Please Help!

ShelleyR

Statement of Affairs and Personal Balance Sheet
Household Information
Number of adults in household........... 2
Number of children in household......... 2
Number of cars owned.................... 1
Monthly Income Details
Monthly income after tax................ 3020
Partners monthly income after tax....... 0
Benefits................................ 135
Other income............................ 0
Total monthly income.................... 3155
Monthly Expense Details
Mortgage................................ 950 Currently Interest only
Secured/HP loan repayments.............. 315 Car Finance 3 year term currently trying to downgrade
Rent.................................... 0
Management charge (leasehold property).. 0
Council tax............................. 184
Electricity............................. 40
Gas..................................... 35
Oil..................................... 0
Water rates............................. 30
Telephone (land line)................... 20
Mobile phone............................ 25 For both of us
TV Licence.............................. 35
Satellite/Cable TV...................... 16
Internet Services....................... 15
Groceries etc. ......................... 350
Clothing................................ 20
Petrol/diesel........................... 80
Road tax................................ 10
Car Insurance........................... 12
Car maintenance (including MOT)......... 10
Car parking............................. 0
Other travel............................ 45 Husbands tube travel to work
Childcare/nursery....................... 0
Other child related expenses............ 15
Medical (prescriptions, dentist etc).... 8
Pet insurance/vet bills................. 0
Buildings insurance..................... 15
Contents insurance...................... 10
Life assurance ......................... 100 This is high due to my husbands heart condition
Other insurance......................... 0
Presents (birthday, christmas etc)...... 10
Haircuts................................ 0 Mums a hairdresser!
Entertainment........................... 40
Holiday................................. 10
Emergency fund.......................... 30
Total monthly expenses.................. 2430

Assets
Cash.................................... 0
House value (Gross)..................... 420000
Shares and bonds........................ 0
Car(s).................................. 14000
Other assets............................ 0
Total Assets............................ 434000

Secured & HP Debts
Description....................Debt......Monthly...APR
Mortgage...................... 300900...(950)......3.5
Hire Purchase (HP) debt ...... 15000....(315)......5
Total secured & HP debts...... 315900....-.........-
Unsecured Debts
Description....................Debt......Monthly...APR
Capital One CC.................13600.....415.......21 Limit £ 14500
HSBC CC........................6200......150.......16 Limit £10500
Halifax CC.....................3700......101.......24 Limit £13500
Loan from Parents..............24000.....305.......8
Alliance & leicester ..........5000......200.......7.8
Tesco Personal Loan............8000......181.......7
MBNA CC........................3700......57........18 Limit £4000
Total unsecured debts..........64200.....1409......-

Monthly Budget Summary
Total monthly income.................... 3,155
Expenses (including HP & secured debts). 2,430
Available for debt repayments........... 725
Monthly UNsecured debt repayments....... 1,409
Amount short for making debt repayments. -684
Personal Balance Sheet Summary
Total assets (things you own)........... 434,000
Total HP & Secured debt................. -315,900
Total Unsecured debt.................... -64,200
Net Assets.............................. 53,900

So here it is in all its glory our sorry mess

We have visited the CCCS website and have been given the options of either a DMP which would take forever to repay as we have so little left at month end or selling our property to clear the entire debt, this has resulted in numerous arguments between my husband and I as to what is the best way of dealing with the situation.

Our house has been valued at around £420000k and when we put it on the market briefly we had people round straight away and 2 offers in the first 2 days so I am confident we could acheive this price and we would therefore taking into account selling fees have enough money to pay off the debt in its entirity apart from the car which is the HP item which we are currently trying to downgrade. WE would then be left with around £30k to put away and hopefully start saving for a new house whilst renting for say a year or so.

However my husband seems to think that we should stick with the house as he feels it will go up in value so much that in the future we will regret selling now, howver the DMP seems like such a long slog with the little amount we can pay into it plus I am frightened of the bad credit we will then have and the future repurcussions of this.

I know no-one can tell us what to do I guess I just maybe want a fresh set of eyes to look at things and give me any opinions.

I am looking for part time work at the mo to try to increase our income and have tryed to cut back as much as possible.

Many Thanks

secretshopper75

Hi and welcome, is there any chance of renting the house and moving in with parents? That way you could maybe use any surplus rent each month to pay off debts. If this is not an option how long would the DMP take to clear?

