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Struggling with debt? Ask a debt advisor a question

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  • Cougargb
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    I am not prepared for what has just happened to me!

    Last Wednesday I "rescued" my 37 year old estranged son (no contact since May) as he was evicted from his house. He has not worked since being made redundant 2 years ago, living off his redundancy and accruing debts of just over £5k. He suffers from ADHD and is unfit for work.

    He has asked me to deal with his debts and guide him on a suitable path!

    After some initial advice we/he applied for ESA and on checking various sites feel that going down the DRO route is the best option.

    Clearly we have to produce a presentable budget but I have no idea on expenses we should claim bearing in mind he is living "at home". I am financially stretched and would need some help with food costs etc.

    None of the so called "debt remedy calculators" give any advice for our situation, so any advice would be gratefully received.
  • Rat_Boy
    Rat_Boy Posts: 1 Newbie
    edited 14 November 2012 at 11:31PM
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    Hi, we have built up a large debt over the last 7 years of around £40k, it all started 7 years ago when I got a new mortgage and tried to reduce the term by paying more, and this was ok at first but the last few years it has suddenly got out of control.

    However I’m now in a position to re mortgage as my fixed term is up, (I took a 2 year then a 5 year fixed rate).

    We have repaid about £20k off in this time from the mortgage and owe about 75% of our house.

    My question is as some of our debt is with the mortgage company 2 credit cards and overdraft, should I get a new fixed term rate (thats if I can) again for 5years and add this debt to the mortgage this would be about £15k, and the rest either do a DMP or a loan?

    What will happen in 5 years if I did a DMP, would I still be able to get a mortgage at a preferred rate?

    Regards

    Richard
  • WayneB73
    WayneB73 Posts: 33 Forumite
    First Anniversary Combo Breaker First Post
    edited 15 November 2012 at 7:12AM
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    Hi,

    I need some advise about IVA's as apposed to bankruptcy. The only reason i havn't already filed for bankruptcy is the fact i don't want to lose my house..

    I currently have a debt plan which i pay around £167 pcm on a debt of £90,000 My mortgage is £115,000 with a house value of £150,000 max, Currently i can only afford to pay my interest which is about £142 pcm.

    the problem i have is i am due to finish my mortgage in 16 years time, by my maths i would have to pay £7187 per year plus 1800 in interest providing my rate stayed the same meaning i would have to pay back £748 pcm to clear the mortgage in 16 years..

    Out of the £90,000 debt two of those creditors has debts secured against the house by a court order for around £35,000 which leaves £55.000 of unsecured debt to pay..

    I am self employed and based on my estimated average earning's over the next 5 years after tax will be around £24,000 pa, my living costs are currently £17.400 pa which means providing living costs don't rise i have around £6600 disposable income pa..

    What i really need to know is, should i keep my mortgage on interest only for the next 5 years and apply for an IVA to clear the debt? Tecnically with the secured loans i am in negative equity..

    The only reason i don't use the extra £6600 currently is because for some reason i can never live to my budget as i have no saving's, there always seem to be something that goes wrong from car repairs to house hold goods need replacing, i was trying to save a large some of money before taking out an IVA as i know it would limit my cash flow every month to the max with nothing spare.. If i pay the mortgage in full and i pay the mortgage off before the debt i will be forced to sell the house or remortgage the house in my late 50's to pay the remaining debt which means i would have noting and worked all my life for nothing.. Am i wrong to feel it so crucial to want to keep my house for retirement?

    Any advise would be much appreciated, sorry for any poor spelling and grammer in advance as it's not my strong point..
  • Serinapuk
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    Hi,

    Me and my partner have natwest accounts. I previously banked with Barclays but got into financial difficulty so now have current account with Natwest and trying to pay off my Barclays overdraft (with difficulty)!!!
    We have received a letter advising that our joint, his current and business (he is self employed) will be closed if we can't pay the overdrafts off! This is as a result of my partners current account being £4k overdrawn! My partner has attempted to contact natwest to explain that he was made redundant over 3 times in the past 2 years which meant he had to go self employed but this does not guarantee a regular income! He was told that it was not their problem and he needed to pay it off! Since then, the interest has been building and building and at no point did they offer to stop interest charges which has now resulted in the current situation!
    My current account is ok, I have never gone over limit. I am wondering whether I should pay all wages into my account for now and set up the direct debits for utility bills, mortgage etc from my account but I am worried that they will try to take that money to repay debt on our other accounts with them which would leave us in a position where we would be unable to meet our monthly outgoings! Please help!
    Thank you
  • System
    System Posts: 178,117 Community Admin
    Photogenic Name Dropper First Post
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    Cenedra41 wrote: »
    Hello

