Struggling with debt? Ask a debt advisor a question

Former_StepChange_Rory

boredsailor wrote: »

I am after some advice with regards to my debt.

In short, due to a combination of poor choices and bury my head in the sand attitude, my debt has spiraled to almost unmanageable proportions.

I currently have combined unsecured debt of approximately £30k (£30,105 to be exact).

This is split between 4 credit cards and an overdraft, details below:

Lloyds CC - £11,461 with a min payment of £300 pcm
Barclaycard CC - £1,421 with a min payment of £35 pcm
Natwest CC - £5,299 with a minimum payment of £100 pcm
Virgin CC - £10,522 with a minimum payment of £300 pcm
Lloyds O/D - £2,700 which never clears

My wife and I own a mortgaged property of approximately £175,000 which has an outstanding mortgage of £118,000. I have made subtle enquiries about remortgaging but the mortgage provider are unwilling to lend probably due to the amount of my unsecured debt. There is also a second charge on the property which was a 5 year £15,000 interest free loan with the 5 year period up for renewal in December. This is further compounding the issue as we are also keen to clear this before the interest starts totting up.

My take home wage is approximately £2,700 pcm. From the figures above you'll see that my debt servicing is taking up £735 of this. This leaves £1965. £1620 of this goes to my wife for housekeeping and covers all the outgoings (food shopping, bills, mortgage etc) and we are up to date on all financial commitments. We have rationalized where we can and don't believe there are many more savings to make. From the little that is left (£345) my monthly fuel allowance is approximately £280 due to me working 180 miles away from home Mon - Fri and only returning home on the weekend. This leaves £65 for the remainder of the months living costs and has recently resulted in me utilizing credit just to feed myself whilst at work, sometimes even missing meals. My wife also works but her wage only equates to approximately £175 pcm and she also gets the Child Benefit for our two children paid to her.

I was contemplating a consolidation loan but having read your pages, am reluctant to borrow more, despite the appeal of paying out less per month.

What are my options? Is there any truth in the myth that a proportion of debt can be written off? There is obviously some £55k equity in the house (£40k if you take away the second charge) but how do I release this without selling up? Are there any mortgages out there which would allow me to clear the debt and secure it against the house? I'm not keen on the IVA route or anything which will affect my credit rating in the future if I can avoid it. I just want an end to the never ending cycle as at the minute, each month seems to bring more and more desperation and stress and I don't see an end to the cycle!
Many thanks in advance.

Hi there,

Thanks for posting, this is obviously something you’re finding really difficult to deal with but we’re here to help.

You may be right when mentioning that borrowing additional money or consolidating loans can make things more difficult, they’re often a tempting prospect and in some cases they can work but we often see that you end up repaying more in the long-term. Our advice would be based on repaying what you owe without having to borrow any more money.

From your budget, it’s clear that the payments to your unsecured debts are leaving you with very little left each month. It’s really important to concentrate on the most important bills such as your utilities, mortgage and everyday spending on things like food shopping as falling behind with these can have the greatest consequence. You should also never have to feel that you skip meals because of debt.

It’s also not always an option to re-mortgage as you've found out already. Securing debts to your property can also carry its own risk as the consequences of missed payments to secured debts is often far greater than unsecured debts.

With credit ratings, it’s often a major worry that any impact on your credit score will be permanent when in reality, nothing will show forever. It’s far more important to us that you make steps to deal with your debts rather than worry about your credit rating. There’s lots of myths around ‘blacklisting’ that simply aren't true. Here's an article on our MoneyAware blog that talks about this in more detail.

Before we look at debt solutions, we’d first like to know more about your circumstances and budget so that we can tailor all of our advice to your situation. The first thing we’d recommend is putting together a budget with us either online or over the phone.
You can use our free, anonymous, online Debt Remedy tool available here or you can talk to us by visiting the StepChange website for more information.

Once we’ve got a better idea of your situation, we’ll be able to offer complete advice, personal plan of action and a debt solution we think would be best for you to deal with your debts. All of our advice is free, impartial, confidential and always based on what’s best for you.

