MSE virgin after some advice please

E-Lou1976

Hi

I've finally plucked up the courage to register and face my debt problems but am just at a loss at where to start.

I have worked out that I have £11,500 of credit card and overdraft debt We don't live an expensive lifestyle, we just got into debt young and it has spiralled out of control. The majority of spending on our cards has been for car repairs, bill payment when the recession hit, food, nothing too extravagant. After interest rate hikes I can only afford to pay minimum payments on each card and am only covering interest each month.

I have tonight approached my own bank where I have been a customer for about 15 years to see how they could help. They could only offer a loan for £4,500 to consolidate internal debt, they would not cover anything held externally. They say I should check my credit file. I know we have gone over our joint account overdraft limit a few times recently... so I assume my credit rating is shot.

I'm at a loss as to what to do. I can just about manage the minimum monthly payments but I am getting so disheartened about not seeing the debt reduce. I figured if I covered everything with a loan, got rid of the credit cards, then at least I could chip away at the debt and see it reduce, albeit slowly!

I have been googling like crazy to see what options are available, IVAs, bankrupcy etc but I don't know where to start. I work in financial services (admin for an Independent Adviser) so I know that my financial position can have an effect on my job, I'm not sure if I approach my creditors saying I can't afford payments, will it get flagged up with my employers? Will this even be an option cos I can just afford to pay...

I have done as much cost cutting as I can. Switched electricity, reduced TV to minimum package, phone and internet are free with the TV, have cancelled gym membership, started food shopping at Aldi, I can't see anywhere else we can cut back. Switching credit cards isn't an option cos of the poor credit rating.

Sorry for the waffling... any advice will be greatly appreciated!

bottleofred

Hi E_Lou and welcome to the forum,

From what you have stated, the loan from the bank is not going to be any good to cover all the debt and having been where you are now, I don't think it's a good idea to consider it, but that decision is entirely up to you. There are many options for people with debts and a debt management plan from the consumer credit counselling service or payplan (there are other free companies) seems to be the best option, although I've no idea what way it will affect your job (i think it would be ok, but wait until someone with better knowledge than me comes along). I managed to get a debt consolidation loan before and cleared all the credit cards and loans etc, but it did not work for me and I'd be surprised if it really ever works for anybody.

Good luck in getting sorted

E-Lou1976

Thanks for the quick reply! To be honest, I'm not sure the loan is any help, been there done that bought the t-shirt before. I just wonder if maybe a small help is better than non iykwim?

[Deleted User]

Start with a statement of affairs - http://www.makesenseofcards.com/soacalc.html if you haven't done one yet. Then you'll be able to see the full picture. If you post it here people will be able to offer advice.

Hope it helps.

bottleofred

Hi E_lou,

I personally would discourage you from getting the loan, but the decision is entirely up to you. I consolidated before by getting a joint loan for £12000 to clear all the cards and loans etc, which I did. However, I kept the cards and before long, the balances were as bad as ever and I was able to meet the minimum payments on everything, but had no money left to spend on groceries, diesel etc. I then had to use the cards again just to survive. I understand how easy it is to run up the card debts to the limit (or close to it) and then hope to get a loan to sort it out. Providing it does not affect your job, I personally felt a huge weight had been lifted from my shoulders whenever I started my DMP with the consumer credit counselling service. Don't misunderstand me, creditors phoned and harassed me for more cash, but there simply was no more to give them and eventually things did get better. I changed my phone number at home, but at that point I had no idea you could ask creditors only to contact you by letter and things did get better. You'll get all the help and support you need on this forum, because I definately have and for me, the people with most knowledge/advice etc will always try to help you. Wait to see what other responses you get and how it will affect your job (if at all) before deciding what to do, but you will get support on this forum. You should definately post a statement of affairs to see if you can save money anywhere as well.

E-Lou1976

Thanks Domino9. I'll check it out now. Wow, this is a great way to be spending a saturday evening eh??

