what can we do now?

bigfred

my wife and I are finally out of ideas... we currently live in a council house (unfortunatly) and are desperate to purchase a home of our own..

I earn £25,000 per anum and my wife earns £6000. we are both lucky enough to be paid weekly.

Our problem is that we are in excess of £30,000 in debt. Our outgoings are now greater than our income and we are out of ideas.

We have loans, credit cards, car finance x2, various HP agreements, etc,etc, etc.

Most of the debts that we have started when we first got married... the usual setting up home costs and what have you, and have since spirralled out of control.

The problem is now that we simply have no disposable income and an absoluetly terrible credit history, with a score to boot I'm sure.

We are after some advice on our options... should we get an IVA to free up some money, or even go as far as applying for bankrupcy.

Please offer some advice if you can, desperation has just about kicked in.

CAFCGirl

I think posting an SOA is the first immediate step.

Outlining what your outgoings are in terms of rent, utilities etc and then how much you're paying to what debt, the amount outstanding and then the apr's.

I confess I dont know much about IVA's and bankruptcy but if you're looking to get a mortgage, I think you'd be better investigating the options that wont have too great an impact on your credit rating.

I would imagine its more a case of organising yourselves and possibly cutting back in some areas and seeing what savings can be made in certain areas.

You've got a good income between you so I would think it just takes some time and effort to organise yourselves a bit better to make some impacts into your debts

bigfred

CAFCGirl wrote: »

I think posting an SOA is the first immediate step.

Outlining what your outgoings are in terms of rent, utilities etc and then how much you're paying to what debt, the amount outstanding and then the apr's.

I confess I dont know much about IVA's and bankruptcy but if you're looking to get a mortgage, I think you'd be better investigating the options that wont have too great an impact on your credit rating.

I would imagine its more a case of organising yourselves and possibly cutting back in some areas and seeing what savings can be made in certain areas.

You've got a good income between you so I would think it just takes some time and effort to organise yourselves a bit better to make some impacts into your debts

I appreciate what you are saying.. the problem we have is that we have cut back in the past, saved the odd pound here and there, but have now got to the point where we have overstretched ourselves.

what other options are there for people in our position?

chunky79

I echo waht CAFCgirl says. Its very hard to advise on the little information you given.

Also by going bankrupt that will have a massive impact on your credit rating so will make it i would say nigh on impossible to get a mortgage!

CAFCGirl

bigfred wrote: »

I appreciate what you are saying.. the problem we have is that we have cut back in the past, saved the odd pound here and there, but have now got to the point where we have overstretched ourselves.

what other options are there for people in our position?

I'm a little confused I must confess.

Exactly how have you overstretched yourself?
It could be as simple as contacting your creditors and getting some interest breaks, or some balance transfers.

Your post reads to me that by saving a bit you've overstretched yourself, and I'm probably having a blonde moment but I know exactly understand. Sorry

If your considering bankruptcy I'd suggest the bankruptcy forum, theyre much better suited to advising on that situation than I am. But I would say really investigate the possible implications of any decision you make, as Chunky said you'd be even harder pressed to get a mortgage.

the_cat

hi
welcome to the boards. IMO bankruptcy or IVA etc should be a last resort if you are really keen to buy a house as either of these will blow a big hole in your ability to get a mortgage for many years (6 I think at least)

You have nothing to lose by posting your details on here and everything to gain. It may be that we can see options that the two of you haven't even considered but we are very limited in how we can help without this info

rayday2

To me if you are living in rented then you cannot possibly be over stretched it may mean you have to consider a DMP or like you mentioned an IVA but on 31k and with rent then you should be comfy with just the basic gas, electric, food etc and then what is left you pay to your debts rather than paying your debts and then worrying what you have left to live on.

We have two mortgages totalling £700 a month and we are on £17k a year with 3 children - we are in debt yes but with a DMP we can live.

Also 3 years ago in rented we were so lucky but thought we had to join the mythical ladder to owning your own home - now we know we own boilers to fix, roofs to worry about, etc etc its not all its cracked up to be!

bigfred

CAFCGirl wrote: »

I'm a little confused I must confess.

Exactly how have you overstretched yourself?
It could be as simple as contacting your creditors and getting some interest breaks, or some balance transfers.

Your post reads to me that by saving a bit you've overstretched yourself, and I'm probably having a blonde moment but I know exactly understand. Sorry

If your considering bankruptcy I'd suggest the bankruptcy forum, theyre much better suited to advising on that situation than I am. But I would say really investigate the possible implications of any decision you make, as Chunky said you'd be even harder pressed to get a mortgage.

we made the mistake of freeing up money...... then getting more credit to try and fix other problems, thus spending the money that we had made free... it spiralled from there really... i know i have been vaige with the details... just wondered what other options were out there...

think maybe i should take a look at another forums for more spceific advice on bankrupcy.

lynzpower

No what you should do is post up your SOA.

