Advice on way out please.

silvercar

Trying to help a friend who is in a bigger mess than I thought. I did direct him here without success. If anyone has any advice I'd be really grateful. As its a friend there is a limit to how much info he has given me.

Situation is that the wife has had to give up work suffering with depression/ suicide attempts. Is not getting much help from the doctors yet. They have one child currently studying in sixth form college.

Friend is now struggling at work. Basic salary is £40k + bonuses take home about £2,500 a month basic. He approached work for help and was given a loan repayable against bonuses. His bonuses used to be high (sales job) but his work has now suffered due to concerns over wife and he hasn't received bonuses for the last few months. His boss has called him for a chat and expressed concern at his recent sales levels. Luckily they have said that the loan was given to be repaid from bonuses not basic pay so won't start taking from pay. They have also said that if there is a way out of the financial mess they would consider a loan to clear his high interest debts that he could repay from salary. They would obviously be conditions to this, but it appears they want to help him.

soa is patchy, but this is the info I have:

mortgage - £978 repayment mortgage £150k mortgage, property value £158k.
secured loan - £377 outstanding is £18k
car loan £145
unsecured bank loan £361 (£15k outstanding)
credit cards and another loan - £530

gym for him and wife (only outlet?) £45
critical illness cover for mortgage £84
health insurance £37
life insurance £17
mobile £45
insurance £15
water £35
council tax £141
gas £40
electric £40
phone £25
food - ???

overdraft - £6,000 - don't know charges
unpaid loan to work £3,500

His only asset is his home, but with the mortgage and secured loan that is in negative equity to the tune of 10k+.
His unsecured loans and CC exceed £30k

Without even eating etc each month he has a £600 shortfall.

Any advice on a way out?

IF

Hi silvercar and Welcome, He's lucky to have a friend helping like you. First thing get him to make a list of all his creditors, debts and assets. Secondly and most important is to get him to contact one of the following debt charities. Please ask him to try these they don't charge and are impartial. They will go through all his options with him and if they suggest bankruptcy then ask him to come back to this board and we will help him all we can. Also if he's not ‘clicking’ with one of the Debt charities say to him to try another.

Ask him to read everything he can re Bankruptcy x


Please click on Blue links below.


For ‘essential’ info this is Fermi’s sticky - Click here

• Consumer Credit Counselling Service - Website: CCCS Telephone: 0800 138 1111
• National Debtline - Website: National Debtline Telephone: 0808 808 4000
• Citizens Advice Bureau - Website: Citizens Advice or visit your local CAB centre (find nearest)

Business Debtline - Website: Business Debtline


More Debt charities also on Fermi’s link - Click here


And do remember to say to him we’ve all been through this and anything he doesn't understand just ask away.

Best wishes
If...x

So_Sad_Angel

Hi Silvercar

Hope you are keeping well.

On first glance (reading between the lines maybe) but does your friend work for one of the finance houses or Banks? I say this as I have seen it happen where the employer is keen to help their employees to try & get them out of trouble.

He needs to contact one of the charities to get the professional viewpoint...mainly as they can see the whole situation & get a proper full picture. (guessing this might be difficult but worth suggesting to him).

That is a big shortfall though & he needs to do something soon...a DMP maybe until his bonuses return?

I will tender one word of warning though....if he takes loans with his employers & then has to take the BR route that would put him in a very difficult position & his job could potentially be on the line.

Sorry I can`t add more.....maybe check with one of the CCCS advisors on here.

silvercar

I've tried to make an soa:

Statement of Affairs and Personal Balance Sheet

Household Information
Number of adults in household........... 2
Number of children in household......... 1
Number of cars owned.................... 1

Monthly Income Details
Monthly income after tax................ 2500
Partners monthly income after tax....... 0
Benefits................................ 80
Other income............................ 0
Total monthly income.................... 2580

