Got ourselves into a very deep hole

hig3k

I am just after some general advice about who to speak to or where to go from here, as we are drowning....
Is an IVA our best option??

I am not looking to be preached to please, or told what I did wrong, what idiots we are, etc, as I know all that, I am just trying to get advice on figuring the best way for us to sort it from here...

Have always had excellent credit rating and as such had money thrown at me all my life, but we are now in a deep hole of debt and as such nobody wants to help us now..

Bit of a story but here goes...

Met my now wife in 2003, at the time we both had some small debts, ie 2-3k car loans, 1-2k on credit cards etc..
Got married in 2005 and took out a loan to cover the wedding as we hadnt saved much for it, and then bought a house in 2007 at peak of the market (unknown to us) on a 92% mortgage.

Then in 2008 we worked out all our min card and loan payments were about £700pm and so consolidated all our loans, cards etc, and topped up a few K to get our old single glazed windows replaced, and a new boiler etc...
That loan was for 25k over 7yr @ about 445pm.
Even at 445 it was still loads less than previously going out.
It was then our only debt going out and we both earned about 22-23k at the time so it wasnt a problem for us..

But since then we have had 2 kids so my wife left work for long periods, and been either on SMP or earning nothing, and as such my sole income was then barely covering all our outgoings, so we started using the mortgage reserve account and also the cards again as we had literally no spare cash each month to live off, I had to do a load of overtime just to earn enough to cover the DD's, and we had not even anything left for the food shopping, let alone stuff like birthdays/christmas, car mot/tyres/repairs, 2 growing kids need bedroom furniture/uniform/clothes all the time...

Last years mot the car failed on so much stuff it cost over £800 to pass it..we didnt have that sort of money and we need it for work as my wife now works in a rural village, so it had to go on a card.. then a few weeks later the ecu died on it, that was another 400..
Then the washer packed up, then the oven, then the fridge, it just kept coming and coming..

Luckily for us the base rates plummeted and our mortgage halved over the last few years, or we would prob have lost the house by now..
Over the years we have used the mortgage reserve account and all the cards to basically live on, and so they have slowly racked up and we are now struggling to meet it all...

The current balance on the loan is now under 14k and with the mortgage rates as they are its now MORE per month than our mortgage...
The mortgage reserve has no repayment and % is applied at mortgage rates but its still climbing steadily, we have cut out all non essentials now just pay loans, cards, utilities, insurances etc, and I still run short of the bills by about 200 most months and have to transfer money from the reserve account to avoid bank fees..
We have almost borrowed back everything we have paid off the mortgage since moving in... we have paid off 14k and borrowed back around 10..

My wife recently went back to work p/t which has helped a bit and gives us some money towards food and petrol, but they way thats gone up lately it doesnt go very far, we have changed from shopping at the big stores to farmfoods and aldi and it goes further but usually most months it still doesnt cover it.
My mother has our kids two and half days a week for her, but wont have them any more than that as she is almost 70, and so my wife cant go f/t as the childcare costs would wipeout most of it and make it pointless...

I have been back to the bank and tried to redo the loan balance over a longer term again and even though I dont want to actaully lend any more off them and they will if anything make more off me by me extending the term, they were sympathetic to our situation etc, but refused..
Have tried other lenders every few months, and they all refuse too..
Its only got 3+1/2yrs left as it stands and then we will have 445 per month available to live off and start paying off the cards...
Its just by the time we get there the grand total will prob be miles higher..

We cant get any secured credit as like I said we bought at the peak on 92%, and our house has lost some value since buying and so mortgage is on about 120k and house now only worth around the same...

We are now up to our necks, and the cards and loans payments come to almost a grand a month, although we are currently making all the payments every month, its leavng us with no cash leftover to live off, and nobody wants to help us, we are starting to get stressed and despair is setting in...

We have discussed an IVA.. would that be our best option??
I think it probably wouldnt include the mortgage reserve as thats secured as part of the mortgage, and I believe an IVA incurrs large fees too of near 8-10k too....
But in just over 3yrs 15k of our debt will be gone in that loan, so we wonder if its worth just struggling on??


Rough breakdown..

My net income pm 1450-1700pm (basic is 1450, rest depends how much OT I get)
wifes net pm 600
mortgage @430pm
bank loan 14k @445 (40mths left)
barclaycard 11k @150
virgin card 5k @100
egg card 4k @100
halfax card 2k @60
mortgage reserve account -10k
wifes virgin card 3k @70


Please dont preach to me, just hopefully offer some advice....

HappyMJ

You would only normally include your base rate as salary. Overtime can pay for treats.

So you earn £1,450 a month minimum. Your debts total £1,355 per month for the mortgage and £39,000 of unsecured debt. That's just too much. Have you considered BR. It will wipe all the unsecured debt out in one go. You can keep the house as the mortgage is equal to it's value and you will be debt free and have a clean credit file in 6 years time.

happyhaddock_2

Hi, no preaching from me . We were in roughly the same position and our wheels fell off last April, since then we've been on a Debt Management Plan (DMP) with the FREE charity CCCS. Please go to www.cccs.co.uk and go to the DEBT REMEDY, enter all your details (it's totally confidential) and see what they advise, good luck

bottleofred

Hi hig3k and welcome to the forum,

I was at £38k before I realised I could no longer cope and went the consumer credit counselling service. They were brilliant and exactly what I needed. Please don't be tempted to pay any companies for a debt management plan though, as they promise loads, but actually don't do any more than the non fee charging ones, particularly when it comes to getting interest frozen.

Good luck

Red

geoffky

If i was you! I seriously would look at bankruptcy...you need a clean start because you are never going to pay it all off

bugslet

Have to say that people on here are very un-preachy - probably becuase they either are or have been where you are.

Could be an idea to post an SOA

http://www.makesenseofcards.com/soacalc.html

Some smart people on here can possibly come up with some savings.