E-Lou1976

OK, here goes... All household bills etc are 1/2 share, me and DH pay equal amounts into a joint bills account so these are always covered. This is just looking at my income and outgoings and my share of the joint outgoings


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.................... 1
Monthly Income Details
Monthly income after tax................ 1125
Partners monthly income after tax....... 0
Benefits................................ 0
Other income............................ 0
Total monthly income.................... 1125
Monthly Expense Details
Mortgage................................ 228
Secured/HP loan repayments.............. 120.5
Rent.................................... 0
Management charge (leasehold property).. 0
Council tax............................. 60
Electricity............................. 41
Gas..................................... 0
Oil..................................... 0
Water rates............................. 21.75
Telephone (land line)................... 5
Mobile phone............................ 5
TV Licence.............................. 6
Satellite/Cable TV...................... 20
Internet Services....................... 0
Groceries etc. ......................... 150
Clothing................................ 20
Petrol/diesel........................... 0
Road tax................................ 20
Car Insurance........................... 16.75
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..................... 4.07
Contents insurance...................... 4.07
Life assurance ......................... 8.20
Other insurance......................... 0
Presents (birthday, christmas etc)...... 0
Haircuts................................ 0
Entertainment........................... 0
Holiday................................. 0
Emergency fund.......................... 0
Total monthly expenses.................. 734.34

Assets
Cash.................................... 0
House value (Gross)..................... 100000
Shares and bonds........................ 0
Car(s).................................. 1000
Other assets............................ 0
Total Assets............................ 101000

Secured & HP Debts
Description....................Debt......Monthly...APR
Mortgage...................... 0........(228)......0
Secured Debt.................. 0........(120.5)....0
Total secured & HP debts...... 0.........-.........-
Unsecured Debts
Description....................Debt......Monthly...APR
FD Visa........................3946......119.......0
Abbey Visa.....................4899......125.......0
Barclaycard....................2233......50........0
FD overdraft...................600.......0.........0
Total unsecured debts..........11678.....294.......-

Monthly Budget Summary
Total monthly income.................... 1,125
Expenses (including HP & secured debts). 734.34
Available for debt repayments........... 390.66
Monthly UNsecured debt repayments....... 294
Amount left after debt repayments....... 96.66
Personal Balance Sheet Summary
Total assets (things you own)........... 101,000
Total HP & Secured debt................. -0
Total Unsecured debt.................... -11,678
Net Assets.............................. 89,322
Reproduced on Moneysavingexpert with permission, using IE browser.

[Deleted User]

Does your partner not work? If not, can the not claim job seekers allowance?

Do you know where te £96 goes? Are you sure you're not missing any other spends where this might be going? You have nothing down for entertainment, haircuts, emergencies etc. If you don't know where this cash is going, you need to keep a spending diary and write down everything that you spend money on (from a chocolate bar to the water bill) Then you will know where your income'ss going.

Is your Council tax paid over 10 months or 12 - maybe you can ask to switch to 12 months if you're currently paying over 10. And if your partner's not working, see if you can get any assistance for the Council Tax.

You might be able to get your grocery bill down a bit if you visit the old style board for hints and tips.

Cut out Satellight/Cable TV if you can - it's not a necesity.

Also, can you put in the APR's for the CC's and Overdraft. You do seem to have a monthly surplus, and should be spending this on the debt with the highest rate, so that overall you'll be chipping away at getting your debts paid off quicker.

Hope it helps

gargrave50

Keep a spending diary - its invaluable advice! Then you can repost your SOA and reflect - its surprising how inaccurate your SOA is without the benefit of a spending diary!

E-Lou1976

Thanks Domino. I've edited my post again. Red items are my half of joint monthly outgoings (£535.34) and I pay £600 to the bills account to cover this. Hubby pays the same. Any surplus is used towards car repairs, birthdays, nights out etc. He does work but aside from the household bills coloured in red, we keep our finances seperate. Am not sure about the APRs for the CCs and overdraft, they never make them easy to find do they?? Will do some research into these...

Thanks for the tips though, am thinking a spending diary may be a very good idea cos I can't see where the surplus is going...I don't think I've taken into account my pension contribution either, this is made by salary sacrifice so my take home pay will be about £50 less... I think just taking my head out from the sand has made me think about things a bit more, I guess its a start. I appreciate I'm not in debt crisis but can see me slipping that way which is why I have realised I need help before it gets too bad.

:beer: Thanks very much! (was looking for a 'thank you' smiley but couldn't find one so 'cheers' will have to do!)

E-Lou1976

gargrave50 wrote: »

Keep a spending diary - its invaluable advice! Then you can repost your SOA and reflect - its surprising how inaccurate your SOA is without the benefit of a spending diary!

Thanks! I'm thinking this is defintely the way to go. Time to start facing up to things eh?