I hope this helps, we look forward to hearing from you soon.

Miss_E62

Hello everyone, I'm new here and hope I've done this properly.

I'm hoping for some advice, here's my situation,

Age 52 female working full time. Single but live with partner. All finances separate.
Homeowner mortgage in my name only.

Currently personally owe £38,000 with credit cards store cards bank overdraft.
Paying out approx £870 per month to these.

Personal finances are:

Monthly income is £2329.00

Monthly Home outgoings minus food and petrol is £887.44 inc mortgage (12 yrs to run)
Credit and charges £ 870 approx
Leaving remainder of approx £550 for food fuel clothing etc.

Inheriting £15,000 in a couple of months.

I'm keen to reduce and clear my debts which have been creeping higher and higher.
I can't seem to pay more than minimum payments so they are not reducing,
My partner doesn't know the amount I owe and I do not wish to involve him.
I'd be interested to hear your advice please, it's causing me real anxiety, I just don't know what to do for the best.

Would I qualify for debt management? Or is a consolidation loan best?

Thank you for taking time to read this

Miss E62

margs23

Hi. I have credit card debt of about £10k and an overdraft of £1300 which is being cut by the bank to £500. We have a joint loan which is paid up next July. I am also paying £275 per month to my partner as he previously took some of my debt on to his card. My problem is that there is no spare cash. I am almost at the point where my monthly salary pays my debts and I then have nothing to.live on so have to use any spare on my credit cards so they never reduce. Where do I go from here? P.S. I also suffer from depression help!!!!

StepChange_James

Miss_E62 wrote: »

Hello everyone, I'm new here and hope I've done this properly.

I'm hoping for some advice, here's my situation,

Age 52 female working full time. Single but live with partner. All finances separate.
Homeowner mortgage in my name only.

Currently personally owe £38,000 with credit cards store cards bank overdraft.
Paying out approx £870 per month to these.

Personal finances are:

Monthly income is £2329.00

Monthly Home outgoings minus food and petrol is £887.44 inc mortgage (12 yrs to run)
Credit and charges £ 870 approx
Leaving remainder of approx £550 for food fuel clothing etc.

Inheriting £15,000 in a couple of months.

I'm keen to reduce and clear my debts which have been creeping higher and higher.
I can't seem to pay more than minimum payments so they are not reducing,
My partner doesn't know the amount I owe and I do not wish to involve him.
I'd be interested to hear your advice please, it's causing me real anxiety, I just don't know what to do for the best.

Would I qualify for debt management? Or is a consolidation loan best?

Thank you for taking time to read this

Miss E62

Hi Miss E62,

With debt management plans it's not so much that you need to qualify, it's more a case of working out if it's a solution that fits your circumstances.

From what you've said it sounds like you're finances are stretched at the moment but it's hard to tell if you're at a point where reduced payments would be the best plan.

If you can manage to maintain full payments and clear the debts in a reasonable timescale then that's usually the best way to sort things out. When that's not possible it's that point where debt solutions like debt management plans become potential options.

I'd recommend giving our online advice tool, Debt Remedy, a go. It takes about 20 mintues, and will make recommendations about how best to deal with your debts. Here's the link: http://www.stepchange.org/DebtRemedy.aspx.

My experience is that consolidation loans can be very risky when you're struggling with debts. I've spoken to a lot of people who've taken them out, struggled after getting the new loan and run their old debts back up again.

So I'd suggest extreme caution before taking out a consolidation loan. There might be some circumstances where it can help simplify and reduce the overrall costs of debt but it's also possible for them to make things worse.

I hope this helps.

Kind regards

James

StepChange_James

margs23 wrote: »

Hi. I have credit card debt of about £10k and an overdraft of £1300 which is being cut by the bank to £500. We have a joint loan which is paid up next July. I am also paying £275 per month to my partner as he previously took some of my debt on to his card. My problem is that there is no spare cash. I am almost at the point where my monthly salary pays my debts and I then have nothing to.live on so have to use any spare on my credit cards so they never reduce. Where do I go from here? P.S. I also suffer from depression help!!!!

