Desperate and Scared

viv1969

Hi, this is my first time posting here, and is a desperate scream for help from my husband and I. Here’s our situation.

We moved house in March 2006. We have a mortgage of £165,000 and the house is valued at around £190,000

I am employed full time and earn £20,5000 pa.
My husband is self employed (Driving Instructor) and started his own business in August ’06. Before that he was a franchisee with a driving school but they wound up supplying him with almost NO students. Right now he has very few students and he is bringing in very very little money. We know that will change with time and is the nature of the beast with new driving schools, but because of this we are having to take money from credit cards to pay the bills and as they’re almost maxed out it can’t go on.

We have what I consider to be horrendous debts. I have no idea how we allowed ourselves to get in this deep, but I know that dwelling on the ‘how’ won’t change the facts. We have enough on cards to cover next month and then that’s it.

In total, including credit cards, store cards (mine – guilty) one loan and the remainder of my husbands car finance we are in debt to the tune of £34,000.

We are at the end of our wits here, and I’m terrified that we’re going to lose everything.

So far we haven’t missed any payments or defaulted on anything.

We’ve looked into the possibility of a secured loan as a way of reducing monthly outgoings by a BIG margin to get us back on our feet, and then paying a chunk off of the loan once each year,, thus reducing the term.

At the moment I’m terrified because I don’t see any other options?

Am I being naïve about this?

We desperately need to reduce our payment(s) in order to give my husband’s driving school the time it needs to get on its feet.

Please, if anyone can help with advice we would SO appreciate it.

lorraine

Hi Viv, although I cannot give any advice I would like to say a big welcome to MSE and you have come to the right place. Some one will be along soon to help you on your way

py6km

Speak to the card companies and your mortgage provider etc and explain your situation openly and honestly - they may be able to help you.

I guess if I were in this position, and after I had exhausted the above, I would ask my mortgage provider if it is possible to release some of the equity in the house (if the release is for 'home improvements' you can usually get a better rate than otherwise), and then use that to pay off some of the higher interest bearing debt? This is providing I was able to afford to pay the extra it will cost on the mortgage to borrow, and that it did actually end up putting me in a better position (i.e. extra mortgage payments were less than the payments being paid off).

Are you able to get any interest free credit cards (egg etc)?

I would stop all unnecessary spending (store cards etc), and cancel any cable tv etc etc to get monthly spending down to an absolute minimum.

This is all just my opinion, and what I would probably do in this situation.

viv1969

I’m at work at the moment, so I’m going to list here what I can from memory (we have it all written down at home.

Me:
Lloyds TSB Visa £8000
Amazon Mastercard £5000
Capital One M/C £ 900
Mothercare £ 300
Evans £ 340
Comet Edge £ 300
SimplyBe £ 150

Husband:
Egg £10000
Mint £ 3600
Lloyds TSB Visa £ 2000
Lloyds TSB Loan £ 3100
GMAC Car Finance £ 1400

Plus:
HFC Furniture Finance £ 1700

Other outgoings per month would be:
Mortgage: £1070, Rates, £127, Water £30, Electricity £40, Phone £20, His Mobile £30, My Mobile £13, house Insurance £35, Car Insurance £25 & £35, Petrol (mine) £200 – Husband’s varies massively according to the number of lessons he has), Food £160 (Inc Dog). Broadband is free – a deal through his Mobile provider.

I’m sure there are other bits and pieces I’m forgetting now.

Our problem (as my panicking eyes see it now) is that we have NO savings and we are at the end of our ropes here.

We know now (after several days deep discussion and thought) that we have to totally restructure not just our finances, but the way we live our lives. I know that getting a loan isn’t always the best answer, but it would put everything in one place where we can see it. We have come up with the idea that once things are at least under control we can then begin to save and make a payment off of the loan once a year, thus reducing both the term and the interest. We also know that this involves cutting up ALL the cards and cancelling any store acct etc….believe me I will be HAPPY to do this.

Husband is already looking for a part-time job that he can work his students’ lessons around, and is spending several hours a day pounding the pavements delivering leaflets (printed for free here at my work) advertising his business. Dec / Jan and beginning of March are notoriously bad for Driving schools both because of dark nights and because lessons are the first thing most people suspend because of the expense of Christmas.

Thanks for the welcomes here, and thanks in advance for the help!

seven-day-weekend

Hi there!

It may be best if you posted this on the Debt-Free Wannabee board. They are an absolute MINE of information and will be able to offer all sorts of helpful suggestions in a totally non-judgemental environment.

Post your SOA (Statement of Affairs - there is a 'sticky' at the top of the DFW board to show you how) and people will offer all sorts of suggestions to help you.

Above all, don't panic - you've come to the right place.

viv1969

Thanks all.

I've also posted this in Debt Free Wanabee as I need all the help I can get. I think there may be more info in my posts there.

Rafter

Please call the consumer credit counselling service or Payplan tonight too and talk through your options with them - they are professionals.

Please don't be tempted to take out a secured loan or be taken in by a company claiming to be able to wipe your debts out.

Other ideas:

Get your husband to do other part time work, even stacking shelves or something to boost income.

Really cut down on any non-essential expenditure.

Get the store cards (highest interest rate) paid off first.

Good luck.

R.

Robert_Sterling

Best wishes ...