Shocked and desperately need advice!

dizzydaydream

My husband yesterday had his 'lightbulb' moment and revealed that he's got £50,000 worth of debt in credit cards and loans that I knew nothing about!
I've just given birth to our fifth child (yes, number 5! Ages 11,9,7,4 & 7 weeks) and don't know where to start to sort things out! Any advice is extremely appreciated, I've listed below our incomings and out goings as best as I can but unfortunately can't give the % on the debts at the mo' as need hubby to sort them out.
Please help us sort out this mess.

Income

Husband's Salary - £1500 flat without OT but OT available
My Salary -£0 at mo' but when I am working varies from £100 - £800
Other - £257.50
Child benefit - £210 (not including newborn yet!)
DLA - £176.60
TOTAL - £2144.10

Out goings

Northern Rock Mortgage - £920
Council Tax - £106
Gas & Electricity Powergen - £87
Sky tv & phone - £56.65
BT line rental - £11.50
Wanadoo Broadband - £17.99
Tesco Dog Insurance - £13.94
Repair Protection - £7.50 (don't know what it's protecting! Will find out!)
Centrepoint House Insurance - £31.58
American Life Insurance - £4.95
Charity - £16.00 (Definitey going!)
Magazine subscription - £1.50
L & G Assce Insurance - £68.98
Kids' Performing Arts Classes - £180
Shopping - £400
Petrol for 2 cars - £150 (need both as hubby works shifts)
Car Insurance - £70 (total guess-both paid in full)
Mobile phones - £100 (mine & kids are payasyougo, hubby on contract)
School trips/swimming etc - £20
Cigarettes - £100 (He'll have to quit)
Work snacks/food - £70 (:eek:)
TOTAL - £2433.59

SAVINGS

£21,000 - Inheritance from Mum :A
£400 - Tesco shares if sold at present rate
£3,000 - ISA
Hubby has Tesco SAYE & BAYE share schemes running

APPROX. DEBTS AND PAYMENTS

MBNA - £6000 MONTHLY PAYMENT £150
MORGAN STANLEY - £3500 MONTHLY PAYMENT £90
MINT - £4000 MONTHLY PAYMENT £90
AMEX - £800 MONTHLY PAYMENT £30
ABBEY - £10000 MONTHLY PAYMENT £313
EGG - 4000 MONTHLY PAYMENT £90
CITICARD - £8500 MONTHLY PAYMENT £270
EGG LOAN - £13000 MONTHLY PAYMENT £284

TOTAL PAYMENTS PER MONTH - £1317

Surprisingly he hasn't missed any payments but I've had to dip into my mum's money since not working to pay for things. I was a bit miffed as thought my hubby was just being tight but alarm bells rang when a loan company phoned to discuss a loan for £40,000!

I can see that there's a few things that we can cut back on and know that sadly my mum's money is going to have to go (hard to face as still hurting from the loss). We also have equity in the house but when I 'phoned they won't let us borrow any more for six months as a payment was missed in October (it's all up to date now). Has anybody got any ideas of how to get rid of this big black cloud and what would be the best move first?
Thanking you in advance xxx

skintas_2

you pu child benefit, dla, dont you get tax credits appy for them.....

dizzydaydream

Thank you for your speedy reply:j
Yes, we were getting Tax credits about 2 years ago but they over paid us (somehow) and asked for repayments. I 'phoned them for an explanation and asked how to pay back the money but they never pursued it and we haven't applied since! I'm scared now that they'll ask for the money again!

Adrasteia01

Hi,

I can understand it must have been very worrying to find out your husband had run up so many debts. At least now that you know about it you can both do something about it. However, you will need to ensure that your husband doesn't continue to run up more on the cards.

Had your husband contacted the loan company because he was considering consolidating his debts or does he have another 40k loan? I assume it's the former.

It makes sense to pay off some of the debt with most of your savings - it will save you both money on the interest in the long run. However, I would strongly suggest setting some money aside for emergencies. I know people on here often say that you can allow space on a card, but when you're talking about debts that large I'd say keep a separate bank account with your own money just in case (not one belonging to any of the banks he has credit cards with).

If you don't mind me asking, how did he run up so much money? What did he spend it on and over what length of time?

There are things in your budget that you can cut back on... acting classes for the kids 180 - this is a lot and I'm sure you'd be inclined to not cancel, but it's over 2k a year. Don't they teach performing arts at their schools?
Dog insurance isn't essential, unless you have an old or sick dog. Also, could you cancel or downgrade the sky tv? If necessary, there's the broadband too but I find it an unpleasant thought to live without internet!

The magazine subscription is a negligible amount so I'd be inclined to leave it.. there's the charity (you could always say you'll give a donation when you're debt free again)..the cigs of course for your hubby - that would save 1200 a year to cut them out. As for work lunches, I'm a habitual snacker and I've found buying cans of drink and junk food in bulk from the supermarket is better and taking that in.. a packed lunch is another good idea, or if his company has a subsidised canteen that would save a bit too.

Personally, I think with the amount of debt you have 0% credit cards wouldn't be as good as a 'life of balance' transfer - that way you wouldn't need to keep applying/looking for deals every 6 months or so.. you could just transfer some of your balance and pay a much lower interest rate. You would need to check on the fee for transferring the money over though - a fee free balance transfer of around 3% would be about the best i'd say. This site has more details in the credit card section - I haven't looked at it in a while so can't remember the exact rates/cards.

You wouldn't get a card for anywhere near as much as your husband has run up I'd say but every little helps.