Hi Margs,

Welcome to the forum.

It sounds like things are very stretched with your finances at the moment. You're describing a situation we hear about from our clients regularly, when income gets sucked up by bills and credit paymetns so living costs are then covered by getting more into debt.

This can create a spiral which it is best to break as soon as possible. We can help you work out your options with this.

I'd suggest using our Debt Remedy tool. It'll help you plan a realisitic budget and work out what you've actually got available to pay towards your debts. After that we'll make recommendations about options to sort the debts out that fits in with your current circumstances.

Here's the link: http://www.stepchange.org/DebtRemedy.aspx.

I'm sorry to hear you've been struggling with depression, we know that debt and mental health problems are often linked. There's a bit more information on our website about this here: http://www.stepchange.org/Debtandmentalhealth.aspx.

All the best, I hope this is useful.

Kind regards

James

deefurkay

Hi, any advice would be welcome.

I have around £30,000 of debt racked up from when I bought my own house at 21 (I'm 27). It started as a loan for a car. I then ran up my credit cards, got a new loan to clear them, didn't cut them up and then maxed them out again. Plus a £3,000 overdraft.

Basically being young, naive and stupid.

I earn about £2200 a month, of which £1200 is going straight to minimum payments before mortgage and living expenses. I'm also saving for a wedding and everything is really get on top of me.

I've met with a financial advisor who has recommended a Trust Deed, which means I pay a portion of my debt and after four years, it's gone. My credit rating will take a hit, but it's already very poor as it is.

My only concern is that he said if my creditors don't agree to the the Trust Deed, then I HAVE to file for sequestration, which seemed odd as I would have thought I could have walked away at that point and looked at an alternative. I really don't want to go anywhere near sequestration as I'd have to use my house as a means of paying creditors (ie being forced to sell it )

Just looking for any advice anyone can give me.

Former_StepChange_Rachel

deefurkay wrote: »

Hi, any advice would be welcome.

I have around £30,000 of debt racked up from when I bought my own house at 21 (I'm 27). It started as a loan for a car. I then ran up my credit cards, got a new loan to clear them, didn't cut them up and then maxed them out again. Plus a £3,000 overdraft.

Basically being young, naive and stupid.

I earn about £2200 a month, of which £1200 is going straight to minimum payments before mortgage and living expenses. I'm also saving for a wedding and everything is really get on top of me.

I've met with a financial advisor who has recommended a Trust Deed, which means I pay a portion of my debt and after four years, it's gone. My credit rating will take a hit, but it's already very poor as it is.

My only concern is that he said if my creditors don't agree to the the Trust Deed, then I HAVE to file for sequestration, which seemed odd as I would have thought I could have walked away at that point and looked at an alternative. I really don't want to go anywhere near sequestration as I'd have to use my house as a means of paying creditors (ie being forced to sell it )

Just looking for any advice anyone can give me.

Hi there, thank you for getting in touch

I think from everything you’ve said, it would be a really good idea for you to get some free and confidential debt advice from us.

As you’ve mentioned a Trust Deed, I’ll assume that you are based in Scotland. You are right to want to know more information before considering something like a Trust Deed. This is a form of insolvency as well as a formal agreement between you and your creditors. While it is a way of ensuring you’ll be debt free within a certain timeframe, there will be restrictions on your spending and it will show on your credit file that you’ve entered a Trust Deed. You can find out more about what Trust Deeds entail on our website.

If you’re unsure of how to proceed, we can help. We can take an in-depth look at your situation and figure out what debt solution is best for you. We will need to take a look at your budget first, and ensure that your priority living costs such as mortgage, rent, utilities, council tax and food are taken into account. Our online advice tool Debt Remedy can help you put together a personal action plan in approximately 20 minutes:

Alternatively, you can go through your budget over the phone by calling our Helpline on 0800 138 1111. We are open Mon – Fri 8am to 8pm and Sat 8am to 4pm.

