In debt and confused - help?!

redrez

I'm a single Mum in trouble. It started with a £500 credit card, the limit of which was increased bi-annually, then I tried my hand at tarting. However after a catalogue of disasters I was using credit cards for the various emergencies which arose. I now have a debt of approx £4500 between 4 cards and 2 overdrafts, and am forced to live on credit at the moment.

I am a council tenant and on benefits intending to return to work when my daughter starts full time education. Why I was allowed to run up such debt is beyond me! However, my only assets are my car and my computer. I need my car to run my 3 year old to various classes and my computer for various reasons. All my utilities are managed online, direct debit, etc, so I do not wish to be made bankrupt and lose car, comp, bank a/c's. Although I never want credit as such again! My utility bills, gas/elec/fone, etc are all being paid but from an ever increasing overdraft, and I really am struggling now.

Is it true that an IVA would allow me to keep my car, etc. and that I would still be allowed a bank account (i.e. could still manage utilities online and direct debit), and that I could be debt free in 5 years?

Although a DMP, which I believe at this point is the only alternative, is free of charge, does that not mean a much longer commitment and larger monthly payments required. After using Martin's Budget Planner, I can realistically only afford to offer £30-£40 per month repayments.

And in either circumstances how safe is my daughters savings, only £325, in her own 60 day savings a/c linked to my main current account. I do not wish to use for my debts as this money has been given to her by family and friends as well as my donations from the penny jars!!

Any and all advice would be appreciated.

Thanks :wall:

pink_fairy_7

Hi redrez

If you can post at list of all your incomings/outgoing on this site then people will be able to help you more.

The people on this site are really helpful and thanks to them I feel more positive and in control of my own situation.

Good luck
Pink Fairy

Magentasue

I would hate to be without a car but running one to take a three year old to classes seems extravagant to me. Could you sell your car and put the money towards reducing your debt? Even if it was only a temporary measure, you would save money not having to run and maintain a car on a monthly and annual basis. If you were a large family, bus and train fares might work out just as expensive but for an adult and a toddler, maybe not?

homersimpson_3

I know you don't want to but using money in child's account would clear 7.2% of debt and you can always put it back when you're in better position/ start working full-time. Only 92.8 to go.......................
sell car and use pulic transport/ walk
transfer credit cards debts to credit cards at 0%
use computer to generate cash- various cash reward sites, completing surveys etc (read other forums)
cut out the child's classes and put money to clearing debts. explain money tight and do things together which don't cost money- e.g. museums, trips to park- when child in full-time education may be more expensive- e.g. school dinners, more likely to want to go out with friends, school trips etc. better to clear debt now.
can you do some part-time work or work from home e.g. baby sitting; registered child minder; computer work (whatever). obviously check impact on benefit and ensure you're claiming everything you can.
thanks

steveb1967

What would be the position if you talked to the credit card companies and told them that you couldn't afford the monthly payments, and would they consider freezing the interest and you would pay as much as you can, alternatively you will stop paying them and they would have to take you to court? obviously this is only a ploy to try and freeze the interest, if they say no then you will have to carry on paying the best you can.
sory if this doesn't help
alternative trawl this site on debt management to find more help.
all the best
steve b

mummytofour

The first thing i would do is cut up the cards!
Then call the bank( you may need to visit the bank as opposed to call them) get the o/d changed into a loan and tell them how much you can afford, i did this a few yrs back and it really helped me i managed to get a £700 o/d changed into a loan and paid £20 a month. Explain how hard it is for you and that you really want to sort the situation out.
I would then do the same with the credit card people, you need to contact them, once you have done this you will feel a lot better.
I would try and hold onto the car if you can, i say this as im a mummy of four, i live in a small village and sufferd with very bad depression due to isolation, but once i got a car things were a lot easier, cars are not cheap to run, but only you can weigh it up and work out whats best for you.
With regard to the classes, our local council give you a discount card for the sports centre if you are on benefits its 50% off lesuire stuff maybe you local council does one you could use?
I would also make the most of free stuff the park its always a good one the libabry hold story time one day a week, cooking at home arts and crafts and so on.
Kids of three really are just learning about the world, they can manage without paid for classes.
Good luck
Vxx

Magentasue

mummytofour wrote:

I would try and hold onto the car if you can, i say this as im a mummy of four,


Kids of three really are just learning about the world, they can manage without paid for classes.
Good luck
Vxx

Maybe with four children and living in a rural area you could justify a car but with one or two it's a luxury. It's a personal choice but you've got to pay rent etc, a car is usually a major expense to buy and keep on the road if you're in debt.

deemy2004

Sell the car

You will save on insurance, road tax, MOT, petro, Maintenance.

And get a monthly bus pass - Which is likely to cost you probably 20% of your current monthly travel expenditire.

And on top of that you will realise the capital to payoff part of your debt.

The daughters money of £325 is your personal decision, as obviously there is the psycholigcal factor of spending something that you had thought of being for the long-term for your daughter, so maybe its best left alone.

P.S. I don't understand why your blaming the card companies ....

Iona_Penny

I know haweasy it is for debt to creep up on you but the main thing is that you realise you can't carry on the way you are.
When my kids were small we had to make the choice you have about using the small amounts they had in savings; we chose to spend the money keeping the ' home fires burning ' or whatever the crisis was. I dont regret it - they didn't know it was there and we replaced it several years later when we were able. Y ou can write her an I.O.U if it makes you feel better but your need is now and hers may be later.
Post in more detail you debts and other outgoings and any income; others will have GREAT advice ....really

meanmachine_2

redrez wrote:

Why I was allowed to run up such debt is beyond me!

Well done for recognising you need to change your spending habits. But before you do anything, you have to admit that no one forced you to spend money you haven't got.

Regarding your daughter's savings, don't feel guilty. Use the money - after all, you're doing it for her benefit in the end. Plus, there's light at the end of the tunnel if you're soon able to go back to work. At that stage you'll be able to put the money back into her account (plus a bit more, as a thank you!)

Good luck.

And remember, £4500 might seem huge to you, but average student debt these days is over £12000, so don't think you're alone.

Plus, I know a family who have - wait for it - £70,000 worth of debt. She's a cleaner and he's on benefits. And they don't even think they've got problems!

redrez

Thanks all who've replied. My daughter's classes are nearly all free mostly being playschool (funded) and I only pay £12.75 a term for her dance classes (less than £2 per week!) and I am not about to deny her that, all other entertainment for her is free or as close to it. My car is also used to take my Mum to doctor's and hospitals, and she assists with the costs of running the vehicle from insurance to petrol, etc, I've been told I won't get much if anything for it anyway. Its only an old Volvo, which has been very reliable and (fingers crossed) trouble free, it wont be used much at all over the next few months so Im holding on to it.

It's because I tried to be a card tart that Im in this mess. I was a useless tart, and ended up spending on the cards I'd transfered from! It was all at the wrong time, I just moved into my house 2 and half years ago, unfurnished, bare floors and walls weren't even painted, etc, and was only offered £250 from DSS. Brother got married, Dad died, Mum got ill, etc, etc....

As for the debts I think I need to go to CAB with my files and get professional help. I've not been well in the past couple of weeks, and its mainly because of this.

Cant see a way out unless debts are consolidated, but if I go for a loan will be paying more on interest than I am on the cards at the minute, as most of them are on 0 or low % interest! I need to consolidate and go for free or frozen interest, which sounds like a DMP but I dont have the sums of money usually required for minimum payments. Ive been advised an IVA is similar in that you're usually expected again to have £80-£150 per month spare but costs money to set up.

Aaaaaargh! going round in circles again. Will let you know how I get on.