Finally admitting we have a debt problem

tiredmumof2

Hi all,

Well after years of hiding the fact, having relationship problems and sleepless nights my Husband and I have finally admitted we have a debt problem.

We both feel really embarrassed about this as we have really good, well paid jobs and we've still managed to get into £50k worth of debt on CC, store cards and overdrafts.

We've never missed a payment but it comes to the end if the month and we borrow money to pay the bills then the circle continues. My questions to all you wonderful people are:

1) what would you recommend - DMP or IVA?
2) can the creditors repossess my home?
3) I lease my car as I need a decent car (in terms of road worthy) for the distance I travel - 100mile round trip per day- and my lease finishes in May 2014 so will I still be able to use the lease option as I need a car to get to work!
4) can you offer any words of encouragement as this had a serious effect on my health, our relationship and our outlook on life

Many thanks in advance everyone - I'm so pleased I found this forum!!!!

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SkintGypsy

You might be admitting you have a problem, however I'm not convinced you have had your light bulb moment.

You do not NEED a brand new shiny lease car for it to be roadworthy. My husband managed over two hundred miles of daily commute for a year in aged vehicles. His current vehicle is an 05 plate vw, picked up for less than £3k. It has been entirely reliable for two years since we got it, just passing its MOT first time with a couple of advisories.

If you are doing this, then you have to make some big sacrifices. A shiny new car is likely to be one of them.

Post your SOA and get some advice on cutbacks. It's all worthwhile in the end!

Good luck on your journey.

Hovel_lady

Hello and welcome to the DFW forum :hello:

I'd suggest posting a SOA (statement of affairs) so people can help further.

Link here:

http://makesenseofcards.com/soacalc.html

Format for MSE at the end and remove any links before posting.

Your house can't be reprocessed unless you don't pay a mortgage or any loan secured on it.

Tixy

Hi

The option of whether to go for a DMP or IVA depends on a large number of factors.

One key thing will be how much you can afford compared to how much you owe. It might even be that different options would be best for each of you.
First you need to work out how much you can afford to your unsecured creditors a month after paying normal living expenses and any secured debt repayments. And how much short that is of your contracted monthly repayments.

You could then get an idea as to how long a DMP would take to pay off your debts (assuming creditors freeze interest). That will be a big factor, a 20year DMP is a totally different prospect to a 5year one.

I would suggest speaking to one of the debt advice charities to talk through your options and the implications of each option. They'll talk you through considering things like the security of your income streams, what equity is in your house in terms of an IVA. The costs of an IVA and whether it could be an issue for yourselves in your current jobs or any planned job roles in the future etc.

You might want to start by preparing a statement of affairs to get a full picture of your income, outgoings and how far short you are of repaying your debts if you didn't re-use the cards/overdrafts etc - http://www.makesenseofcards.com/soacalc.html

The answers to your other questions would depend on what debts you have and what option you take.

Growurown

tiredmumof2 wrote: »

1) what would you recommend - DMP or IVA?
2) can the creditors repossess my home?
3) I lease my car as I need a decent car (in terms of road worthy) for the distance I travel - 100mile round trip per day- and my lease finishes in May 2014 so will I still be able to use the lease option as I need a car to get to work!
4) can you offer any words of encouragement as this had a serious effect on my health, our relationship and our outlook on life

1) Don't know what option is best for you, but I am on a DMP with CCCS and my experience is that it has really worked for me, and really helped take the pressure off me and OH so has sorted out a lot of the problems mentioned at no. 4!
2) I guess they can if you have a debt secured against your home.
3) Again, don't know but as previous poster said it does seem OTT
4) See no. 1

Get some professional advice regarding your options. Good luck.

tiredmumof2

SkintGypsy wrote: »

You might be admitting you have a problem, however I'm not convinced you have had your light bulb moment.

You do not NEED a brand new shiny lease car for it to be roadworthy. My husband managed over two hundred miles of daily commute for a year in aged vehicles. His current vehicle is an 05 plate vw, picked up for less than £3k. It has been entirely reliable for two years since we got it, just passing its MOT first time with a couple of advisories.

If you are doing this, then you have to make some big sacrifices. A shiny new car is likely to be one of them.

Post your SOA and get some advice on cutbacks. It's all worthwhile in the end!

Good luck on your journey.

Hi again,

Thanks for all the prompt replies!

Another reason I use the lease hire is I can't afford to buy a car outright (regardless of the age) so by paying £194 a month I have a car at my disposal without having to find a few grand to buy it outright. It's not a flash motor, I realised that as long as it got me a-b it was good enough. It's a little diesel, does 64mpg and cost £20 road tax a year so I really have tried to be as economical as possible where my car is concened.