Best regards

Rachel

Lou890

Hello

I was wondering if I could get some advice please. I’ve been advised to get an IVA (by an IVA company - no surprises there!) But i’m not sure if it is the best option for me. I owe roughly £14,000 on loans and credit cards (£9,000 loan + £700 computer finance + £4000 credit cards).

I’ve been in debt for years but i’ve managed to bring it down and pay it off gradually. However my circumstances have changed due to having a baby and from January I will only be earning £800 a month of which my repayments equal about £500 a month. So this leaves me with £300 a month for nursery fees, travels costs and the cost of living. Basically i’ll be losing money!

The IVA people said they could lower the payments down to £200 a month which would be a lot better, however after reading this site an IVA sounds a very drastic action, especially as i’d like to try and get a mortgage in a couple of years and up until now I’ve been able to pay off all my debts and never missed a payment.

Is the IVA the best option? Until I can find a way of raising my income I’m not sure how I would be able to afford all those repayments.

I’d appreciate any advice you can give me please!

Many thanks!

fatbelly

Lou890 wrote: »

Hello

I was wondering if I could get some advice please. I’ve been advised to get an IVA (by an IVA company - no surprises there!) But i’m not sure if it is the best option for me. I owe roughly £14,000 on loans and credit cards (£9,000 loan + £700 computer finance + £4000 credit cards).

I’ve been in debt for years but i’ve managed to bring it down and pay it off gradually. However my circumstances have changed due to having a baby and from January I will only be earning £800 a month of which my repayments equal about £500 a month. So this leaves me with £300 a month for nursery fees, travels costs and the cost of living. Basically i’ll be losing money!

The IVA people said they could lower the payments down to £200 a month which would be a lot better, however after reading this site an IVA sounds a very drastic action, especially as i’d like to try and get a mortgage in a couple of years and up until now I’ve been able to pay off all my debts and never missed a payment.

Is the IVA the best option? Until I can find a way of raising my income I’m not sure how I would be able to afford all those repayments.

I’d appreciate any advice you can give me please!

Many thanks!

So from January, you will not be able to afford youR contractual monthly payments on your debts.

After essential living expenses how much will you have available?

If the answer is £200 per month then a 60-month IVA does not to have a lot of advantage compared to a 70-month debt management plan or bankruptcy with a 36-month possible IPA

If the answer is less than £50, then you may be eligible for a DRO, which would not surprise me for someone earning £800 per month.

But you would need to run this past someone who does not have a product to sell, like National Debtline or the CAB as the criteria are different for each strategy.

Former_StepChange_Rachel

Lou890 wrote: »

Hello

I was wondering if I could get some advice please. I’ve been advised to get an IVA (by an IVA company - no surprises there!) But i’m not sure if it is the best option for me. I owe roughly £14,000 on loans and credit cards (£9,000 loan + £700 computer finance + £4000 credit cards).

I’ve been in debt for years but i’ve managed to bring it down and pay it off gradually. However my circumstances have changed due to having a baby and from January I will only be earning £800 a month of which my repayments equal about £500 a month. So this leaves me with £300 a month for nursery fees, travels costs and the cost of living. Basically i’ll be losing money!

The IVA people said they could lower the payments down to £200 a month which would be a lot better, however after reading this site an IVA sounds a very drastic action, especially as i’d like to try and get a mortgage in a couple of years and up until now I’ve been able to pay off all my debts and never missed a payment.

Is the IVA the best option? Until I can find a way of raising my income I’m not sure how I would be able to afford all those repayments.

I’d appreciate any advice you can give me please!

Many thanks!

Hi there, thank you for getting in touch

We at StepChange Debt Charity provide IVAs as a debt solution and can look into whether this is the best option for you. In order to do this, we would need to have a full understanding of your financial situation. This will involve going through a budget with us so we can ensure any solution we provide takes all of your living costs into account.

Our online advice tool Debt Remedy can help you put together an action plan in just 20 minutes.

You can also read more about how our IVAs work on our website.

Best regards

Rachel