What do I do now

taren

Been on these forums for a while now, and its a great place.

I'm in a real dilemma, first I am being made redundant at the end of July, and after the 7 years ive been with this company, the package is healthy. Also my wife is on maternity leave and her pay has also now dropped, so money is very tight.

But I have debts, over £40k, which for the past 3 years, we have been making cuts, and paying off debts, 3 years ago it was over £77k between us, but we have managed to clear it down pretty well, and my plan was working (taken on board what a lot people on these forums have also done, SOA, etc etc).

But with the redundancy at the end of July, I am concerned, my mortgage is high, and after speaking to the bank they have said, I could pay intrest only until I find a job again, but in my sector they are far and few and getting less every year. I am confident I will find a job, but how long, and what the pay will be I am not.

So what do I do? use the redundancy money to clear as much of the debts as possible?

Bank it and live off it in the hope of finding a job, but this will eventually run out, and I'll still then have the debts, a little lower, but the bulk will be there.

I feel like all my plans for the future have been pulled from underneath me, we have two children, one who is 2 and one baby 3 mths old.

My original plan was;
1) Change wages bank account - Move my banking from lloyds to another bank, as two of the biggest debts, a credit card and a loan are with the bank my wages get paid into, and in the past when I was falling behind with payments, they would then just take the money out of my account if it was there. hence I could never really default and then enter into a repayment plan.

2) Overdraft - I am currently selling my stuff on ebay to raise enough money to pay off the overdraft with lloyds bank, which I have started and im on target to be able to clear this down this month.

3) Redundancy payment - use this to clear as much of my debts as possible. It wont clear all of it as it stands, and this is where I am worried, I am already into repayment plans with a couple of my credit cards, and one has already offered a full and final over the phone. If I was to default on the other two big debts, and let them chase me for a few months, would I then be a position to get them to negotiate down, by writing a letter to all my debtors, stating who and what amounts I owe and then reduce them down by an even percentage so that all my debts are cleared with the redundancy payout.

I keep looking at my debts spreadsheet and it makes me sick with worry, that if I am not careful, we could be in real trouble. My head hurts and every day I am looking at ways to save more money off our outgoings. Its took a lot of courage to write this, as I am usually the man with the plan, but now I finding it hard to think straight.

In an ideal world, I'd find another job quickly and use the redundancy money to clear as much debt as possible, and then continue with my original plan. But with the market the way it is, and jobs in my career they are far and few. Sorry if this is a little messed up, but im just writing down whats in my head.

All advice from these forums are greatfully recieved

southernbelle

I am by no means an expert, but I suspect the first thing to do will be to create a SOA (Statement of Affairs). This will give the lovely people here the chance to see where you could save some money.

The good thing is that you've made a huge step in admitting you're not always the man with the plan - it takes a lot to admit that, so well done. :T

Hovel_lady

The link for the SOA is here...:)

http://makesenseofcards.com/soacalc.html

When you have clicked 'Calculate' on the Statement of Affairs form, click 'Format for MSE'. This gives you a popup window. Click 'highlight text', right click on the highlighted text and copy the highlighted textincluding all formatting codes. Paste the copied text into a post on this thread.

Sarah2490

I am no expert and use this forum for help but I will tell you what my DMP company told me when I was made redundant. They said not to use the redundancy to pay off the debt until I had a new job as I may need it to live on and make repayments.

I was very strict and cut all outgoings by looking at our SOA and then made up the shortfall (less than my wage would have been) with money form the redundancy.

Once I had a job I used the remaining redundancy to clear as much debt as possible.

Like I said I am no expert and other may give you better advice but I though I would tell you what I was told.

sistafromanothermista

:wave: what 'sector' is it you work in? could you get a job i a similar field of work? so not necessarily the same job but same field of work?

Okydoky25

Sorry cant help re debts but in the short term altho as a mother I know it's not what I'd want to do but could your wife go back to work full time and you be a stay at home dad u till you find a job. Your wife could then negotiate p/t hours if she wanted when your on a full wage. You are also entitled to claim JCA not a lot but every little helps! Good luck

bargainbetty

Sarah2490 wrote: »

I am no expert and use this forum for help but I will tell you what my DMP company told me when I was made redundant. They said not to use the redundancy to pay off the debt until I had a new job as I may need it to live on and make repayments.

