unemployed & in debt: it's a full time job!

tarchin

This is the financial summary worked out with assistance from CCCS, who were very helpful - 2 hour phone interview! After filling in their web questionnaire, the automated system advised no solution as it could not cope with a nil income situation

Income = 256 JSA (nothing received yet, but advised to put this figure. Last worked 10/04/07, no income since 24/04/07)




Expenditure

Mortgage 620
Water 13
Council Tax 65 (CTB applied for)
Gas 22
Electricity 36 (630 in arrears, but querying this - meter reading dispute)
Buildings Insurance 15
Land line / mobile / internet 55
TV license 12 (aplied for refund - not used it since January)
Car spares /servicing 10
Road tax 10
Car insurance 21
RAC 12
Fuel / parking 43
Food/household stuff 126
Tobacco 50
Hair 4
Dentist 13
Entertainment ? 5
Emergencies 5

TOTAL ESSENTIAL (not including endowment payments of 48) = 1,155 TOTAL INCOME = 256
REPAYMENTS DUE TO CREDITORS = 1,180

CREDITORS

Capital One credit card 2,300
Goldfish credit card 4500
Lloyds overdraft 650 (agreed limit 750)
Lloyds unecured loan 8,000
MBNA unsecured loan 11,000
MBNA credit card 8,500
Lloyds credit card 3,400
RBOS unsecured loan 6,500
RBOS overdraft 100 (limit 100)

Total = 44,950


House valued (for scrapped remortgage option April 07) 90,000
Outstanding mortgage 61,000 - 7 years to term, mixed Cap/repay and interest only.

I am also paying 12 and 36 for endowment policies. Company cash-in value at Feb. 07 = 12,000. Not included in CCCS summary, just seen that, awaiting phone call as to why - should I have included it in mortgage?

ACTION TAKEN -

(if i wasn't currently unemployed i just would not have enough time to sort out all the paperwork and phone calls involved)

Claimed JSA 25/7/07

Sent CCCS standard letter to all above creditors with above summary and offered £1 token payments, asked to freeze interest, will contact when circumstances change etc. Letter to each shows all creditors.

Set up basic bank account - Two! HSBC and Yorkshire Bank, no transactions yet.

Withdrew last £500 from savings account.

E-mailed local estate agents - interested in selling property.

Trawled agencies - got confirmed offer of contract for 1 month minimum at
estimated take home pay of 320 a week (1240 a month ?)

I have been working via agencies for 3 years and usually have a week's gap in employment at most. being unemployed and claiming benefit for first time is what prompted me to do the above and try to sort out finances sensibly. I have been living on credit for years - taking out loans which go to a savings account, but then is used to pay minimum payments on cards and the other loans. A total fantasy /delusion world - but the nature of blind spots is: one doesn't see them! Until now. I am not wasting any time on self mortification
but am intent on acting impeccably from now on - I would welcome advice from anyone as to how to proceed.

The nature of my employment via an umbrella company(as above) means that income, although likely to be available is not consistent. Do I revise total finance summary and advise all creditors every time there is any change? - could be every few weeks/months. Trying to find a permanent job for 2 years.
I get no pay for holidays /sickness. Even with regular employment my income fluctuates and anyway would only allow disposable income of about £40/50 a month so a debt plan, I am 57, seems impractical. (No pension arrangements)
Also doesn't look like an IVA would work because of above.

My inclination was initially to bancruptcy, but now musing over possibility of full and final settlement in longer term This would mean selling house and cashing in endowments - rent somewhere. At present, guesstimate this to yield about 41,000. Initially I thought to offer this between creditors for settlement. Now wonder if I might be able to offer less, especially if they know an alternative would be bancuptcy. Otherwise what about cashing in as above , but using the proceeds to pay regularly (more than minimum for a change) and see how things go - i might get interest on the lump sum to help)?

Well I hope this is not too much information for a first post - i know there is along way to go with this! Basic advice I would welcome is:

what reaction to expect from initial letter to creditors

strategy in future dealings with them

thoughts on my long term strategy

Note: first reality check experience - yesterday i was in town sorting a bank account and needed to buy some stamps, had no cash. walked up to cash machine at lloyds where i have o/d of £600 (£750 limit). "Is that my money?"
"no - it's theirs and if you borrow it you will have to pay back" Simple but mindblowing to this bear of little brain!

best wishes, tarchin.

saffronflowers

Welcom and not sure if I have the best advice but here are some bits and peices that maybe of use.

What JSA have you applied for - Also you can apply for help with interest but only the interest on your mortagae but it is complicated on how and when you get paid so I would speak to the CAB.

