Help! Is there anything we can do to get out of this mess?

Moi_63

Hi.

This is my first post so please be gentle.

Today my husband and I had an appointment with someone at our local CAB to discuss our financial situation.

We have around 42k of unsecured debt to 12 creditors.

I've filled out the CAB SoA and 'spare' monies amount to 160.00 per month. I was told that this isn't enough to consider an IVA and a DMP would take 22 years.

The main problem is that we have a large secured loan on our current property, which we had to take out to clear debts from our previous home (the ultimate fixer-upper). We downsized when my husband was diagnosed with leukaemia. Basically we stretched ourselves too thinly.

We don't live excessive lifestyles, we haven't had a family holiday abroad for years (the odd overnight short break is our limit), we have one car which we both use to get to work together.

I am shocked this has happened. Is bankruptcy our only option? The secured loan has 7 years left to run, could we go with a DMP until then and perhaps then opt for an IVA?

Many thanks.

WASHER

Welcome to MSE and the debt free board.

Could I ask you to post your SOA on here, and you will get loads of advice and tips.

How is your Husband now?

Martin once said, he has never seen a debt problem that couldn't be solved, and yours is no different, but we need an SOA so we can help.

WASHER.x.

miggy

Hello Moi, I'm sorry to hear things have gone so badly for you. As Washer says, post an SOA (there is a link to one in one of the stickies at the top of this forum) because there are amazing people here who can see all sorts of ways to cut costs. I accept what you're saying about not leading an extravagant lifestyle, but sometimes other people can see savings that we don't see ourselves and maybe they can find some for you, too.
Most of all, look after yourselves. Money matters but people matter more.

Moi_63

Thanks for the replies!

I've been looking around at other SoAs posted and I may have to fine tune ours a bit before posting.

My husband has good days and bad days. He usually starts the week with the same energy levels as I end a week with. He works from home on Fridays, before he would sleep pretty much all through the weekend, the children would rarely see him.

He is worried about our situation, he has been up mooching around at 03.00am the last few weeks because he can't settle.

It's really taking it's toll on us at the minute

WASHER

The sooner you get the SOA up, the sooner we can help and hopefully your husband just may have a peaceful sleep.

A problem shared is half way to getting the problem solved.

WASHER.x.

WASHER

http://www.makesenseofcards.com/soacalc.html

Heres the link to the SOA for you.

Moi_63

Right, we have spent all evening trying to sort out a SoA and this is what we have to show for it.

I would like to point out that the secured loan only has seven years left to run.

Anyway, here we go...

(I had to remove the link to soacal on makesenseofmoney because I'm not allowed to post links as I'm a new user. Apologies)

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.................... 1

Monthly Income Details
Monthly income after tax................ 1466
Partners monthly income after tax....... 1506
Benefits................................ 172
Other income............................ 0
Total monthly income.................... 3144

Monthly Expense Details
Mortgage................................ 750
Secured/HP loan repayments.............. 534
Rent.................................... 0
Management charge (leasehold property).. 0
Council tax............................. 156
Electricity............................. 60
Gas..................................... 100
Oil..................................... 0
Water rates............................. 36
Telephone (land line)................... 0
Mobile phone............................ 0
TV Licence.............................. 12
Satellite/Cable TV...................... 23
Internet Services....................... 30
Groceries etc. ......................... 480
Clothing................................ 50
Petrol/diesel........................... 140
Road tax................................ 15
Car Insurance........................... 32
Car maintenance (including MOT)......... 30
Car parking............................. 0
Other travel............................ 0
Childcare/nursery....................... 120
Other child related expenses............ 50
Medical (prescriptions, dentist etc).... 20
Pet insurance/vet bills................. 0
Buildings insurance..................... 13
Contents insurance...................... 13
Life assurance ......................... 68
Other insurance......................... 22
Presents (birthday, christmas etc)...... 50
Haircuts................................ 10
Entertainment........................... 10
Holiday................................. 50
Emergency fund.......................... 0
Milk Delivery........................... 12
Window Cleaning......................... 10
School Meals............................ 70
Total monthly expenses.................. 2966


