pay a token payment of £1 to each card a month this is better than nothing.

Is OH looking for better paid work or work nearer to home currently? What does he do? is there any chance his work would allow him to work flexibly so work one day from home or work 4longs days instead of 5normal days to reduce his fuel costs. Is his car fuel efficent? If not could he sell and buy a cheaper car that is more fuel efficent?

Have you double checked to see if you would be entitled to any tax credits to top up your ebay income (www.entitledto.co.uk)

liberty_lily

Hi everyone,

Thanks for your replies

Luckystepho - thank you, I will look into that.....not sure if there is a Welfare Advice office.

Pixiechick - thanks for your advice.......I have to say generally speaking from what I've seen on the forums I would have agreed with you - but and it's a big but , I have had it confirmed by the bank themselves via the FOS in writing that despite the debts owed on the accounts the refunds are going to be paid by cheque!

I automatically assumed that the refunds would go to reduce the balance and specifically asked the FOS to confirm this with the bank in question - as in one instance I saw a copy of an email from the bank to the FOS adjudicator which said the full amount was to come to me as a cheque. I queried this in case an error had been made and the adjudicator confirmed that the refund was not going to be paid towards the debt.

Additionally one of the PPI refunds relates to an account which has been sold to a DCA. Last year I had another PPI refund upheld by the FOS on a different account with the same bank. This account had also been sold to a DCA - the FOS even warned me that the refund would in all probability go to the DCA, but the full refund including contractual interest came as a cheque from the OC to my DH.

The other PPI refunds relate to accounts which were settled in full several years ago so there is no question that they will be paid in the form of cheques.

Hopefully therefore I should be able to utilise the refunds to reduce the debts or better still make Full and Final settlement offers to clear them completely. I have already been offered a reduction of 40% on one loan but last year when the offer was made I wasn't in a position to accept.

Thanks again for your replies - they are most appreciated!

Liberty_lily xxx

10yrsoldersaver

Hi Liberty, Just read your post..you are very doing well in difficult circumstances , pity about the travel costs, hopefully your husband can find a job nearer in the not to distant.(my DH has similar travel costs its a big hit!)
Your father would get carers allowance and `I think' you or your mum should get attendance allowance, citizens advice and help the aged can give you correct info.( unless of course you are technically looking after both of them, ie shopping , driving etc..)

10yrsoldersaver x

Just a thought ,do you have a spare room you could rent out for a short time to help with debts?

Stuckinarut

Is your dad claiming Attedance allowance for himself or for your mum? Both can claim if both require care of some sort on a daily basis.

Carers Allowance is something different, and only one of you can claim for it, if your dad claimed it can effect other benefits he is in receipt of i.e they give you carers allowance but the reduce another benefit to allow this payment, but as you are not working to care for your mum, then you could actually be paid the amount of money. It's worth looking into.

liberty_lily

pixiechick wrote: »

Hi. Sorry to be the bearer of bad news but you will not receive the PPI refunds, they will go towards the debt on the cards.

Never-in-doubt (on the Unenforceability Templates thread post #3444) says
So, unless you owe less on the credit card than you are receiving in PPI refund for that card, you won't receive anything.

Hi there,

Just an update - today I have received a cheque (nearly £3000) for the first of the PPI refunds due on one of the accounts which is in default with an outstanding balance of £6500

This is despite the fact that no payments have been made to this account for over a year and the balance is being pursued by a DCA on behalf of the bank.

As was my intention I will be utilising this refund to make a F&F offer to settle the debt.

So it can be done :j

Liberty_lily x