    I'm desperately in need of some advice. My husband and I have a consolidation loan we took out 2 years ago for £16000 (still has 3 years to run at £331 per month) but since then we have also built up debts of £30000 more or less on three other credit cards. We are paying £200 per month approximately on each credit card so all in all our debts are costing us around £1000 per month. Up to this month our mortgage cost us £1200 per month as we bought at the height of the boom and thought fixing it would be a good idea! From this month it has gone down to £800 which helps but I am 9 weeks pregnant with twins, bad timing I know but I am 44 so this was last chance saloon as far as having kids goes. I intend to return to work but I am desperately stressed and worried about how we will manage these debts. I'm not a high earner so have to balance how many days I return to work against cost of childcare. I only get 6 weeks full(ish) pay then down to £130 per week statutory maternity pay which isn't nearly enough to manage on.

    At the moment we struggle with minimum payments and run out of money mid month which means I have to put basics such as shopping on to cards which is just adding to the debt. I want to funnel the savings from my mortgage payments into paying things off but have a limited amount of time now until I go on maternity leave next year. I want to deal with this issue now and do something but don't know where to start.

    We considered borrowing extra on the mortgage but a. I don't think they'd lend money to us to consolidate debts and b. we don't have a great deal of equity in the mortgage anyway.

    I considered another consolidation loan but it would need to be very long and low interest for us to manage the payments until I am able to work more hours.

    My husband earns a good salary and is doing his best to do what overtime he can get but it's never enough. Another thing is that on 2 of the cards we have 0% deals until next year which are then due to finish and will go up again.

    I know we have brought this on ourselves but we need to sort this out so it doesn't add to pregnancy stress and gives us a clear idea of the steps we can take

    any help will be so appreciated thanks

    Tina

    sorry one more thing I forgot to add - my husband works for a financial company and due to the nature of the job he holds cannot be a bankrupt or have IVA's etc

    Hi Tina and welcome to the forum.

    It sounds like would benefit from some free and impartial advice.


    In your situation we don’t normally recommend taking out any further lending to consolidate loans, this often makes the situation worse over the long run. We also wouldn’t normally recommend taking out any further secured lending for the same reason.


    The best thing to do is to put together a budget and look at what realistic options are available. If your husband cannot have an IVA or go bankrupt this will be taken into consideration and it could be that a less formal solution such as a debt management plan (DMP) would be best suited.


    The first thing to do is visit our online debt advice service Debt Remedy (http://www.stepchange.org/msehelp) to help you find a solution to your debt problem quickly.


    Debt Remedy will assist you in completing a financial statement with information on your household, employment, income, expenditure and debts. From this the service will automatically determine your options.


    To help you fill in the form, it’s best to gather together information about:

    • Your income

    • Your expenditure

    • The creditors you owe money to


    You’ll receive a downloadable advice booklet providing a tailored solution for you based on your current circumstances and advice on ways you may be able to improve your situation.


    If you’re not confident with computers or would like to speak to an advisor then you’re welcome to ring our free Helpline on 0800 138 1111. We’re open Monday to Friday 8am - 8pm and Saturday 9am until 3.00pm.


    I’d recommend that both you and your partner call together once you have the paperwork you require for the debts and your monthly income and expenditure.


    It’s worth noting that debt solutions will have an impact on your partner’s credit rating and he should check to see if this will impact his employment also. If you call us we may still be able to give more advice regards this.


    I hope this helps.


    Kind regards,


    Mat
  • System
    System Posts: 178,117 Community Admin
    Photogenic Name Dropper First Post
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    wnjmurphy wrote: »
    Hello,

    I have just requested my DMP that (as per the email) should arrive tomorrow.

    If I get everything back via e-mail tomorrow, when will things be set up? Reason I ask is I have a pay day loan (DOH!) to go out at the end of the month. If they take the money, it leaves me requiring probably another to pay the rent etc.

    If I contact them direct, do they stop the taking of the payment, or will they still attempt it on that date, if so, how quickly can StepChange act to make sure they don't.

    Many thanks for your help and your fantastic service.

    Hi and thanks for your message.

