a sorry SOA

avizandum_2

Having a bad time. Wrote to CC's to freeze interest. Barclaycard said no. Waiting for others. Minimum payments were up to date until March this year. Tired of all the calls and threatening letters. Trying to apply for work after graduating and can't concentrate on my applications with their threats hanging over me. Got the rudest b'strd last week from John Lewis. I was speechless at the way he spoke to me. Cannot make the minimum payments any more. What will happen if I offer token amounts? Can they add interest while I make these payments? If I offer token will they put me in 'default'? If so what exactly does this mean?

Any help/advice much appreciated.


Statement of Affairs and Personal Balance Sheet


Household Information
Number of adults in household........... 1
Number of children in household......... 1
Number of cars owned.................... 1

Monthly Income Details
Monthly income after tax................ 690
Partners monthly income after tax....... 0
Benefits................................ 220
Other income............................ 90
Total monthly income.................... 1000

Monthly Expense Details
Mortgage................................ 590
Secured/HP loan repayments.............. 60
Rent.................................... 0
Management charge (leasehold property).. 0
Council tax............................. 0
Electricity............................. 14
Gas..................................... 15
Oil..................................... 0
Water rates............................. 0
Telephone (land line)................... 25
Mobile phone............................ 15
TV Licence.............................. 0
Satellite/Cable TV...................... 0
Internet Services....................... 0
Groceries etc. ......................... 140
Clothing................................ 0
Petrol/diesel........................... 45
Road tax................................ 0
Car Insurance........................... 20
Car maintenance (including MOT)......... 30
Car parking............................. 0
Other travel............................ 0
Childcare/nursery....................... 0
Other child related expenses............ 25
Medical (prescriptions, dentist etc).... 0
Pet insurance/vet bills................. 0
Buildings insurance..................... 17
Contents insurance...................... 0
Life assurance ......................... 10
Other insurance......................... 0
Presents (birthday, christmas etc)...... 0
Haircuts................................ 0
Entertainment........................... 0
Holiday................................. 0
Emergency fund.......................... 0
(Unnamed monthly expense)............... 0
Total monthly expenses.................. 1006


Assets
Cash.................................... 0
House value (Gross)..................... 150000
Shares and bonds........................ 0
Car(s).................................. 0
Other assets............................ 0
Total Assets............................ 150000

Secured & HP Debts
Description....................Debt......Monthly...APR
Mortgage...................... 96000....(590)......5
Hire Purchase (HP) debt ...... 3000.....(60).......3
Total secured & HP debts...... 99000.....-.........-

Unsecured Debts
Description....................Debt......Monthly...APR
Barclaycard....................1289......45........27
John Lewis CC..................5800......177.......16.9
Natwest CC.....................4890......72........0
B of S Loan....................5000......100.......8.9
University Fees................950.......10........0
Natwest Loan...................18000.....270.......7.9
Total unsecured debts..........35929.....674.......-


Monthly Budget Summary
Total monthly income.................... 1,000
Expenses (including HP & secured debts). 1,006
Available for debt repayments........... -6
Monthly UNsecured debt repayments....... 674
Amount short for making debt repayments. -680
Personal Balance Sheet Summary
Total assets (things you own)........... 150,000
Total HP & Secured debt................. -99,000
Total Unsecured debt.................... -35,929
Net Assets.............................. 15,071
Created using the SOA calculator
Reproduced on Moneysavingexpert with permission, using IE browser.[/font]

Hax

Wow. As your SOA shows that you're already spending more than you have coming in BEFORE you service your unsecured debts, I don't think you're left with many options.

With regards to you making token payments, your SOA shows that you don't even have the "free" funds available for them. If you are able to find the money needed for token payments, then the creditors will simply mark your account as being a month late for each month you fall behind, until the point you hit default status. At this point, they may, or may not pass the debt on to a collection company (which could possibly be just another section within the company).

You need to contact someone like the CCCS who can advise you of your best course of action - and they don't make a charge for the help they can provide.

From your SOA, you don't seem to have many areas where you can reduce your expenses. The only "obvious" one is the car - is it a necessity?

I really don't know what else to say - your level of unsecured debt is phenomenal when compared to your income - even more so when you consider that your income doesn't cover your monthly expenses (as listed)

Please call the CCCS - they're used to dealing with cases like yours and will be able to help and offer advice to you.

I hope you are able to find a solution to your problems and wish you the best of luck with dealing with them.

Hax

P.S. I know you're looking for work after finishing Uni - is there any chance you can get a second source of income going in the meantime? Maybe selling things you no longer have a need for - or perhaps getting another job. Increasing your income has to be the main focus point for improving your situation.

Tixy

Hi

Have you just graduated? what benefits are you getting? have you checked whether you are entitled to anything else.

Your main issue (aside from the debts) would appear to be the size of your mortgage repayments. is the a capital repayment mortgage or interest only? That might be an avenue to explore. Would getting a lodger be feasible? or could you rent out your property for the cost of the mortgage and you and your child rent somewhere cheaper?

One other option which only you can know if its suitable for you - would be selling you house and paying your debts and finding somewhere to rent whilst you get back on your feet and find work etc. I'm sure you've considered it but didn't want not to raise it as an option.

You definitely need advice from a debt charity. They are likey to suggest token payments but if you have had advice from them then at least your creditors may accept that you are acting on proper advice.

Have you written when you offered token payments? and did you ask them to freeze interest? they don't have to, they can continue to charge interest but quite often many will agree to freeze it.