Thanks again, I'm off to complete the SOA as advised and I'll look forward to the responses.

Speak soon!!!

tiredmumof2

God, I feel so embarrassed about this but here goes- this is our SOA :

Tried to post it via the link but it wouldn't work - hope it makes sense. Thoughts please??????



Statement of Affairs & Personal Balance Sheet

Summary

Monthly Budget Summary Amount(£)
Total monthly income 4,124
Monthly expenses (incl. HP & secured loans) 3,568
Available for debt repayments 556
UNsecured debt repayments 1,285
Amount short for making debt repayments -729
Personal Balance Sheet Summary Amount(£)
Total Assets (things you own) 275,000
Total Secured & HP Debt -212,000
Total Unsecured Debt -40,760
Net Assets 22,240
Household Information

Number of adults in household 2
Number of children in household 2
Number of cars owned 2
Income, Expense, Debt & Asset Details

Income Amount(£)
Monthly income after tax 2200
Partners monthly income 1790
Benefits 134
Other income 0
Total monthly income 4124
Expenses Amount(£)
Mortgage 1370
Secured/HP loan payments 300
Rent 0
Management charge (leasehold property) 0
Council tax 178
Electricity 100
Gas 75
Oil 0
Water Rates 28
Telephone (land line) 40
Mobile phone 80
TV Licence 28
Satellite/Cable TV 40
Internet services 20
Groceries etc. 500
Clothing 80
Petrol/diesel 300
Road tax 20
Car Insurance 80
Car maintenance (including MOT) 0
Car Parking 0
Other travel 0
Childcare/nursery 0
Other child related expenses 0
Medical (prescriptions, dentists, opticians etc.) 16
Pet Insurance/Vet bills 0
Buildings Insurance 14
Contents Insurance 14
Life Assurance 145
Other Insurance 0
Presents (birthday, christmas etc.) 20
Haircuts 20
Entertainment 50
Holiday 0
Emergency Fund 50
Total monthly expenses 3568
Secured & HP Debt Description Debt(£) Monthly(£) APR(%)
Mortgage 198000 (1370) 0
Hire Purchase (HP) Debt 14000 (300) 0
Secured & HP Debt totals 212000 - -
Unsecured Debt Description Debt(£) Monthly(£) APR(%)
Co-operative bank 8560 265 0
Barclaycard 12000 265 0
AA 11900 265 0
Lloyds TSB overdraft 600 40 0
HSBC overdraft 1100 60 0
HSBC overdraft 1200 60 0
Next 1000 135 0
Argos 2000 35 0
HSBC 600 80 0
Virgin money 1800 80 0
Unsecured Debt totals 40760 1285 -
Asset Description Value (£)
Cash 0
House Value (Gross) 265000
Shares and bonds 0
Car(s) 10000
Other assets (e.g. endowments, jewellery etc) 0
Total Assets 275000

Tixy

Hi

Some initial thoughts below

tiredmumof2 wrote: »

God, I feel so embarrassed about this but here goes- this is our SOA :

Tried to post it via the link but it wouldn't work - hope it makes sense. Thoughts please??????



Statement of Affairs & Personal Balance Sheet

Summary

Monthly Budget Summary Amount(£)
Total monthly income 4,124
Monthly expenses (incl. HP & secured loans) 3,568
Available for debt repayments 556
UNsecured debt repayments 1,285
Amount short for making debt repayments -729 so this is your shortfall and the figure you need to try to reduce as much as you can.
Personal Balance Sheet Summary Amount(£)
Total Assets (things you own) 275,000
Total Secured & HP Debt -212,000
Total Unsecured Debt -40,760
Net Assets 22,240
Household Information

Number of adults in household 2
Number of children in household 2
Number of cars owned 2
Income, Expense, Debt & Asset Details

