I need help. Massive debts.

rachel23

I have a serious debt problem.
Noone knows about this.

I have been borrowing to pay debts for a few years now and it is now out of control and I know I need to do something about it.

I have completed a statement of affairs as I have seen other posters have done this. I have no idea what is an allowable/reasonable expense so I have put down everything. Please advise me on this!
I have two small children and a husband.
One of my debts is in joint names with my husband (12k loan) the rest are solely in my name and (one unsec loan and c cards).

I lied on this loan application to get the money I said we had income from rented property coming in when this was just money lent/given by my Mother.

I have been borrowing thousands off my Mother to keep us in pocket but this has to stop.
We live in rented accommodation but we are able to move in with my mother for a period of 3-4 years in order to save money. We would have to pay £400 pcm in rent plus our share of the bills (she is single we are a family of 4 so lion's share would be ours).

We have 2 cars (both on HP) one 2005 worth aprox £4k one 2008 worth £10k. We both need our cars to work (shift work in rural area so not possible to use public transport). We both drive 30 mins to work (from my Mother's house that is) and children's school nursery is also 30 mins drive from Mother's house.

I want to go to University next year to retrain as a teacher (1 yr PGCE) so I have some hope of getting a decent job! I am 26 so I have time on my side though. I would need a student loan for both fees and maintenance. My existing student loan debt is £20k.

I have never missed a payment or anything but this is only because my Mother has been subsidising us and I want this to stop. We have a major shortfall without her contributions.

I cant think of anything else to write but this is making me ill. I cant sleep and I am permanently stressed. I have two small children and it brings me to tears that I have done this to my family.
Such an idiot. 2 years ago we hardly had any debt.

Here is the SOA (rough):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.................... 2

Monthly Income Details
Monthly income after tax................ 500
Partners monthly income after tax....... 1200
Benefits................................ 900
Other income............................ 0
Total monthly income.................... 2600

Monthly Expense Details
Mortgage................................ 0
Secured/HP loan repayments.............. 335
Rent.................................... 400
Management charge (leasehold property).. 0
Council tax............................. 75
Electricity............................. 40
Gas..................................... 40
Oil..................................... 0
Water rates............................. 60
Telephone (land line)................... 0
Mobile phone............................ 25
TV Licence.............................. 12.5
Satellite/Cable TV...................... 16.5
Internet Services....................... 15
Groceries etc. ......................... 400
Clothing................................ 100
Petrol/diesel........................... 200
Road tax................................ 20
Car Insurance........................... 85
Car maintenance (including MOT)......... 40
Car parking............................. 0
Other travel............................ 0
Childcare/nursery....................... 100
Other child related expenses............ 40
Medical (prescriptions, dentist etc).... 20
Pet insurance/vet bills................. 12.5
Buildings insurance..................... 0
Contents insurance...................... 25
Life assurance ......................... 19
Other insurance......................... 0
Presents (birthday, christmas etc)...... 30
Haircuts................................ 10
Entertainment........................... 30
Holiday................................. 0
Emergency fund.......................... 30
Total monthly expenses.................. 2180.5


Assets
Cash.................................... 0
House value (Gross)..................... 0
Shares and bonds........................ 0
Car(s).................................. 13000
Other assets............................ 0
Total Assets............................ 13000


Secured & HP Debts
Description....................Debt......Monthly...APR
Mortgage...................... 0........(0)........0
Hire Purchase (HP) debt ...... 10000....(335)......9
Total secured & HP debts...... 10000.....-.........-

Unsecured Debts
Description....................Debt......Monthly...APR
Loan 1.........................7500......388.......10
Loan 2.........................12000.....299.......10
Santander......................3300......33........0
Vrgin .........................7000......70........0
American Express...............3000......50........27
Lloyds.........................3000......50........17
Total unsecured debts..........35800.....890.......-


Monthly Budget Summary
Total monthly income.................... 2,600
Expenses (including HP & secured debts). 2,180.5
Available for debt repayments........... 419.5
Monthly UNsecured debt repayments....... 890
Amount short for making debt repayments. -470.5

Personal Balance Sheet Summary
Total assets (things you own)........... 13,000
Total HP & Secured debt................. -10,000
Total Unsecured debt.................... -35,800
Net Assets.............................. -32,800

DancerSupreme

Hi,

If there is anything I have learnt it is that no debt is too big to handle.