You have a good income there, considering you live in a council house with repressed rent. I know for a fact that a 3 bed council flat rented form the council in our area is about 65 a week, ( 281) to buy same flat on a mortgage would be an outgoing of somewhere around 1739.48pcm

If you post up your SOA we can help, we might even suggest bankrupcy is for you. But this comes with a huge amount of stress, pressure and devastation- hop over to the bankrupcy board to see what people go through. It isnt the "easy" option whatever people may tell you.

Do your SOA , and lets see

Biffa

If you post a SOA we can all take a peek and come up with ideas to reduce your outgoings. Sometimes when you're in debt you literally can't see the wood for the trees, so there may be something there that's glaringly obvious to the rest of us that you haven't thought of in your mad panic about being in debt.

Without a SOA, it's like trying to put together flat-pack furniture without the instructions and no picture of what it should look like when it's done - quite difficult to help!

Quick ideas..... you have two car finance agreements. What sort of cars are they for, how long have you had the agreements for and have you paid back half the amount you originally borrowed? What are they worth now? If so, check the small print on the paperwork as it may be possible to give the cars back and cancel out what remains outstanding on them. This will get rid of quite a chunk of debt and probably reduce your monthly outgoings in the region of £400 - 500. Like I say, without a SOA I'm guessing. By the sounds of it, you need both cars to be able to get to work. I'd get rid of them and buy something cheap and cheerful - you can pick up fairly decent Mondeo's for around £900. Mine's a W reg ghia that I bought last October for £850 off ebay. Never had any problems with it apart from usual wear and tear but then I drive 500 miles a week. You've probably also got two insurance policies, two lots of MOT and tax to worry about and two petrol bills.

What's your food bill like? Is it just you and your wife or do you have 6 kids to support as well? If it's just the two of you and your shopping at M&S for your groceries, again this can be cut back quite a bit. Take a look at the Old Style moneysaving board for some ideas.

In the meantime, keep a spending diary of every PENNY that you spend - whether it's 30p on a newspaper, £50 on petrol or money out of the cashpoint. Over the course of a week or two, you'll get an idea of where your money is going and be able to adjust accordingly. Simple things like not buying sandwiches on the way to work but making them yourself etc etc etc.

Bankruptcy is not as easy as it sounds. Been there, done that. Yes, it sorted out our debt and yes we've now got loads of spare cash and are quite comfortable thank you very much, but we won't be able to get a decent mortgage for another 5 years and it's a bit of a pain in the bum not having a cheque book.

Vindaveen

Hi Bigfred

Both myself and partner were in similar position last year, renting, both had large loans/credit cards/overdrawn in back. Total came to approx £30k we had no savings whatsoever and we knew we would never get a mortgage. I called the Halifax to see what they would offer and came back with £42k! But also wanted deposit...Not much I know.
We then decided to see mortgage adviser just out of interest, listed everything we owed, etc. I honestley thought our credit rating would be pants and they would just laugh at us!! They then listed mortgage companies that would offer certain deals. They only way we could buy anything was to get a 110% mortgage (I know this wasn't ideal but only way) It involved giving us an unsecured loan the same rate as the mortgage, we then paid off all loans we had along with CC's with this loan. The unsecured loan I know will be with us for 25 years!!! but we class the payments as part of the mortgage. Also straight away you have negative equity, however the way we view this is that property will hopefully rise in value over the next 25 years and we are not renting, paying someone else mortgage for them!!
Before buying our outgoings were over £1000 in rent/loans etc etc, we now pay £950 per month for both mortgage/secured loan/insurances. It is scary thinking the loan is with us for 25 years, but it was the only way we could do this. We also cut up all credit cards so we are not tempted to get in debt again, even though the unsecure loan did not pay off our overdrafts (still approx -£4800 between both of us) But we're working on this, this is why I found this site.
I know you are in a different situation, however have you looked into buying the council house? Depending on how long you have been there I think you get a discount on the selling price ( I maybe wrong in thinking this, but I'm sure they did do this in the past )
I'm sure other people will come back advising against 110% mortgages and we were also made aware of the downfalls, but in our situation it was the only way.
I am 40 this year so wanted to get on ladder for a 25year mortgage, however some companies will give you longer up to 70 years of age I think.
Apologies for taking an age to explain this, but this may be a option for you and I know this is only our experience.
Good luck.
Vin