RAS

ShelleyR wrote: »

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................ 3020
Partners monthly income after tax....... 0 any chance of your goiong out to work for a few hours a week, there would be no tax or NI so it is more effective than an increase in salary for your OH
Benefits................................ 135
Other income............................ 0
Total monthly income.................... 3155
Monthly Expense Details
Mortgage................................ 950 Currently Interest only
Secured/HP loan repayments.............. 315 Car Finance 3 year term currently trying to downgrade - when does this end?
Rent.................................... 0
Management charge (leasehold property).. 0
Council tax............................. 184
Electricity............................. 40
Gas..................................... 35
Oil..................................... 0
Water rates............................. 30
Telephone (land line)................... 20
Mobile phone............................ 25 For both of us
TV Licence.............................. 35 - this is very high. it should be £12
Satellite/Cable TV...................... 16 - you need to get rid of this - you cannot afford it
Internet Services....................... 15
Groceries etc. ......................... 350 - this is huge for three. You should aim for £200
Clothing................................ 20
Petrol/diesel........................... 80 - what do you use the car for?
Road tax................................ 10
Car Insurance........................... 12
Car maintenance (including MOT)......... 10
Car parking............................. 0
Other travel............................ 45 Husbands tube travel to work
Childcare/nursery....................... 0
Other child related expenses............ 15 - what is this?
Medical (prescriptions, dentist etc).... 8
Pet insurance/vet bills................. 0
Buildings insurance..................... 15
Contents insurance...................... 10
Life assurance ......................... 100 This is high due to my husbands heart condition
Other insurance......................... 0
Presents (birthday, christmas etc)...... 10
Haircuts................................ 0 Mums a hairdresser!
Entertainment........................... 40 - halve this
Holiday................................. 10
Emergency fund.......................... 30 - this is an emergency, how much is in the fund?
Total monthly expenses.................. 2430

Assets
Cash.................................... 0
House value (Gross)..................... 420000
Shares and bonds........................ 0
Car(s).................................. 14000 - if this is HP, at what point can you give the car back without penalty?
Other assets............................ 0
Total Assets............................ 434000

Secured & HP Debts
Description....................Debt......Monthly...APR
Mortgage...................... 300900...(950)......3.5
Hire Purchase (HP) debt ...... 15000....(315)......5
Total secured & HP debts...... 315900....-.........-
Unsecured Debts
Description....................Debt......Monthly...APR
Capital One CC.................13600.....415.......21 - well this is the priority
HSBC CC........................6200......150.......16
Halifax CC.....................3700......101.......24
Loan from Parents..............24000.....305.......8
Alliance & leicester ..........5000......200.......7.8
Tesco Personal Loan............8000......181.......7
MBNA CC........................3700......57........18
Total unsecured debts..........64200.....1409......-

Monthly Budget Summary
Total monthly income.................... 3,155
Expenses (including HP & secured debts). 2,430
Available for debt repayments........... 725
Monthly UNsecured debt repayments....... 1,409
Amount short for making debt repayments. -684
Personal Balance Sheet Summary
Total assets (things you own)........... 434,000
Total HP & Secured debt................. -315,900
Total Unsecured debt.................... -64,200
Net Assets.............................. 53,900

So here it is in all its glory our sorry mess

We have visited the CCCS website and have been given the options of either a DMP which would take forever to repay as we have so little left at month end or selling our property to clear the entire debt, this has resulted in numerous arguments between my husband and I as to what is the best way of dealing with the situation.

Our house has been valued at around £420000k and when we put it on the market briefly we had people round straight away and 2 offers in the first 2 days so I am confident we could acheive this price and we would therefore taking into account selling fees have enough money to pay off the debt in its entirity apart from the car which is the HP item which we are currently trying to downgrade. WE would then be left with around £30k to put away and hopefully start saving for a new house whilst renting for say a year or so.

However my husband seems to think that we should stick with the house as he feels it will go up in value so much that in the future we will regret selling now, howver the DMP seems like such a long slog with the little amount we can pay into it plus I am frightened of the bad credit we will then have and the future repurcussions of this.

I know no-one can tell us what to do I guess I just maybe want a fresh set of eyes to look at things and give me any opinions.

I am looking for part time work at the mo to try to increase our income and have tryed to cut back as much as possible.

Many Thanks

Your first requirement is to balance your budget.

Poostix

I think that although your house could go up in price it could also go down and having 30K left after paying off all your debts is a very good position to be in, where as a DMP would leave you waiting about 6 years after paying off your debts to be able to get a reasonable morgage deal due to the mess your credit file will be in once you have finished?

I'd go with the 30K in the hand with good credit rating and debt free then start again on the housing ladder a little lower down? New builds have had a lot chopped off the price at the minute meaning you could get a good deal on one with that type of deposit?

ShelleyR

secretshopper75 wrote: »

Hi and welcome, is there any chance of renting the house and moving in with parents? That way you could maybe use any surplus rent each month to pay off debts. If this is not an option how long would the DMP take to clear?

Thanks, unfortunately my parents only have a 2 bed flat so not an option with the 4 of us!

katsu

Can you talk to your parents and negotiate a lower loan repayment to them, to help you balance the books a bit better?

If your husband does not want to sell, when you show him the SOA, what does he suggest you do instead? You have more going out than coming in - does he understand that?