Admitting there is a problem is the first step. I do think you need to tell your husband though. If you are going to start cutting your outgoings he will want to know where all this new "free" cash is going I would assume.

Anyway I'm sure there will be others along soon to give some good advice but here is my tuppence worth.

Household Information[/b]
Number of adults in household........... 2
Number of children in household......... 2
Number of cars owned.................... 2

Monthly Income Details
Monthly income after tax................ 500
Partners monthly income after tax....... 1200
Benefits................................ 900
Other income............................ 0
Total monthly income.................... 2600

Monthly Expense Details
Mortgage................................ 0
Secured/HP loan repayments.............. 335
Rent.................................... 400
Management charge (leasehold property).. 0
Council tax............................. 75
Electricity............................. 40
Gas..................................... 40
Oil..................................... 0
Water rates............................. 60 this seems pretty high. Check this out and maybe pay by direct debit
Telephone (land line)................... 0
Mobile phone............................ 25
TV Licence.............................. 12.5
Satellite/Cable TV...................... 16.5this simply has to go. You cannot afford it.
Internet Services....................... 15
Groceries etc. ......................... 400this is way to high and could be cut in half. Old style money saving has some great tips for doing so. A family of 4 including nappies and formula can cope on half this.
Clothing................................ 100not necessary. Cut it out.
Petrol/diesel........................... 200are you collection loyalty points when you fill up. May as well make the most of such a high fuel bill.
Road tax................................ 20for 2 cars you are looking at around £23 per month. If you are tempted to spend, buy stamps from the post office each month and this will ensure you don't have a big bill in one month.
Car Insurance........................... 85price comparison and cashback when its time to renew
Car maintenance (including MOT)......... 40
Car parking............................. 0
Other travel............................ 0
Childcare/nursery....................... 100
Other child related expenses............ 40what is this for?
Medical (prescriptions, dentist etc).... 20
Pet insurance/vet bills................. 12.5
Buildings insurance..................... 0
Contents insurance...................... 25this seems high. Can you shop around for a better deal?
Life assurance ......................... 19
Other insurance......................... 0
Presents (birthday, christmas etc)...... 30could this be cut?
Haircuts................................ 10
Entertainment........................... 30can this be cut out or reduced a little?
Holiday................................. 0
Emergency fund.......................... 30half this or maybe reduce to 10 so you are paying off the debts rather than getting a lower interest rate.
Total monthly expenses.................. 2180.5


Assets
Cash.................................... 0
House value (Gross)..................... 0
Shares and bonds........................ 0
Car(s).................................. 13000
Other assets............................ 0
Total Assets............................ 13000


Secured & HP Debts
Description....................Debt......Monthly...APR
Mortgage...................... 0........(0)........0
Hire Purchase (HP) debt ...... 10000....(335)......9
Total secured & HP debts...... 10000.....-.........-

Unsecured Debts
Description....................Debt......Monthly...APR
Loan 1.........................7500......388.......10
Loan 2.........................12000.....299.......10
Santander......................3300......33........0
Vrgin .........................7000......70........0
American Express...............3000......50........27
Lloyds.........................3000......50........17
Total unsecured debts..........35800.....890.......-


Monthly Budget Summary
Total monthly income.................... 2,600
Expenses (including HP & secured debts). 2,180.5
Available for debt repayments........... 419.5
Monthly UNsecured debt repayments....... 890
Amount short for making debt repayments. -470.5

Personal Balance Sheet Summary
Total assets (things you own)........... 13,000
Total HP & Secured debt................. -10,000
Total Unsecured debt.................... -35,800
Net Assets.............................. -32,800[/QUOTE]

Plough any extra into your highest interest rate debt.

