I really need help

Harry_BullZak

First post. Sorry this may be a bit long.

A little about me. I've been in and out of debt 2 times since I was 18. Now 31. First time money was thrown at me when I was 18, didn't need it but I stupidly took it (about £18k). The second time, about 25, I started my own business and it failed (about £17k). Currently, I have a small amount left from that debt but since moving in to my own property the debts have risen once again.

This time however, the debts are very high. As you can see below.
Credit Card (6 creditors) = £19,950
Personal Loan = £7,500
Unsecured Loan* (as part of mortgage) = £18,000
Next = £500
Overdraft = £500

TOTAL = £46,450

I also currently (I can't stress currently enough, more on that shortly) have the following bills to pay per month.
ESSENTIALS:
Mortgage (including payment towards loan above) = £690
Council Tax = £65
Gas & Electric = £45
Water Rates = £22
Household Insurance(s) = £16
Boiler Service = £23.50
OTHER:
Work Travel = £96
Mobile = £35
Gym = £46
Sky+ = £80

My current salary is around £2230 after tax and with all of the above coming out each month (including payments to my various creditors and the overdraft) I am left with a deficit of -£250 a month. As you can see above I haven't included bills for food etc, because currently I cannot set a budget for this. I just have to make do. I do have two large personal bills for Sky & the gym, but if I didn't have these, I wouldn't have anything. So I am quite determined to keep these going.

Now, long story short, I believe that in a few months I will be able to cut back enough to get back on track, but, this is a big but, my circumstances are due to change.

The flat I own is actually shared with my partner who is now my Ex. We are still living together but we are now looking at options of what to do next. Now for some it would be an option to just sell, but because of the Unsecured Loan and with anything of £10-25k negative equity in the property, both myself and my ex will be left with pretty substantial extra personal debt, and for me at the very least, getting back on the property ladder looks like something that I will not be able to do for at least another 10-15 years because of it.

As a result, I want to try to keep the flat on myself. I am very lucky that I can move in with my Dad for very cheap rent and have already had the property valued for rental. Believe it or not I would actually be better off every month doing this than I am now!

There is a problem though. I currently have really poor credit, no capital and am really unclear if I will be able to remortgage at this time.

I had a chat with the people at CCC and they have suggested starting a DMP. Which once my partner and I go our separate ways I will be able to review.

I'm just really worried about doing this as I know my credit is going to get battered for a long while. I am also very keen to try to remortgage, because at today's rates I would be anything from £500-750 a month better off depending on the rate I was able to get. Just do not believe I would be able to remortgage at this time.

Any help/advice would be appreciated. Thanks.

Hannah_10

Hi Harry, welcome to here. Well done on giving us so much information to open with, but we could still use a few more bits. If you could fill this one out and show us your answers then we'll have a better idea.

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

Also there's a lot of good advice in this post that I wont go into repeating, do have a read. https://forums.moneysavingexpert.com/discussion/107280

Harry_BullZak

Statement of Affairs and Personal Balance Sheet

Household Information
Number of adults in household........... 2
Number of children in household......... 0
Number of cars owned.................... 0

Monthly Income Details
Monthly income after tax................ 2230
Partners monthly income after tax....... 0
Benefits................................ 0
Other income............................ 0
Total monthly income.................... 2230

Monthly Expense Details
Mortgage................................ 627
Secured/HP loan repayments.............. 0
Rent.................................... 0
Management charge (leasehold property).. 1
Council tax............................. 65
Electricity............................. 25
Gas..................................... 20
Oil..................................... 0
Water rates............................. 22
Telephone (land line)................... 0
Mobile phone............................ 35
TV Licence.............................. 6.5
Satellite/Cable TV...................... 80
Internet Services....................... 0
Groceries etc. ......................... 100
Clothing................................ 25
Petrol/diesel........................... 0
Road tax................................ 0
Car Insurance........................... 0
Car maintenance (including MOT)......... 0
Car parking............................. 0
Other travel............................ 96
Childcare/nursery....................... 0
Other child related expenses............ 0
Medical (prescriptions, dentist etc).... 0
Pet insurance/vet bills................. 0
Buildings insurance..................... 9.5
Contents insurance...................... 0
Life assurance ......................... 6.5
Other insurance......................... 0
Presents (birthday, christmas etc)...... 0
Haircuts................................ 15
Entertainment........................... 200
Holiday................................. 0
Emergency fund.......................... 0
Gym..................................... 46
Boiler Services......................... 23.5
Total monthly expenses.................. 1403


