Need help deciding?? Should we do an IVA??

misterbarlow

I will start by saying that since turning 18 I have always held an excellent credit rating, and have always had credit thrown at me by everyone...
which is probably part of the problem really!!

Since movng house (& remortgaging) in 2007 my wife has gone down to p/t work as we had another baby (we now have a 4yr old just started infants, and a 2yr old who is not in education yet), and our income has dropped a lot and wont be going back up again until our youngest hits f/t school, my wife used to be on on 22k+, and now is just on 8k, the cost of childcare makes her going back f/t unfeasable at the moment!!
I earn a basic of 22k gross, plus about 6k in optional overtime = about 28k gross.

Just before she found out she was pregnant with our 2nd child in 2007 we were forced to move home at the peak of the property market (due to a very bad problem neighbour) and we remortgaged a lot compared to what we owed at the time (new mortgage was 127k, borrowed with a 13k deposit (taken from equity of old house) on a 140k property) and we also took out an unsecured loan with same bank as the mortgage just after moving of 24k, to consolidate our current credit cards, bank loan, car loan etc, and the current loan balance on that is now 17k with just under 5yrs left.. the current mortgage balance is about 120k.. but the property is now worth about 115k so we are in negative equity on the home..

Our income has always been less than our outgoings (due to my wife leaving f/t work) for our DD's, mortgage, loan, cards, utilties, etc, so any unexpected needs that crop up, ie car MOT/repairs, xmas, birthdays, new clothes for kids, househould appliance repairs, etc, etc, we have always all had to put things on the credit cards as we never had the cash...
I get about £1700net and my outgoings are are always more than that (mortgage is about £500 now (was more before rates dropped), loan £450, credit cards £250, utilities £150, phone/mobiles etc £70, life/home/car insurances £200, other misc stuff about £200) my wife gets about £600 net and we spend more than that in food shopping and petrol per month too
...
we just dont have any money left over after paying all the bills, petrol, food shopping, etc..
so it all ends up going on cards or being borrowed from the mortgage reserve, and over the years they have all crept up and up and up...

As we stand, i now personally owe about 12k on credit cards (on 3x cards.. all on 0% rates, but yeah the balance is enough to worry...),
plus as stated I have just under 17k left on the bank loan (which has just under 5yrs left at 9%), and with suplementing the shopping etc that my wife doesnt earn enough to pay for, as i spend more than i earn every month, I always have to borrow a few hundred against the mortgage reserve account every month just to stay in the black with the bank, so I now owe about 7k on the mortgage reserve account as well and that is reaching the limit of what we have paid off the capital...
I also have a £1000 od on my current account that I would go over each month without the borrowing from the mortgage reserve account..
my wife also has built about 5k on her credit cards over the years, for the things that I cant afford to get on mine..

All told our unsecured debts are around 42-43k, and the only way we can make the minimum payments is by robbing peter to pay paul...

As stated, every month in order to stay in the black with everyone and meet all our minimum payments, I have to borrow about £300 from the mortgage reserve account, which is going up and up and up every month, and is now on about 7k and reching the limit of what we have paid off the mortgage..

Obviously this is not sustainable as we are just not paying anything off the mortgage to start with as I keep borrowing against it, and we are only paying the minimum amount on the credit cards..

we are just treading water!

I have always valued my good credit rating, but we have reached the point were i am finally considering just stopping doing any overtime, not meeting the minimum payments any more, getting into trouble and in a few months just doing an IVA and seeing what we can write off....

I dont like the thought of it at all, but the way we are going its gonna be 50yrs+ to pay this lot off (and I am 37 now) and the only other option is... well to be honest, its having a serious accident at work and taking the insurance!!
Which I dont even want to consider, but its getting closer all the time!!!

So!
I know its all our own doing at the end of the day..
that much is not in question..

But, right decision or not??
Should we stop paying it all and do an IVA before i get depressed enought to start going down that road??
Once the interest rates finally start going up (and they are bound to at some point in the future) its going to push us beyond breaking point...

To_be_Free

Hi,
Sorry cant tell you which way is best for you to go but if you go to the Debt free wannabee board http://forums.moneysavingexpert.com/forumdisplay.php?f=76 and post an SOA you will get a lot of help there.
This post https://forums.moneysavingexpert.com/discussion/107280 give lots of advice for first time posters and links to lots of help and an SOA calculator.