Trying to combat my debt - is IVA my only option

Vectra1976

Hi guys,

Im sure what im about to ask is in no way a new question, and i hope im doing it in the right section? The bottom line is, ive been chased by debt for years, burying my head in the sand, carrying on living a normal life style sustained by credit cards. Its my own fault, grown out of too much access to easy money at university, always wanting news nice things etc. But now, i'm starting to see the bigger picture, and really getting frustrated at how much my debt repayments are stunting my life!

Only the other day i was talking to a friend who was going to Spain for a week.. and i thought to myself, geeze! Thats normal conversation, im earning 33K a year and cant even think of anything like that, and with the repayments im making.. its going to take for ever to even think like that... thats not to say i will not run up more debt in the meantime trying to sustain a normal life style!

I'm not sure how much i need to disclosed? But the basics are i have a sum total debt of £31K over 4 credit cards and a personal loan. For the privilage of these im paying £790 a month!

I earn £1997 after tax, have to pay £600 to rent (including GAS elec etc) then i have car insurance, phone, TV and mobile coming to £156.

I own my car, and need to to get to and from work, we also live in the country, so i kinda need it for life too. To that end i spend around £150 a month on fuel.

SO my out goings are 600+790+156+150=1696

I basically have £300 a month for life... which suprisingly for food, clothes, hygene doesnt go far!

I am married, and my wife has similar debts, although not as extreme..

I have approached my bank with whom i have 15 years history, my loan is with them, ive never missed a payment on loans or cards 'EVER' and asked for a consolodation loan.... computer said no! arrrgh!

So im at a brickwall, i can only afford minimum payments, im 33 years old, im now renting as due to another more private issue i had to sell my house and come of the market (well we split up but are back together)

I want to get my debt clear in 5 years.... but i see no option other than an IVA.... what do you guys think?

Cheers for any help!

Mike

Tixy

Hi Mike and welcome, well done for taking the first step and posting.

Whilst I think you have covered most of the same info in your post I think it might be quite useful for you and us if you posted a statement of affairs using this link - http://www.makesenseofcards.com/soacalc.html

Its easier to see the full picture if its all laid out in that format, and crucially see how much you have left for debt repayments each month.

If you are considering an IVA - this is quite a useful read - http://www.moneysavingexpert.com/loans/pdf-iva-guide.pdf
and I would also say its essential at some point to talk to one of the debt charities - https://forums.moneysavingexpert.com/discussion/2077631

If your wife also has debts then it might make sense to tackle them together as depending on her finances this might affect what is the best option for yourself.

Have you gone through all your expenses to see whether you can reduce any of them? eg is your gas & elec with the cheapest supplier on an online tariff? is you internet access the cheapest on the market? do you regularly compare your house insurance, car insurance and life insurance to see you have the best deals etc. All these things seem small but can make a suprising difference when added together.

NorthernLas

Another useful article is one from National Debtline that gives options for debts.

http://www.nationaldebtline.co.uk/england_wales/page.php?page=35_options_for_paying_back_your_debts

However, the first step is a SOA so you know exactly what you are facing. Then it is ideas on reducing expenditure and increasing income.

Vectra1976

Think this is right?

Statement of Affairs and Personal Balance Sheet
Household Information
Number of adults in household........... 2
Number of children in household.........
Number of cars owned....................
Monthly Income Details
Monthly income after tax................ 1997
Partners monthly income after tax....... 0
Benefits................................ 0
Other income............................ 0
Total monthly income.................... 1997
Monthly Expense Details
Mortgage................................ 0
Secured/HP loan repayments.............. 0
Rent.................................... 600
Management charge (leasehold property).. 0
Council tax............................. 0
Electricity............................. 0
Gas..................................... 0
Oil..................................... 0
Water rates............................. 0
Telephone (land line)................... 40
Mobile phone............................ 37
TV Licence.............................. 15
Satellite/Cable TV...................... 25
Internet Services....................... 0
Groceries etc. ......................... 200
Clothing................................ 0
Petrol/diesel........................... 150
Road tax................................ 0
Car Insurance........................... 44
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.................. 1111

Assets
Cash.................................... 0
House value (Gross)..................... 0
Shares and bonds........................ 0
Car(s).................................. 8000
Other assets............................ 2000
Total Assets............................ 10000

No Secured nor Hire Purchase Debts
Unsecured Debts
Description....................Debt......Monthly...APR
credit card....................3825......88........0
credit card....................3294......65........0
credit card....................9728......245.......0
loan...........................12000.....337.......0
credit card....................2412......54........0
Total unsecured debts..........31259.....789.......-

Monthly Budget Summary
Total monthly income.................... 1,997
Expenses (including HP & secured debts). 1,111
Available for debt repayments........... 886
Monthly UNsecured debt repayments....... 789
Amount left after debt repayments....... 97
Personal Balance Sheet Summary
Total assets (things you own)........... 10,000
Total HP & Secured debt................. -0
Total Unsecured debt.................... -31,259
Net Assets.............................. -21,259

NorthernLas

Hi - It would be very useful if you explained how your household finances are split. As people will ask whether you have forgotten things. Eg. council tax, electric, car tax ...