This is the financial summary worked out with assistance from CCCS, who were very helpful - 2 hour phone interview! After filling in their web questionnaire, the automated system advised no solution as it could not cope with a nil income situation

Income = 256 JSA (nothing received yet, but advised to put this figure. Last worked 10/04/07, no income since 24/04/07)




Expenditure

Mortgage 620 Check with the CAB
Water 13
Council Tax 65 (CTB applied for)
Gas 22
Electricity 36 (630 in arrears, but querying this - meter reading dispute)
Buildings Insurance 15
Land line / mobile / internet 55 Check pigsback/quidco for a better deal
TV license 12 (aplied for refund - not used it since January)\if you have a tv you still need a licence
Car spares /servicing 10Can you realistiacally afford to run a car
Road tax 10
Car insurance 21
RAC 12
Fuel / parking 43
Food/household stuff 126How many in the household?
Tobacco 50Learn to make roll ups
Hair 4
Dentist 13
Entertainment ? 5
Emergencies 5

Personally I would consider bankcrupcty, you do not have the income to cover your expenses and with your work being sporadic, it seems unlikely and that you will go into default very quickly. Do you have any bank charges you can reclaim?

I hope that I have not been too negative, and really wish you the best in sorting this out and I for one know there are some amazing peeps on here that will probably be able to give you better advice than I

SFx

Crown

Hi and Welcome,

Thats a lot of Information you have there but certainly not too much

I guess the main priority at present now that you have sent your letters to the creditors is employment. I see that you have already spoken to some agencies and hopefully this will bring something up even if only on a temp basis. Have you taken up the offer of one months work with the agency?
Also remember that £320 week probally isnt taking into consideration tax and N.I so make sure you find out about this before you agree.

I am in the same situation that the CCCS couldnt put me on a DMP as I didnt have any income after priorities but I have managed to sort out my own DMP buy writing to the creditors using my CCCS number and paperwork and continuing making token payemnts. after 4 months they finally excepted my offer of £1 a month on a on going basis why I try to sort out my finances.

As for the initial reaction you can expect from the letters it varies. In my case Barclay Card was very good and stopped my interest immediatley although would not except my token offer. I finally agreed to a higher amount although still affordable to me and havent had issues since.

The Halifax who are my main creditor (overdraft, Credit card and Loan) was a nightmare.It took them 4 months and many phone calls and letters before they even acknowledged receipt of my paperwork!

Most importantly to you you will most likely receive a letter saying that if you do not bring your account upto date you will recieve a defualt notice on your account. Do not panic at this as it is there legal responsibility to issue you with it.

Im sure the CCCS has already advised you bout priority debts. You need to try and make an arrangement with your Mortgage company and inform the Countil Tax office as these could lead to the loss of your home and CCJs. Unsecured debt on cards/loans can wait.

Alos I see that on your SOA you are spending £50 a month a smoking. ANy chance you could give up or severely cut down as this is a massive percentage of your JSA.

Good luck and let us know how you get on

tarchin

thanks for posts. i start new job (month duration) on 7th may, will be 320 nett per week working via umbrella company as before. I have agreed mortgage switch to interest only: down from 620 to 320 for now, and extended due date from 18th to 31st (RBOS). I will now have to cancel council tax benefit claim! Confident about future employment prospects - this lull is what got me to the lightbulb moment so very welcome really. hello reality.

Conor_3

tarchin wrote: »

thanks for posts. i start new job (month duration) on 7th may, will be 320 nett per week working via umbrella company as before.

You are aware of the tax changes in the last budget that basically bring the use of unbrella companies to an end in August?

chevalier

Hey don't cancel the claim! For however long you were out of work that is your money. You can use it to overpay the arrears on something!


By the way I have no idea what an umbrella company is (other than someone that make them of course:rolleyes: ).
chev

tarchin

umbrella company is: i work assigned contracts, short term, via an agency. They pay the umbrella company (there are many available, but be careful who you choose). Umbrella co. is my official employer, but i decide where i work - end client, via agency. Umbrella pays me, does all PAYE etc and allows expenses: meals, mileage etc at Revenue approved rates for a fee,which is also offset against tax. this means i receive up to £2/3 extra an hour pay rate(the agency doesn't have oncosts of admin/paye etc).

I was working as a ltd. company via Brooksons - corporation tax / dividends / expenses, but regulations have changed in april; it is just too much hassle and possibly (in my case dubious as to legality) to continue. Now changed to Parasol and working via PAYE but still claiming subsistence/mileage.

Benefits - sorry i meant inform them of change in circumstances - won't be eligible when working.