ShelleyR

RAS wrote: »

Your first requirement is to balance your budget.

Hi RAS,

I am currently applying for lots of part time jobs not so easy to come by as have child care to consider too but applying for as many as I can.

The car finance has 2 years remaining after which we can hand the car back. I have been to the dealer we bought it from and they are trying to source us a cheaper model so that we can reduce our monthly payments by at least half. The car is used for the school run which is a 50 minute walk away and also my husband has to drive to his office in Bracknell wice a week which is a 160 mile round trip.

TV Licence - Sorry this is what we pay quarterly.

£15 - Is child related ie nappies, formaula wipes etc. Our £350 shopping is for 4 of us I will try to reduce this further.

The emergency fund and entertainment I have put on as CCCS say you need to allow for this on the debt remedy although I am happy to take it out.

CCCS ays that if we went on a DMP it would take just over 15 years to clear the debt :eek:

ShelleyR

katsu wrote: »

Can you talk to your parents and negotiate a lower loan repayment to them, to help you balance the books a bit better?

If your husband does not want to sell, when you show him the SOA, what does he suggest you do instead? You have more going out than coming in - does he understand that?

I have showed him it several times and been through the figures so many times I think he is waiting for a miracle, he has always been bad with money not opening bank statements etc but we have no choice but to face it and deal with it I think he sees the DMP as a better solution as we get to keep the house but I feel that as lovely as the house is whats the ppoint in living here as we will have no life for the forseeable future I would prefer to pay off the debt whilst still keeping our credit score in good shape and starting again debt free and with an enormous amount of stress taken off my shoulders

Tixy

15 years seems a long time for your figures.
If you pay the £725 surplus to your debts of £64k it would seem to come out at less than 7.5years, now not every creditor will agree to freeze interest straight away so I agree it could be longer but still unlikely to get as high as 15years.

I suppose another thing to consider is how things might change in that time. How old is your child? I guess as they get older you are more likely to have the time to get a job for yourself which would then presumably increase your monthly repayments to a DMP.

Again if you can reduce the car finance in a couple of years that 2 should decrease the time the DMP takes.

Who is the 4th person in the house (that you mention in the shopping)?

Have you thought about whether you could downsize rather than step off the ladder altogether?
If you could downsize and end up with a cheaper mortgage and use some of the equity to pay off the most expensive debts and the rest for a deposit on a cheaper property you might then be able to manage your remaining debt repayments.
Eg clearing the 4 most expensive debts of £27k would save you £720 a month in debt repayments.

ShelleyR

Tixy wrote: »

15 years seems a long time for your figures.
If you pay the £725 surplus to your debts of £64k it would seem to come out at less than 7.5years, now not every creditor will agree to freeze interest straight away so I agree it could be longer but still unlikely to get as high as 15years.

I suppose another thing to consider is how things might change in that time. How old is your child? I guess as they get older you are more likely to have the time to get a job for yourself which would then presumably increase your monthly repayments to a DMP.

Again if you can reduce the car finance in a couple of years that 2 should decrease the time the DMP takes.

Who is the 4th person in the house (that you mention in the shopping)?

Have you thought about whether you could downsize rather than step off the ladder altogether?
If you could downsize and end up with a cheaper mortgage and use some of the equity to pay off the most expensive debts and the rest for a deposit on a cheaper property you might then be able to manage your remaining debt repayments.

Thank you.

There are 4 of us 2 adults and 2 children 5 and 10 months.

When I put the figures in thats the amount of time it says to repay, we cannot include the car or the family loan on the DMP.

I feel anxious that if we reapplyed for a mortgage now we would not be accepted due to our level of Debt, also I know Interest only mortgages are hard to come by now so we need to account for the fact that the repayments will be higher on a Repayment mortgage unless we dramatically downsized which is not really realitic where we live.

RAS

First, can you go back into your SOA (hit the edit button on you first post) and alter the amounts/ add notes if possible.

And yes, it could well take you 15 years if you do not get a job.

The problems you are are several

1. If you go bankrupt or do an IVA, you will have to release the equity in the house to pay your debts. You will end up paying more than you owe to cover the insolvency practitioners fees on an IVA. What APR you would have to pay to do this is difficult to predict.
2. Because of the very high amount of equity, if you do a DMP, the creditors will come after you get CCJs and charging orders, which will reduce the equity you have when you sell.
3. Even though your SOA is fair and reasonable, if you really want to tackle this debt you need to get your income up and your spending down. Basically live like paupers for two years until you get things under control.

What do you have in the house that you no longer use? Can you start to gather thsi together and work out how to sell it.
Go through all your spends, including that life insurance and see if you can reduce the cost, then use a cashback site like www.quidco.com
Put every spare penny against the Cap 1 card.

Please can you list the maximum limts of your cards.