I was very strict and cut all outgoings by looking at our SOA and then made up the shortfall (less than my wage would have been) with money form the redundancy.

Once I had a job I used the remaining redundancy to clear as much debt as possible..

^What Sarah said ^

If you pay everything off, you have nothing to live on. Strip it all back, tighten your belt and get a new job as soon as possible, whatever it might be. Coudl your wife go back earlier instead, so you could retrain, if necessary? Be a stay-at-home dad?

Good luck

RAS

taren wrote: »

So what do I do? use the redundancy money to clear as much of the debts as possible?

3) Redundancy payment - use this to clear as much of my debts as possible. It wont clear all of it as it stands, and this is where I am worried, I am already into repayment plans with a couple of my credit cards, and one has already offered a full and final over the phone. If I was to default on the other two big debts, and let them chase me for a few months, would I then be a position to get them to negotiate down, by writing a letter to all my debtors, stating who and what amounts I owe and then reduce them down by an even percentage so that all my debts are cleared with the redundancy payout.

Do not do this.

Because you will need to apply for benefits to live off if you do not get a job quickly.

And they will want to know about the value of your redundancy settlement and if you have paid off debts unnecessarily, you will be consider to have deprived yourself of capital. That will mean that your benefit entitlement will be assessed as if you still have the redundancy money in your accounts.

So you have no benefits coming in and no redundancy money either. Deep doo doo.

You can
- make full mortgage payments if you wish - this is money due.
-make full payments towards your debts - this is money due.
- make sure the Council tax and water rates for the year are paid - this is money due.
- pay insurance policies or car tax that need re-newing on an annual basis rather than monthly as this is money due and the cheaper option as a rule.
- pay any utility debts off - as this is money due.

if you make additional payments to clear anything other than high interest debts, then the deprivation of capital issue start to kick in and you will not know what the decision-maker will say until you hit the problem.

taren

RAS wrote: »

Do not do this.

Because you will need to apply for benefits to live off if you do not get a job quickly.

And they will want to know about the value of your redundancy settlement and if you have paid off debts unnecessarily, you will be consider to have deprived yourself of capital. That will mean that your benefit entitlement will be assessed as if you still have the redundancy money in your accounts.

So you have no benefits coming in and no redundancy money either. Deep doo doo.

You can
- make full mortgage payments if you wish - this is money due.
-make full payments towards your debts - this is money due.
- make sure the Council tax and water rates for the year are paid - this is money due.
- pay insurance policies or car tax that need re-newing on an annual basis rather than monthly as this is money due and the cheaper option as a rule.
- pay any utility debts off - as this is money due.

if you make additional payments to clear anything other than high interest debts, then the deprivation of capital issue start to kick in and you will not know what the decision-maker will say until you hit the problem.

Ras, thank god I posted this here and thank you for your reply, never knew it would impact in this way. And I could have really messed up. I owe you a drink. :beer: thanks again

A huge thanks to to all who have replied, i will post up a SOA later today, (visitors around at the moment)

With regards to sector, I will take any job, less money, I'm not fussed as long as I can pay the bills and keep chipping away at my debts, I will be happy.

taren

bargainbetty wrote: »

^What Sarah said ^

If you pay everything off, you have nothing to live on. Strip it all back, tighten your belt and get a new job as soon as possible, whatever it might be. Coudl your wife go back earlier instead, so you could retrain, if necessary? Be a stay-at-home dad?

Good luck

I would love to be a stay at home Dad, I love my kids like all parents do, but i feel i am a provider and should do what I do best and provide for the family, if things do get tough, then i'll put the pinnie form on and get on with the job.

And my wife has already said she will do what needs to be done, we've already started reducing down the 2 years old nursery days, now down to one day per week, and once my wages end next month to no days, although the 2 year old will miss her friends, her dads gonna be around more :-)

taren

sistafromanothermista wrote: »

:wave: what 'sector' is it you work in? could you get a job i a similar field of work? so not necessarily the same job but same field of work?

I'd do anything, I'm evening looking at retraining, and doing something less stressful to give me a better quality of life. I've more than likely got another 30 years career ahead of me, and that could be two careers.