Assets
Cash.................................... 0
House value (Gross)..................... 200000
Shares and bonds........................ 0
Car(s).................................. 0
Other assets............................ 0
Total Assets............................ 200000


Secured & HP Debts
Description....................Debt......Monthly...APR
Mortgage...................... 220000...(627)......6.78
Total secured & HP debts...... 220000....-.........-

Unsecured Debts
Description....................Debt......Monthly...APR
Virgin CC......................6800......180.......19
GOSH CC........................4600......130.......19
Barclaycard CC.................3150......80........19
Overdraft......................500.......5.........0
Next...........................500.......60........19
Unsecured Loan.................18000.....63........6.78
Smile Loan.....................7500......280.......7
Santander CC...................1300......40........19
Capital One CC.................2000......60........19
Tesco CC.......................2100......45........19
Total unsecured debts..........46450.....943.......-


Monthly Budget Summary
Total monthly income.................... 2,230
Expenses (including HP & secured debts). 1,403
Available for debt repayments........... 827
Monthly UNsecured debt repayments....... 943
Amount short for making debt repayments. -116

Personal Balance Sheet Summary
Total assets (things you own)........... 200,000
Total HP & Secured debt................. -220,000
Total Unsecured debt.................... -46,450
Net Assets.............................. -66,450

Tixy

Hi

It looks like you have missed off quite a lot of essentials. You need to budget for groceries, presents, haircuts etc. You haven't put in the gym or the boiler service costs.

Which of the costs above are the full costs of the property and which are just a 50% share with your ex? Eg TV licence is obviously only half the cost.

If you take on the house from your ex what are they planning to do about the negative equity? are they going to pay you 50% of the negative, eg £10k?

What do you mean by a poor credit history? have you missed payments? defaults? CCJs?

I cannot see any way that you will get a remortgage for this property. And if you did it would likely only be at 75% LTV leaving you with a huge shortfall.

And your salary is not large enough to allow you to borrow this much even without a poor credit history. If there wasn't an issue with neg equity you could possibly have looked at BTL mortgages but I can't see a way round it as it is.

If ex definitely wants out of the mortgage then I think you will have to sell and both suffer the mortgage shortfall. Is ex in a position to pay off their £10k immediately.

Have you considered/talked about both keeping that property in joint names and renting it out, with the hope that your rent will cover the current mortgage and costs needed and keep it until it is no longer in negative equity. Though you would need to check whether you are allowed to rent it out on the terms of your current mortgage.

Are you repayments right on your debts above? Have you entered any informal agreements with any yet? Only
Unsecured Loan.................18000.....63........6.78 this repayment won't even be covering the interest and this debt must be increasing each month.

Harry_BullZak

Thank you for the reply Hannah. As you can see I do have a bit of money left over, which is why I am nervous about a DMP, but I haven't done scenario 2, which is something that I definitely want to do.

Do you think I should do another SOA for that scenario?

Harry_BullZak

Thanks Tixy.

I didn't include these things as I never actually budget for them, I just use whatever cash I have available. I'll update the SOA.

All essential costs are half or just over half of the bills.

As for taking on the mortgage myself, I'm a bit frustrated by your comments. Not at you, you understand, but the reality of the situation. Some of the questions I cannot answer fully as I am currently discussing options with my Ex. She definitely has no money though.

Yeah the repayments for the debts are correct. With the one you highlight, that is (technically) my share of the £125 loan. This is paid alongside the mortgage. It really isn't a good deal at all. I haven't entered into any agreement with any creditors at the moment.

Harry_BullZak

I've now updated the SOA. Thanks.

RAS

is this based on you paying HALF the expenses for all the household items? Or is some all and some half?

Harry_BullZak

It is based on half.

RAS

So your satelite Tv is £160 per month?

Harry_BullZak

No, the Satelite (which includes phone & internet) is actually £105. I do pay a little bit more than my ex on some of the bills.

The total 'joint' bills are as follows:
Mortgage (including payment towards Unsecured Loan) = £1,345.00
Council Tax = £130.00
Electric = £50.00
Gas = £40.00
Water = £44.00
TV Licence = £13.00
Service Charge = £11 (per year)
Building Insurance = £15.00
Life Insurance = £19.00
British Gas Home Care = £23.50
Sky+ = £80.00
Gym = £92.00