Monthly Expense Details
Mortgage................................ 978
Secured/HP loan repayments.............. 378
Rent.................................... 0
Management charge (leasehold property).. 0
Council tax............................. 141
Electricity............................. 30
Gas..................................... 30
Oil..................................... 0
Water rates............................. 15
Telephone (land line)................... 25
Mobile phone............................ 40
TV Licence.............................. 10
Satellite/Cable TV...................... 0
Internet Services....................... 10
Groceries etc. ......................... 300
Clothing................................ 100
Petrol/diesel........................... 20
Road tax................................ 10
Car Insurance........................... 30
Car maintenance (including MOT)......... 10
Car parking............................. 0
Other travel............................ 0
Childcare/nursery....................... 0
Other child related expenses............ 0
Medical (prescriptions, dentist etc).... 10
Pet insurance/vet bills................. 0
Buildings insurance..................... 20
Contents insurance...................... 0
Life assurance ......................... 18
Other insurance......................... 84
Presents (birthday, christmas etc)...... 20
Haircuts................................ 10
Entertainment........................... 0
Holiday................................. 0
Emergency fund.......................... 0
gym..................................... 45
heath insurance......................... 37
Total monthly expenses.................. 2371


Assets
Cash.................................... 0
House value (Gross)..................... 158000
Shares and bonds........................ 0
Car(s).................................. 2000
Other assets............................ 0
Total Assets............................ 160000


Secured & HP Debts
Description....................Debt......Monthly...APR
Mortgage...................... 150000...(978)......7
Secured Debt.................. 18000....(378)......10
Total secured & HP debts...... 168000....-.........-

Unsecured Debts
Description....................Debt......Monthly...APR
loan unsecured.................18000.....362.......0
credit cards...................14000.....530.......0
work loan......................3500......0.........0
Total unsecured debts..........35500.....892.......-


Monthly Budget Summary
Total monthly income.................... 2,580
Expenses (including HP & secured debts). 2,371
Available for debt repayments........... 209
Monthly UNsecured debt repayments....... 892
Amount short for making debt repayments. -683

Personal Balance Sheet Summary
Total assets (things you own)........... 160,000
Total HP & Secured debt................. -168,000
Total Unsecured debt.................... -35,500
Net Assets.............................. -43,500

Created using the SOA calculator at https://www.makesenseofcards.com.
Reproduced on Moneysavingexpert with permission, using other browser.

dojoman

silvercar wrote: »

I've tried to make an soa:

Statement of Affairs and Personal Balance Sheet

Household Information
Number of adults in household........... 2
Number of children in household......... 1
Number of cars owned.................... 1

Monthly Income Details
Monthly income after tax................ 2500
Partners monthly income after tax....... 0
Benefits................................ 80
Other income............................ 0
Total monthly income.................... 2580

Monthly Expense Details
Mortgage................................ 978
Secured/HP loan repayments.............. 378
Rent.................................... 0
Management charge (leasehold property).. 0
Council tax............................. 141
Electricity............................. 30 (SEEMS LOW)
Gas..................................... 30 (DITTO)
Oil..................................... 0
Water rates............................. 15
Telephone (land line)................... 25 (£60 INCLUDING MOBILES)
Mobile phone............................ 40
TV Licence.............................. 10 (£12)
Satellite/Cable TV...................... 0
Internet Services....................... 10
Groceries etc. ......................... 300 (£450)
Clothing................................ 100
Petrol/diesel........................... 20
Road tax................................ 10
Car Insurance........................... 30
Car maintenance (including MOT)......... 10
Car parking............................. 0
Other travel............................ 0
Childcare/nursery....................... 0
Other child related expenses............ 0
Medical (prescriptions, dentist etc).... 10
Pet insurance/vet bills................. 0
Buildings insurance..................... 20
Contents insurance...................... 0 (NO INSURANCE?)
Life assurance ......................... 18 (OR MAY HAVE AN INTEREST IN THIS)
Other insurance......................... 84
Presents (birthday, christmas etc)...... 20 (NOT ALLOWED)
Haircuts................................ 10 (£25)
Entertainment........................... 0
Holiday................................. 0
Emergency fund.......................... 0
gym..................................... 45 (NOT ALLOWED UNLESS A MEDICAL REQUIREMENT)
heath insurance......................... 37 (WHAT IS THIS?)
Total monthly expenses.................. 2371


Assets
Cash.................................... 0
House value (Gross)..................... 158000
Shares and bonds........................ 0
Car(s).................................. 2000
Other assets............................ 0
Total Assets............................ 160000