Assets
Cash.................................... 0
House value (Gross)..................... 170000
Shares and bonds........................ 0
Car(s).................................. 4500
Other assets............................ 0
Total Assets............................ 174500


Secured & HP Debts
Description....................Debt......Monthly...APR
Mortgage...................... 106000...(750)......4.99
Secured Debt.................. 40000....(534)......6.9
Total secured & HP debts...... 146000....-.........-

Unsecured Debts
Description....................Debt......Monthly...APR
Personal Loan..................7500......200.......6.95
Credit Card....................3700......56........19.9
Credit Card....................6000......25........0
Store Card.....................566.......23........15.72
Credit Card....................4996......112.......22.9
Credit Card....................3815......75........9.5
Credit Card....................2495......30........19.08
Personal Loan..................4170......189.......8.9
Store Card.....................240.......7.........19.9
Credit Card....................1000......23........18.24
Credit Card....................5300......120.......0
Total unsecured debts..........39782.....860.......-


Monthly Budget Summary
Total monthly income.................... 3,144
Expenses (including HP & secured debts). 2,966
Available for debt repayments........... 178
Monthly UNsecured debt repayments....... 860
Amount short for making debt repayments. -682

Personal Balance Sheet Summary
Total assets (things you own)........... 174,500
Total HP & Secured debt................. -146,000
Total Unsecured debt.................... -39,782
Net Assets.............................. -11,282

Reproduced on Moneysavingexpert with permission, using Firefox browser.

Ames

Moi_63 wrote: »

Right, we have spent all evening trying to sort out a SoA and this is what we have to show for it.

I would like to point out that the secured loan only has seven years left to run.

Anyway, here we go...

(I had to remove the link to soacal on makesenseofmoney because I'm not allowed to post links as I'm a new user. Apologies)

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.................... 1

Monthly Income Details
Monthly income after tax................ 1466
Partners monthly income after tax....... 1506
Benefits................................ 172 is this just child benefit? Have you looked into whether your husband could be eligible for DLA?
Other income............................ 0
Total monthly income.................... 3144

Monthly Expense Details
Mortgage................................ 750
Secured/HP loan repayments.............. 534
Rent.................................... 0
Management charge (leasehold property).. 0
Council tax............................. 156
Electricity............................. 60
Gas..................................... 100 ouch your energy costs are high, are you in arrears?
Oil..................................... 0
Water rates............................. 36
Telephone (land line)................... 0
Mobile phone............................ 0
TV Licence.............................. 12
Satellite/Cable TV...................... 23 this is a luxury you can't afford.
Internet Services....................... 30 this is really high, you can get broadband for less than a tenner now.
Groceries etc. ......................... 480 :eek: you should be able to halve this eventually, for now just aim to knock it down by a set amount each month or week. It's a lot healthier and cheaper to cook from scratch. Check out the old style forum on here for tips.
Clothing................................ 50 how old are the kids? This is high but I know school uniform can be expensive. Look at buying from ebay and charity shops and car boot sales, and making do with what you've got for a while.
Petrol/diesel........................... 140
Road tax................................ 15
Car Insurance........................... 32
Car maintenance (including MOT)......... 30
Car parking............................. 0
Other travel............................ 0
Childcare/nursery....................... 120
Other child related expenses............ 50 what's this?
Medical (prescriptions, dentist etc).... 20 what's this? If it's a regular prescription it might be cheaper to get a pre pay cert.
Pet insurance/vet bills................. 0
Buildings insurance..................... 13
Contents insurance...................... 13
Life assurance ......................... 68 this seems really high. With all the insurances make sure you shop around at renewal and get cashback.
Other insurance......................... 22 what's this for?
Presents (birthday, christmas etc)...... 50this is high. Only buy for kids, make as much as you can, check out car boots and charity shops, pick up bargain buys throughout the years.
Haircuts................................ 10
Entertainment........................... 10
Holiday................................. 50 this is a luxury
Emergency fund.......................... 0
Milk Delivery........................... 12 buy it in with the normal shopping
Window Cleaning......................... 10 cut this out
School Meals............................ 70 could they take sandwiches?
Total monthly expenses.................. 2966