    As you’re already a client I’d recommend that you get in touch for some more advice.

    We’ll be able to look at what’s best in this situation and give you the best advice on what to do.

    The contact number should be in the pack.

    I hope this helps.

    Kind regards,

    Mat
  • System
    System Posts: 178,117 Community Admin
    Photogenic Name Dropper First Post
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    p0lly wrote: »
    Hi Just a quick query I have this company chasing me for a debt I do not owe. I have asked them for the credit agreement over a month ago and they have written to say the company are still trying to retrieve it from their archives. They say they will not be in touch again unless they have the agreement. I am wondering should I just leave at that or will this be on my record ? TIA P0lly

    Hi and thanks for your post.

    I’d recommend double checking your credit file if you haven’t done this recently.

    There are three credit reference agencies in the UK Callcredit, Equifax and Experian. Their websites will explain how to get access to your credit report.

    If anything is listed on your credit report regards this debt, and you have no knowledge of taking this credit out you’d need to come back for more advice.

    I hope this helps.

    Kind regards,

    Mat
  • AllenL
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    Hi,
    I took out an EFG for £50,000 for my business approximately 30 months ago and now still owe £39,000. I now cannot afford the repayments and the company in whose name the loan was taken out has ceased trading.
    I have no personal assets apart from my house.
    Can anyone tell me what my options are? The name suggests that the government will guarantee the loan, so surely if I cannot pay, the government are expected to cover the shortfall.
    Any help gratefully received.
  • System
    System Posts: 178,117 Community Admin
    Photogenic Name Dropper First Post
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    hi there, i am looking for some assistance with some solutions to resolve my current financial situation which i've summarised below;

    i have unsecured debts of around 9k which i am unable to meet due to a decrease in salary. having read about the different options i have, the ones i am looking at are a DMP and IVA.

    i would prefer to write these debts off over a 5 year period via an IVA, rather than applying for a DMP, as i believe the DMP process would take longer to resolve and would not include writing off any debt. at the moment i am not in a position to resolve these debts on a monthly basis as they are with 4 different companies who are asking me to pay more than i can afford.

    i have been a homeowner for 8 years and earn 21K a year so hopefully these debts are resolvable using one of these methods, after mortgage and bills i have around £300 per month which i could use as repayment for these debts. i'd really appreciate some advice on the best way forward for me as i'd like to start 2013 on a better financial footing.

    :money:

    sincere thanks

    Hi and welcome to the forum.


    It sounds like you would benefit from some free and impartial advice.

    I’m afraid you don’t have enough debt to qualify for the IVA criteria (Debts of £15,000 and over only).

    However, as you suggest it is possible to get yourself back on track most likely through a debt management plan (which we offer free of charge, so all the money you pay in goes towards clearing your debts).

    The first thing to do is visit our online debt advice service Debt Remedy (
    http://www.stepchange.org/msehelp) to help you find a solution to your debt problem quickly.

    Debt Remedy will assist you in completing a financial statement with information on your household, employment, income, expenditure and debts. From this the service will automatically determine your options.


    To help you fill in the form, it’s best to gather together information about
    :
    • Your income

    • Your expenditure

    • The creditors you owe money to


    You’ll receive a downloadable advice booklet providing a tailored solution for you based on your current circumstances and advice on ways you may be able to improve your situation.


    If you’re not confident with computers or would like to speak to an advisor then you’re welcome to ring our free Helpline on 0800 138 1111. We’re open Monday to Friday 8am - 8pm and Saturday 9am until 3.00pm.


    If you phone us it may be possible to refer you directly to an advisor for immediate advice. Alternatively, we will arrange for an appointment to be booked at a time convenient for you.


    I hope this helps.


    Kind regards,


    Mat
  • System
    System Posts: 178,117 Community Admin
    Photogenic Name Dropper First Post
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    r6joe wrote: »
    Hi,
    I have been contacted by a debt recovery agency about a debt I dont recognise. I sent them the standard "prove it" letter to which they have replied saying that because it is an "O2 mobile phone account" they do not have to produce any documents. Is this true and do I just have to pay a bill I dont think I owe or are they trying it on?
    Thank you
    Joanne

    Hi Joanne and welcome to the forum.

    They would need to provide some documentation to prove that the debt is yours.

    It might also be worth checking your credit file, and if necessary contacting O2 directly to enquire about this.

    I hope this helps.

    Kind regards,

    Mat
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