Debts spiralling

perdusys

This is the SOA for my 26 year old son, separated from his wife so the child payment is Child support.

Step Change advised him to do this budget some time ago, but also included lots of items like clothes etc, that he says he doesn't buy so has left out of this one. They say if he does an offer letter, he will be paying off the debts for 26 years, but he's concerned about going bankrupt. Some of the debts are still in joint names, but as he was the "at fault" party he agreed that he would take them on and pay them. mortgage, overdraft ( £3500 with Halifax costing him £90 a month as they charge £1 per day for under £2000 and £2 over that, two accounts one £3000 o/d in joint names and the other £600 o/d sole name) and personal loan all in joint names.



Household Information
Number of adults in household........... 1
Number of children in household......... 0
Number of cars owned.................... 1


Monthly Income Details
Monthly income after tax................ 1398.89
Partners monthly income after tax....... 0
Benefits................................ 0
Other income............................ 0
Total monthly income.................... 1398.89

Monthly Expense Details

Mortgage................................ 286
Secured/HP loan repayments.............. 0
Rent.................................... 0
Management charge (leasehold property).. 0
Council tax............................. 76
Electricity............................. 50
Gas..................................... 21
Oil..................................... 0
Water rates............................. 26.33
Telephone (land line)................... 0
Mobile phone............................ 36
TV Licence.............................. 12.12
Satellite/Cable TV...................... 0
Internet Services....................... 23
Groceries etc. ......................... 200
Clothing................................ 0
Petrol/diesel........................... 40
Road tax................................ 22
Car Insurance........................... 68.5
Car maintenance (including MOT)......... 0
Car parking............................. 0
Other travel............................ 0
Childcare/nursery....................... 0
Other child related expenses............ 195
Medical (prescriptions, dentist etc).... 0
Pet insurance/vet bills................. 0
Buildings insurance..................... 10
Contents insurance...................... 11
Life assurance ......................... 0
Other insurance......................... 0
Presents (birthday, christmas etc)...... 0
Haircuts................................ 0
Entertainment........................... 20
Holiday................................. 0
Emergency fund.......................... 0
Total monthly expenses.................. 1096.95


Assets


Cash.................................... 0
House value (Gross)..................... 50000
Shares and bonds........................ 0
Car(s).................................. 600
Other assets............................ 0
Total Assets............................ 50600


Secured & HP Debts

Description....................Debt......Monthly...APR
Mortgage...................... 54000....(286)......4.87
Total secured & HP debts...... 54000.....-.........-

Unsecured Debts

Description....................Debt......Monthly...APR
NRAM Together..................13500.....98........4.87
Personal Loan..................3500......166.......19.9
HP.............................350.......14........0
Overdraft......................3600......90........0
HP.............................1000......24........0
Total unsecured debts..........21950.....392.......-

Monthly Budget Summary

Total monthly income.................... 1,398.89
Expenses (including HP & secured debts). 1,096.95
Available for debt repayments........... 301.94
Monthly UNsecured debt repayments....... 392
Amount short for making debt repayments. -90.06

Personal Balance Sheet Summary

Total assets (things you own)........... 50,600
Total HP & Secured debt................. -54,000
Total Unsecured debt.................... -21,950
Net Assets.............................. -25,350
Created using the SOA calculator at www.stoozing.com.
Reproduced on Moneysavingexpert with permission, using IE browser.


The mortgage is an NRAM mortgage, and they will not increase the term or help in any way. Any help would be appreciated to dig him out of this mess. Is bankruptcy his only option?

moohound

Has he spoken to one of the debt charities like StepChange or CAP?

They might have some suggestions like a DMP or an IVA as an alternative to bankruptcy. When I started my DMP my SOA was about £350 short a month and was spiralling out of control.

What are the HP agreements for?

There might be a solution that can protect his assets.

perdusys

He has had a telephone advice session with a Step Change ( it was CCCS at the time as it was when the breakup first happened last July) and they only really advised him about the letter of offer, and mentioned bankruptcy but didn't say one way or the other.

The HP agreements are both for sofas from DFS on interest free credit, one that was their joint resposibilty and one he had to take out himself as he had given the original sofa to his wife. To be honest, at the moment we are supporting him but this cannot go in indefinitely.

moohound

It might be worth speaking to them again, now his position is clearer.

At fault party or not he has clearly shouldered too much of a burden.

BR is not as bad as most people imagine and at least he would be able to draw a line under it all and start again. Having said that the alternatives need to be explored as well.

harrys_dad

£90 a month charges on a £3500 overdraft is absolutely extortionate. In my view it is important to get this done away with first, or at least brought below the £2000 limit.

perdusys

I realise that the overdraft and the personal loan are expensive, but he's tried to apply for 0% credit cards to reduce the debt/overdraft, and been declined. I did post another thread about that a while ago.
Halifax offered him a loan at 26% to clear the the overdraft and the personal loan, but it did not reduce his outgoings appreciably even if he was willing to pay that much interest.
I was wondering if a different debt payment plan would be an option, but I don't think the money to pay for an IVA is available. Its difficult to get him to deal with all this, when the marraige break up is still an emotional issue for him.