I'd also suggest contacting Payplan or CCCS and running through your budget with them.. see if they can lower or freeze the interest on your debts so you can pay them off more easily (that would make a huge saving). Optionally, you could ring your credit card company and try that yourself over the phone.

You could also perhaps sort out a Debt management plan through Payplan, if you feel that you couldn't pay the minimum repayments or more on each of your debts each month. However, you should be aware that that would seriously damage your credit history (or your husband's anyway) for the next 6 yrs.

I'd suggest saving money where possible.. try to cut down on food bills (you can check out the Oldstyle board for tips).. and just generally only spend when necessary. Your budget though doesn't look too bad.. it's really what your husband has been spending on that's the concern.

If you find out the APRs and credit limits for your husband's credit cards and post them to this list we can give advice on switching amounts around on cards to save on interest.. there's also a snowball calculator (not sure of the url, but if you search it on the forum you will find the link). You enter the details of your debts and it tells you the best amount to pay off each debt each month to clear it quickly and save on interest.

You could also try ebaying some of your unwanted items - it's best to wait for a cheap listing day though. The last one finished at midnight. However, they have 2 or 3 a month usually. It's listed on the 'my ebay' page under announcements a day or two before they're coming up, or on the ebay type board on this site.

Good luck,
Tamara

spaghetti_monster

Hi there!
I'm not normally up so late but thought I'd say hello and don't despair - the good folks on here will be able to give you some good advice about a plan of action. (but maybe tomorrow!)

i'm no expert but just a couple of things: the sky/tv/broadband - I think you can get this cheaper - consider getting a digibox, see articles and posts here on cheapest broadband and other phone providers (depending on your usage)

Have no idea about the logistics involved in shopping and cooking for 5 children but have you been over to the old-style board?

Alex x

Adrasteia01

BTW apologies if my assessment's a bit cold and clinical.. it's getting late <G>.

Tamara

dizzydaydream

Thanks to you both! Hubby says he just didn't adjust from living on his own to having a family (3 of my kids are from a previous relationship). We've been together for 7 years now so hopefully he has now! Some of the money would be from mini cabs to and fro work before he could drive and he likes his cd's, dvd's and books! But I still think it's a lot of debt as we've only been on holiday for the last two years and it's not as if we live in the lap of luxury! From what I can work out he's been borrowing from one card to pay off another and this has gradually built up. I've never had a credit card so don't know how this exactly works!
Thanks for the advice about The Old-style Board I haven't found that yet but will definitely have a look! As far as cutting back on the kids' Performing Arts, I couldn't! They all love it so much, the eldest started when she was 18 months and has all her friends there plus they're really good kids and never ask for anything! The dog isn't old but has a metal plate in her leg from being run over so don't really want to cancel the insurance. I'm going to see about looking into the phone, sky and broadband to see if there are better options out there and I'll take your advice about contacting Payplan or CCCS are the contact details on this site somewhere? I don't expect an immediate reply as I've just seen the time! Joys of a new baby with colic! Lol!

debt23

Hi dizzydaydream!

How much equity do you have in your house?

Also, how concerned are you about keeping a good credit record?

And.... are all the debts your husbands, and nothing to do with you so to speak?

Looking at you incomings and outgoings, Im amazed your husband has managed to keep the payments up on the debts, but it was bound to catch up with him in the end (simple maths im afraid)

I think you have a lot of room for action, you may have a large amount of debt, but you also have a large lump sum of cash as well - although Im sorry you might have to use your inheritance.

As you can see from my sig, Ive got a lot of debt, and as its all in my name, my wife leaves me to it! She has quite a bit of her own money, but thats for her and the kids - and I cant blame her for holding onto it.

Dont get me wrong, she wont let me go short (as my growing waste line will show) but she draws the line at bailing me out from debts I was stupid to run up etc etc.

So I have set up a debt management plan whereby I pay back as much as I can to my creditors - Im currently paying £240 a month, which I can manage comfortably, although the down side is a long long repayment time!

So there is plenty of light at the end of the tunnel, really.

One last word about a good credit record. My credit record is obviously trashed, and although I like to think I have learned my lesson, I wonder. So the truth is, Im far better off not being able to get credit from anyone - It might be the same with your other half? (just a thought)

Anyhoo, see my opening questions and well take it from there.

All the very best

Debt23

dizzydaydream

Hi There,
The equity is about £80,000,
When my hubby applied for the £40,000 loan he was told his credit score was sparkling because apart from the one missed mortgage payment he'd managed to keep up with the payments. Apart from the mortgage, I've got no other debt but I think that works against me as they've got nothing to rate my credit score on!
The debts are all my hubby's. Any thing that has been a big spend, I've paid for out of my mum's money and most of the time I've been paying for all the bills except the mortgage which comes out of my husband's account. This is why it's come as such a big shock because there's nothing to show for it!

How did you get your payments down and how did you sort out your debt management?
All his card are maxed out except the citicard. The others he's going to cut up while I watch!
It's nice, although not for you (lol!) that there's somebody else out there with a huge debt!

Thank you xx

TallGirl

Sorry to hear about your situation now that you are not working you really need to claim Tax Credits. You get double allowance the first year so it is worth doing it. Don't worry about the overpayment right this minute, it is more important that you get some more money coming in now. Please call them now and make a claim as it can only be backdated 3 months.

dawnybabes

If you've not claimed for 2 years surely they'd owe you now ?

You can put the figures in the IR website and it will tell you how much you should be getting so you can see if that would wipe the overpay out.

http://www.taxcredits.inlandrevenue.gov.uk/Qualify/DIQHousehold.aspx

Congratulations on the new baby !!

We used colief drops for colic and it made all the difference and you can get these on prescription.