Secured & HP Debts
Description....................Debt......Monthly...APR
Mortgage...................... 150000...(978)......7
Secured Debt.................. 18000....(378)......10
Total secured & HP debts...... 168000....-.........-

Unsecured Debts
Description....................Debt......Monthly...APR
loan unsecured.................18000.....362.......0
credit cards...................14000.....530.......0
work loan......................3500......0.........0
Total unsecured debts..........35500.....892.......-


Monthly Budget Summary
Total monthly income.................... 2,580
Expenses (including HP & secured debts). 2,371
Available for debt repayments........... 209
Monthly UNsecured debt repayments....... 892
Amount short for making debt repayments. -683

Personal Balance Sheet Summary
Total assets (things you own)........... 160,000
Total HP & Secured debt................. -168,000
Total Unsecured debt.................... -35,500
Net Assets.............................. -43,500

Created using the SOA calculator at https://www.makesenseofcards.com.
Reproduced on Moneysavingexpert with permission, using other browser.

Hope this helps?

So_Sad_Angel

I`m wondering if your friend will have a good potential future bonus payments?...if so I`d be tempted to suggest that he pro rata his current excess between his creditors in the short term until his bonuses recover. (ie a self managed DMP perhaps?)...a link here tells you how to do it - http://www.ned-cab.org.uk/debtselfhelp/dmp.shtml

Additionally maybe a call to the customer assistance team at his mortgage company to see if they will consider a mortgage holiday of say 3 months to help him recover the situation. They will likely require a budget planner/financial statement to support this request.

Yes there is a high debt figure but this is on par with his income & I think its worth fighting on as future bonus will make all the difference IMO.

I was in a DMP of over 60k paying £195 a month for 18 months & all creditors agreed.....with the potential of recovering the situation once my bonus came back on track .Sadly in my case I could`nt carry on working but I am glad I gave it a shot.

Hope that helps.

silvercar

So_Sad_Angel wrote: »

I`m wondering if your friend will have a good potential future bonus payments?...if so I`d be tempted to suggest that he pro rata his current excess between his creditors in the short term until his bonuses recover. (ie a self managed DMP perhaps?)...a link here tells you how to do it - http://www.ned-cab.org.uk/debtselfhelp/dmp.shtml

Additionally maybe a call to the customer assistance team at his mortgage company to see if they will consider a mortgage holiday of say 3 months to help him recover the situation. They will likely require a budget planner/financial statement to support this request.

Yes there is a high debt figure but this is on par with his income & I think its worth fighting on as future bonus will make all the difference IMO.

I was in a DMP of over 60k paying £195 a month for 18 months & all creditors agreed.....with the potential of recovering the situation once my bonus came back on track .Sadly in my case I could`nt carry on working but I am glad I gave it a shot.

Hope that helps.

Thanks for that. It seems there is home. I thought that with no equity in the home and nothing much else, together with a £600 month shortfall, bankruptcy would be the only option.

So_Sad_Angel

silvercar wrote: »

Thanks for that. It seems there is home. I thought that with no equity in the home and nothing much else, together with a £600 month shortfall, bankruptcy would be the only option.

Always worth a shot....if it ends up as BR then at least he gave it a shot....plus potential for bonus makes all the difference IMO.

Btw is mortgage payment on interest only?.....for a short while anyway, as it will reduce payments. When I worked in mortgage customer assistance this was the first option to help the customer who was in difficulty.

Good luck & well done for helping your friend....that support is worth so much as you know.

silvercar

I'll suggest he try getting his mortgage moved to interest only. That is an easy first step.

silvercar

Spoken again, he doesn't think his bonuses will be that great.

With no assets and his job not at risk, wouldn't bankruptcy mean he can concentrate on the secured loan and mortgage whereas a DMP will leave the credit cards hanging over him? I just feel he needs a breathing space to help his wife and get back to his work properly.

silvercar

Nothing much has happened in 3 weeks, except he had to meet his boss this week to discuss his performance and if there is anything they can do to help him. I hope he is honest about his problems. He doesn't want to lose his house or his wife's car, but by clinging on to them he can't get rid of all the debts.:(