Income Amount(£)
Monthly income after tax 2200
Partners monthly income 1790
Benefits 134
Other income 0
Total monthly income 4124
Expenses Amount(£)
Mortgage 1370
Secured/HP loan payments 300
Rent 0
Management charge (leasehold property) 0
Council tax 178
Electricity 100 have you shopped around recently for the best deal for elec and gas? elec in particular looks very high - do you have arrears? do you use elec heating or know why its high?
Gas 75
Oil 0
Water Rates 28
Telephone (land line) 40 this looks quite high - do you make a lot of calls
Mobile phone 80
TV Licence 28 this should drop to half this once you've been paying it for 6months
Satellite/Cable TV 40 look into reducing the package or getting a combined deal for tv/landline and internet which can be got a lot cheaper than the £100 you are paying across them all.
Internet services 20
Groceries etc. 500 this is pretty high. Some on here can manage on around £200-£250 for a family of 4. Maybe try aiming for £300 to start.
Clothing 80 try to reduce this a bit
Petrol/diesel 300 are these all essential journeys? is it mostly communting? do you drive fuel efficently/fill up at the cheapest places etc. Is any of this refunded by work? and if so is that included in your income?
Road tax 20
Car Insurance 80
Car maintenance (including MOT) 0 is this realistic? think about what you spend on tyres, servicing etc
Car Parking 0
Other travel 0
Childcare/nursery 0
Other child related expenses 0
Medical (prescriptions, dentists, opticians etc.) 16
Pet Insurance/Vet bills 0
Buildings Insurance 14
Contents Insurance 14
Life Assurance 145 this is very high, although appreciate your mortgage is fairly high. Try shopping around to see if you can get the same cover cheaper.
Other Insurance 0
Presents (birthday, christmas etc.) 20
Haircuts 20
Entertainment 50
Holiday 0
Emergency Fund 50
Total monthly expenses 3568
Secured & HP Debt Description Debt(£) Monthly(£) APR(%)
Mortgage 198000 (1370) 0 whats the APR on your mortgage? is it fixed or variable? if fixed when does the deal end? the repayment looks hgh for the amount outstanding - do you know what remaining term you have?
Hire Purchase (HP) Debt 14000 (300) 0 is this secured on the house? or a car?
Secured & HP Debt totals 212000 - -
Unsecured Debt Description Debt(£) Monthly(£) APR(%)
Co-operative bank 8560 265 0 worth finding out the APRs for all these.
Barclaycard 12000 265 0
AA 11900 265 0
Lloyds TSB overdraft 600 40 0
HSBC overdraft 1100 60 0
HSBC overdraft 1200 60 0
Next 1000 135 0
Argos 2000 35 0
HSBC 600 80 0
Virgin money 1800 80 0
Unsecured Debt totals 40760 1285 -
Asset Description Value (£)
Cash 0
House Value (Gross) 265000
Shares and bonds 0
Car(s) 10000
Other assets (e.g. endowments, jewellery etc) 0
Total Assets 275000

tiredmumof2

Hi Tixy,

Responses to your comments:

UTILITY BILLS
We moved house last year and builder didn't send our details to utility company resulting in us not getting a bill for 8 months. Stupidly never put that money away each month as we had other things to pay so 'normal' payment would £100 combined bu I'm have to £175 for he arrears

TELEPHONE, SAT, Internet
I split these up and you correctly stated we pay £100 a month for tv, phone, broadband. We're on a 12 month contract with Sky so can't change until August but we have JUST this minute phoned sky and we're down to £60 for all tv, internet, phone now (got rid of sports n movies)

Cancelled our papers/magazines £30 a month saving!

TV licence- yes, I'm going to contact them as we've been in our home now for 9 months so it should be reduced now.

Shopping - totally agree, I got a shock when I saw how much I send on groceries (and how much I throw out)! Will defo be reducing this

Clothing - mainly the kids and their uniforms. I buy asda trousers but the rest has to come direct from the school and I do spend a lot- maybe 50 a month rather than 80.

Yes, all for commuting unfortunately for both me and DH. We walk everywhere when at home!

Yeah, agree with car maintainence - ill change this.

Life insurance based on DH age and our mortgage balance. Tried all over and this was the cheapest.

Mortgage- 15 yrs repayment, 5.9% fixed for 3 years and runs out in 2014.

£200 HP is for my car, £100 for new TV (interest free for 9 month)

APR's for credit cards range from 19.8% for some, some have fixed rate of 7.9% for life of balance and Next and Argos are a disgusting 29.9%!!!!!!

Hope I've captured everything and thanks to your reply

DevCoder

Hi,

Read your posts and just wanted to say well done and don't be embarrassed, Its just money.

Tixy has offered excellent advice (as usual) and you seem to be taking it onboard so please keep us updated and post if you need some encouragement or advice.

Watching threads on these forums you quickly work out those who are genuinely trying to seek help with their debts and those trying to avoid them (through whatever means necessary).

I wish you all the best, just remember there is nothing to be embarrassed about in your situation as you are actively dealing with your debt.

mrsmccat

Hi, do you know if you are paying for Payment Protection Insurance on any credit cards/loans? It adds so much on to the monthly payment and isn't always appropriate for people it was sold to. And of course interest is added to the PPI so the debt gets bigger...
It may be worth your while to check this (unless of course you have done so already) and reviewing whether you:
Actually needed it, and;
Would even be eligible to claim from it, and;
Might have been missold it so could claim it back and reduce your debts

If you haven't done so already take a look at the PPI reclaiming forum.

All the best.