Don't panic, this seems easy to solve by just making a few adjustments in your budget and you may not even need to move in with your mother. However if you did then I'm sure you can sort this even quicker.

InDeepDebt

Bit knackered now as nearing the end of a 12 hour shift so will be short but - the childcare - can you get this through virtual vouchers at work. It means that you pay it out of your gross pay and save the tax and national insurance.

moneybuster

double check your benefit's make sure your claiming all you can tax credits can be a nightmare, could you lose one car and share one, if you are only renting then moving in with your mothers the best move you can make.


do another SOA as though you have moved in with her and see how that looks that would give you realistic figures to work with, as it stands you need to create £400 + to break even

MB

immoral_angeluk

The HP/car costs are crippling you. Do you really need two cars? It might be worth looking into options to voluntarily terminate (if you can) one and rely on one and public transport until things improve?

rachel23

InDeepDebt:
I get the childcare element of tax credits so cannot claim childcare vouchers as well. The £100 is the proportion TC do not pay. I work shifts (no set pattern) and so does DH so I have to pay for some childcare which I do not use IYSWIM. I have not yet found a nursery/childminder who be very flexible yet as I only know my shifts 1 week in advance.

moneybuster:
That is more or less after we move into my Mother's! Our current rent is £750, council tax much higher, utilities higher etc.

gembaxter:
Will make your suggested revisions later today!
A few I can't get any lower though:
Water: paying by DD does not lower our bill (metered supply) but will try and cut back. I think it's all the laundry I do for the kids.
Sky: will investigate when contract ends
Petrol: I think this is a realistic amout based on:
Husband: 1hr commute/day 5 or 6 days/weel
Me: 1hr commute 3 days per week and school run (school is 12 miles from my Mother's house).
I think it will be about £25 per car per week easilly
I am collecting points though - I have £75.00 saved up
Car Insurance:
Mine is £25/month
Husband is £60 becuase of previous accident and age (26) this was the best deal I could get with 0 no claims bonus.
"Other child related expenses" are swimming, football etc. Will have to think hard about cutting these. Would rather cut something for me.


Should I be looking to make arrangements with anyone to lower interest or has it not come to that yet?

Should we do something about our HP cars? I read somewhere this could be seen as favouring one cerditor?
My car: worth £2-3k with about the same left to clear the finance.
Husbands's car worth £10-11k with about £7k left to clear the finance I think (not sure on this without checking with him but it is in my name).


That's all I have time for now as need to look after the children but I'll come back later and update the spreadsheet.

rachel23

Sorry just to add that public transport is not an option here with the added complcation of us both working shifts sometimes past midnight.
I worry if we give up the cars we will not be able to get more credit to buy cheaper ones.....

Dabooka

Needing 2 cars is one thing,needing those 2 cars is a different matter. The suggestion to see if you have the option to VT is great advice. You need to dig out the paperwork and check it is HP and how far through the payments you are. TBH a £10k car on such a low wage as you partners is madness anyway. And the saved money will make a huge dent in your outstanding debts.

Which is the next thing; you're going to have to come clean. It is doable, but not by yourself, and you're going to have to explain the lifestyle changes to your other half anyway (I'm assuming you're racked these debts up supporting costs as opposed to buying stuff?). It's going to be tough, but it is in the best interest of your family and it will make you feel better.

Asking for interest freezing and reduced payments wont do anything other than make them realise you're struggling so I;d hang fire on that until you've came clean, looked into the car etc. And you need to start on that TODAY, do not put it off!

You should also realise that going back to uni next year could be a none starter.

Best of luck, keep posting and you'll get some seriously good advice.

poppasmurf_bewdley

Your expenditure shows £30pm for 'emergency fund' yet nothing shows on assets, so what has happened to that?

Pitlanepiglet

If this it's based on you being at your mums, are you sure your benefits are correct? Have you assumed you'll get housing benefit for the rent? I don't think you will get housing benefit or council tax benefit in this situation.

You need to come clean, as others have said you can do this but not in your own.

Good luck

eyeopener2

Is it worth you working? £500 less childcare AND the car payments/petrol/insurance/tax?