Assets
Cash.................................... 0
House value (Gross)..................... 170000
Shares and bonds........................ 0
Car(s).................................. 4500
Other assets............................ 0
Total Assets............................ 174500


Secured & HP Debts
Description....................Debt......Monthly...APR
Mortgage...................... 106000...(750)......4.99
Secured Debt.................. 40000....(534)......6.9
Total secured & HP debts...... 146000....-.........-

Unsecured Debts
Description....................Debt......Monthly...APR
Personal Loan..................7500......200.......6.95
Credit Card....................3700......56........19.9
Credit Card....................6000......25........0
Store Card.....................566.......23........15.72
Credit Card....................4996......112.......22.9
Credit Card....................3815......75........9.5
Credit Card....................2495......30........19.08
Personal Loan..................4170......189.......8.9
Store Card.....................240.......7.........19.9 you could pay this off in a month by cutting your food bill down.
Credit Card....................1000......23........18.24
Credit Card....................5300......120.......0
Total unsecured debts..........39782.....860.......-


Monthly Budget Summary
Total monthly income.................... 3,144
Expenses (including HP & secured debts). 2,966
Available for debt repayments........... 178
Monthly UNsecured debt repayments....... 860
Amount short for making debt repayments. -682

Personal Balance Sheet Summary
Total assets (things you own)........... 174,500
Total HP & Secured debt................. -146,000
Total Unsecured debt.................... -39,782
Net Assets.............................. -11,282

Reproduced on Moneysavingexpert with permission, using Firefox browser.

Hi, there are loads of places for you to cut back, although I'm not sure you could cut back the total deficit. I know it seems overwhelming, which is why I've put that you could clear the store card in one month, just as an example of how it's worth making cutbacks, it's so easy to say 'oh it's just a tenner, what's the point, it's a drop in the ocean', but it really is worth it.

Cleverer people than me will be along with longer term solutions.

WASHER

I agree with Ames' comments.

I don't think you can make up the shortfall, but you can make a big difference to outgoings by cutting out non essentials, like school meals etc.

Why don't you set up a DMP yourself, and offer the creditors a token payment, yes it is going to take a long time to repay the debt, but you didn't get into debt overnight either.

BR maybe an option for you, but you have large equity in your home, you may to have sell if you decide to go BR.

Could you sell the house now and repay most of your debts and move into rented, you have almost £60K of equity, that would clear the secured debt and half of the unsecured debt, is this an option you would explore? You could be debt free within a few years this way and then you could look at buying a property again.


WASHER.x.

dktreesea

You've got quite a lot of equity in your home. Could you maybe increase your mortgage, by, say, around £20,000 and pay off the unsecured debts other than the personal loans and the two credit cards which have a 0% interest rate?

On the expenses front, other than perhaps cutting the window cleaning, holiday fund and entertainment, and maybe reducing the presents fund to £20 a month, by buying cards in bulk, and presetns when the sales are on - the books for £1 from Poundland are sometimes quite good titles)all of which would save £90 a month, and maybe cutting back on your grocery bill (we feed a family of four for around £200 a month) I'm not sure what you could cut.

Your electricity and gas look reasonable. We only have electricity, but it comes to around £220 a month over the year, so £160 a month looks quite good. You could cut cable TV, but put it this way - in our house that wouldn't be an option. For two people with full time jobs, I would imagine that childcare is a necessity.

WASHER

dktreesea wrote: »

You've got quite a lot of equity in your home. Could you maybe increase your mortgage, by, say, around £20,000 and pay off the unsecured debts other than the personal loans and the two credit cards which have a 0% interest rate?

.

With all due respect, this is not usually recommended. She will be turning unsecured debt into secured, personally I wouldn't do this, you are risking your home if you cannot keep up the repayments, anyway you will end up paying more in interest if you remortgage, and the Life cover would have to increase. Remortgaging- its not always the solution nor is it a quick fix.