If the food is for 2 then it could be trimmed, but if it is for 1 then it could be slashed. When people are looking for things to save, they also look for things that you have not included.

You have a surplus which is good, but it is small and you haven't put in car tax...

Are you still spending on the cards, do you have anything that you can sell on ebay or car boot.

Also, you need to add the APRs for the cards and loans (and limits), then people can see if there is any room for movement.

(if you use the edit button on your post above you can keep the notes and the SOA in one post)

RAS

Can you explain why there is no second income, no Ct and no utilties listed?

Please note that if you have a surplus after paying your debts each month, you are not insolvent so an Individual Insolvency Arrangement would not be appropriate.

Vectra1976

My wife and myself keep finances seperate, so this is just about trying to sort out my own personal debt in the most effect manor!

The £600 figure is my joint payment into a shared account which pays rent, council tax, gas, electric and house insurance.

I think the bottom line is, after everything going out of my account i have £300 to live off. OK, so there is my wifes money for living too, but she earns a fraction of what i earn. The issue is, i can just about afford the minimum on my credit cards, and i cant see anyway to increase this quickly!

Ive done more research and made a few calls to independents today, it would appear the IVA is a more drastic option, and not for me as im actually just in a situation which is not going forward, not going backward... ive been recommended debt managment... but again, this has its pit falls!

I feel very annoyed and foolish at myself, all the lending ive found easy to get in life ive abused and squandered, now i really need lending to get out of this mess... and nobody will help... well not easily or without catches etc..

Mike

Vectra1976

Hi, further answers!

I have cut up all cards but one.. going to sound like an addict here, but what if i need it? i.e car break down? I have no back up buffer!

Ive ebayed alot of stuff, and made around £1000 which i chipped of a card, but i have to be careful how far i go with ebay, i dont want to rid myself of all my worldly goods, possessions etc... some stuff is life necessity too.

I will come back with the APRs, but most cards are close to maxed.....

Mike

Tixy

Lots of people in the same situation as you so no need to feel particularly foolish. Nearly everyone on this board has been in too much debt at some point, many of us still are. Credit is much harder to get generally and certainly when your are maxed out in terms of what you can afford nobody will offer to lend you more (basically in case you max out the new debt and keep the old ending up in an even worse position).

If you are considering a debt management plan then you need to use one of the charities who won't charge you fees, but again a DMP is only for people who cannot keep up their minimum payments after normal household expenditure. It also wrecks your credit rating for at least 6years as you will be defaulted and you cannot take out any more credit in that time.
If you have any joint financial products/bank account with your wife it will also greatly impact on her credit rating.

Also the charity will need to see a breakdown of that £600 to see how much is being spent on each item, they'll usually ask you about your partners situation as well. In fact if you both have debts then a joint DMP mght be more appropriate.

That said they will also expect you to include costs you have not put on your sheet above, such as annual costs and that you don't pay all the time car tax, car maintenance & servicing presents, haircuts, a small clothes allowance etc.

Is your wife aware of the extent of your debts? Have you been through your finances together to make sure you are both contributing fair amounts to the household bills? have you tried reducing your household bills by switching suppliers, looking for better deals etc?

Vectra1976

Well, looks like we are taking another approach, going to down grade the cars, and pay off a few cards... we dearly dont want to mess with credit ratings, not if we ever want to get a house, move or start a family etc...

I think the easy option looked very glossy, but once you investigate the hidden extras, its not worth it...

Back to the trying to be good drawing board

Mike

kathy40uk

Hi Mike

I also have large credit card debts which I am trying to repay and when my finances took a large knock in April after a restructure at work which left me £4000 a year worse off I thought I would never be able to do it but the help I have had from this board is incredible. The whole foum is full of threads full of good ideas I had never thought of, I got cashback on my car insurance this year by using Quido (a cashback site) and I have discovered what a difference 'snowballing' makes to my credit card debts by using this calculator

http://www.whatsthecost.com/snowball.aspx

Basically it means working out what you can pay off cards each month and using the majority of the money on the highest interest one and minimum on the rest. I was amazed to find that an extra £100 a month reduced my payment time from 45 months to 23! Also the 'money saving old style' board has fantastic ways of reducing the shopping budget


There's also the 'up your income' board which is full of good ideas. I am lucky enough at the moment to be able to do overtime and I have a small second job which gets me between 50-100 a month depending on the hours I manage to get but I also got money for counting election votes for the last election through a suggestion on there. Admittedly the overtime is wearing me out due to the shift pattern but if I take it while its there it's all extra money towards the debts:)

Good luck with it all, it DOES get better, last year I didn't think there was a light at the end of the tunnel and that was when I was on more money LOL but this year I am actually realising there is.