If you don't pay, or pay just token payments then your creditors will issue a default notice and will mark a default on your credit file. This stays on your credit file for 6years and will affect your ability to get new credit/ a new mortgage etc. If you were financially associated (joint bank, loan, mortgage etc) with anyone else then their credit would also be affected.

Who do you bank with for your current account? is it a bank you owe money to? If so you need to open up a new bank account with a bank you don't owe money to to protect you from offsetting - this is when they take money from your current account to pay your debts or recall your overdraft if you have one.

So I would suggest
1) seek advice from a charity
2) open a new bank account if you need
3) send this letter or similar if you haven't already - http://forums.moneysavingexpert.com/showpost.html?p=21937969&postcount=52
4) send this letter - http://forums.moneysavingexpert.com/showpost.html?p=11571485&postcount=4

good luck

avizandum_2

Thanks for all the advice Tixy and Hax. Re the qu's:
Yes, Hax I never had enough money even before I made the payments. I ended up having to leave my flat and rent it out as I could not make the mortgage payments. (Rental income = £690 which I included in my income). I moved back home to my mums and I am not charged rent. (Thank God for parents).
Yes I have very little outgoings now (martyr bit here.. I haven't had hair cut since Feb etc, stopped going out, no holidays, no presents to people etc) but I need the car for daughters school and her swimming lessons etc.
Yes, I agree the unsecured debts are out of hand now. I was in f/t employment when I got them. I then had the bright (?) idea of chucking in my job & studying law.(Hence the £18000 professional trainee loan from Natwest)This was early 2007 before the big downturn. Very few legal traineeships at the moment but I am trying.
RE: other income. Have gone for lots of non legal jobs too and will keep applying
Tixy, I can't get benefits because of the rental income.
I called Halifax about moving to interest only but not much difference at all. And I dont want them to re-assess my income at this time.
Don't want to sell the flat yet if can avoid it. Have really been wrestling with this idea though as it would stop my creditors harrassing me. But the way things are with credit score I'll never get another chance
Thanks for the moving bank thing. John Lewis have made pre-arrangements to automatically take the £177 per month (I can't stop this with my bank as it is automatic (not DD) so I need to move my income to a safe place.
Checked out CCCS website. They had specific advice for people in England/Wales. Will call them to see if they cover Scotland.

Thanks for the advice. 6 years seems a long time to have no credit but think I have run out of choices. I will let the debt advice people mediate from now on if they can. Sick of talking to those bullies on the end of the phone.

Tixy

I'm fairly sure CCCS do cover scotland, but the law is different there and so are the potential options available to you.

National debtline website is another good source of info - it has a specific section for Scotland.

Might also be worth a quick look here IMPORTANT - Where to seek professional impartial advice about your debts.

Once you have a new bank account go for standing orders rather than DDs if you do need to set any up - as this means you can cancel it and only you can vary the amount sent.

Regarding the calls - if they call before you get those letters out then simply refuse to answer their security questions or confirm who you are, at least that will keep the calls short.

DebtFreedom_2

Hi there

I'm so sorry to hear - you've done the right thing for your career, and ended up in this pickle. I know the legal world has taken a real battering, and I can appreciate the problems you're facing.

I'm a Chartered Accountant, and in debt. But, working through it. I'm not sure about the legal profession, but I certainly need to be careful about not getting into trouble as it could affect my 'fit and proper' registration. I assume the same would apply to you.

The reason I say this is that you need to seek advice very soon so that this doesn't spiral - and really focus on the options which wouldn't have an impact on your ability to practice law in the future.

Good luck with it all...

ERICS_MUM

I know it's not legal work but you could think about getting a temporary Christmas job with a high street store such as M&S, Argos etc. I noticed Argos had recruitment posters up the other day. Supermarkets too, I don't know if you would get a staff discount ?

Also I've registered for work on the Census in spring next year and already had details of various roles. As an example there is a coordinator job total hours 424 over several weeks at just under a tenner an hour. It's worth registering and trying to secure a job even just for a few weeks and so far in the future.

Good luck. xx

avizandum_2

Thanks again everyone
Tixy- I'll check out both organisations. Did try my local CAB earlier this year but they were very busy (queued for 4.5 hours) but the biggest problem was the staff member did not know her stuff. (You lot have answered the qu's I asked her, she answered "I'm not really sure"
Debtfreedom, thanks so much for the encouragement. Problem has been that in Scotland if you want to convert to law you need to do the whole undergrad LLB (even when you have an existing degree) and then a one year postgrad (and the fees are extortionate -£9kp.a. hence the mammoth Natwest loan). However if I get a traineeship it will level out..
In Scotland there is a 'fit & proper person' reqmnt for solicitors but from my reading I would only be explicitly barred from entering certain legal positions (I.e. Insolvency Practitioner) if I were bankrupt. But you're right I need to get things fixed asap so this thing doesn't spiral.
Eric's mum: Thanks, yes I am applying for all kinds of jobs. I am scouring the job ads and applying for everything w/i travelling distance. Have had 2 interviews this week, will hear in October.

PS Stupid qu: If the default(s) on my credit file last 6 years does this run from when I accrue the default(s) or when I finish paying the b*ggers off? Thanks in advance

Hax

Certainly in England, defaults will drop off your credit record after six years from the date they were first registered - regardless of whether they have been satisfied. Not sure if there's any differences with Scotland