Advice needed - how much to offer creditors?

aquarian3

Hi all,

I went to the CAB a few weeks ago and got a debt pack from them and it's taken me ages to work out what is going where, but I've finally worked out income & expenditure and now I'm just not sure how much I should offer those we owe money to, so if I put all the details below I'd be really grateful if someone can advise?

I do have template letters to fill in it's just the amount to offer I'm stuck with!

Monthly:

Wages - partner £800
me £400
Child & Working tax creds £296
Child benefit £70
Total income per month £1,566.00

.....but tax creds may change and we may owe them money as our income for 06 to 07 was £4791.00 now working out the actual income on the declaration they sent it's actually £7541.00, so I'm sure we're going to have an overpayment with them? This was only due to my hubby changing jobs recently and I've been doing courses and getting paid for them, plus mileage, so I've earnt more than I thought - so that's another worry hence why I've not sent the declaration back yet

Outgoings:
Rent £370.33
Council tax £144.00
Water rates £26.52
Gas £35
Electric £25
Housekeeping (food for ourselves & pets) £440
TV licence, basic Sky tv & broadband £41
HP on car £160
Travelling expenses £140
Clothing £60
BT line rental, Sky Talk + mobile (2 x £10 top up) £41
Dog insurance £13.75

Total £1,496.60

Difference of £69.40

Debts:

Housing benefit overpayment £1,506.57
Rent arrears with H/A £366.55
Overpayment of income support £1,852.11
Self-employment Income Tax £16,529.06
Capital One credit card (interest frozen) £1,643.73
Great Universal (washing machine) £379.93
ECI - another housing ben' overpayment £109.85
Moorcroft - 02 debt £405.62

Total debts £22,793.42

Those waiting and writing for our financial statement and an offer are:

Social Security - overpayment of income support.
Capital One.
Great Universal.
Housing ben' overpayment.

The others like the car hp; ECI & Moorcroft are already agreed amounts and I know the car one is non-negotiable as it went to court, but ECI and Moorcroft are moveable I'm sure?

Can anyone advise me what sort of figure I should start these debt offers with?

Thanks in advance

Lee
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*zippy*

Bumpity bump

angelavdavis

Hiya,

Work on the lower tax credits figure and then look at what is remaining and split equally across each creditor.

Council tax - contact them and say you are facing financial hardship and could they restructure your payments over 12 months instead of the usual 10 to reduce the outgoings.

Do the same for water bill.

Look over on Old Style to reduce your food bills, they are pretty high.

Suggest you look on www.entitledto.co.uk to check you are receiving the right benefits.

I would go back to CAB for further advice.

Why are you paying for a car and also have travelling expenses? These seem really high - a quarter of your earned salaries. How can you reduce these?

aquarian3

Thanks AngelavDavis,

I've tried that entitledto website and it came out saying that as we're getting tax creds we should be entitled to H/B but housing ben' say no, we are not entitled to anything!

H/B's working out is something along the lines of - if you earn over £182 per week you are not able to get benefit, I do have the exact figures they work to as they had to send me a years worth of working out when I disputed the overpayment. But then looking at what they thought we were earning over the year we may have been £10 to £30 over their figure so I thought it was better to leave sleeping dogs alone!

The car payment is an old HP thing that thankfully we only have over a £1000 left on, the travel expenses - hubby worked out so I'm guessing they are the insurance spread over 12 months, MOT, tax then petrol for me to get to work. The CAB's debt pack said to spread the cost of insurance, tax etc as they are car expenses and debtors don't allow you to recognise these figures anywhere else.

Household expenses, the debt pack has an example to help you work things out and a monthly budget has 'couple £260 to £325 plus one child @ £87 to £152' this money will include food, toiletries, cleaning stuff, newspapers and so on, plus a small amount for entertainment (whats that???), so I've put down £100 per week for me, hubby + 10 yr old, then another £10 per week for our 3 cats and 1 dog hence the amount is £440 per month.

I have to add that I've never been a fast food shopper, all of my food is cooked from fresh but there are the odd days that I loose the will to live and buy something frozen to chuck in the oven (like crispy pancakes) - I am more than happy to look at the old style board and see if I can do more in the kitchen!

Hubby will be going to the CAB next week as the Inland revenue wants to take our possesions for the 16,000.000 we owe - hubby did warn me just before I paid them £10 this month that they would write a 'demand' letter! Bizzare really as they want the whole amount in 2 weeks time! Hope they get it!

Thanks for your advice, I will endevour to reduce the costs you've pointed out and I'll fill in those letters offering what we have left spread between those we owe - boy it's gonna take YEARS to pay

Lee
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DAVETHE_CARDBOARDBOX

How is the income tax from self employment so large on such a small income ?

aquarian3

Oooooh going back many moons ago when hubby was single and self-employed - most of the amount is fine's and charges. Needless to say they'll take YEARS to pay off

alwaysonthego_2

you need to make sure you split what you have left over fairly between the creditors which will mean you will have to work out the percentage of how much you owe to each debt i.e the higher the debt the higher the percentage of payment you will offer compared to a smaller debt iykwim

poppyjay

hi i had a large debt for overpaid benifits offered them £20.00 a month they took that offer took me years to pay but never left my family short they were really good about it .have to got back charges back if any also cataloges and c cards good luck

CCCS_Emily

Hello aquarian3,

You need to work out what your surplus is after all your living costs first and then do the following equasion for each debt:

Individual debt divided by the total amount of debt multiplied by your surplus

For example:

Debt 1) 15,000
Debt 2) 4,000
Debt 3) 250
Total 19,250

Surplus 150

payment to debt 1) - 15000 divided by 19250 multiplied by 150 = 117
Payment to debt 2) - 4000 divided by 19250 multiplied by 150 = 31
Payment to debt 3) - 250 divided by 19250 multiplied by 150 = 2

Hope that helps/makes sense.

CCCS_Emily

To continue...

This gives each creditor their fair share of your surplus. But make sure your budget is realistic to begin with.

aquarian3

Thanks one and all, you've all been very helpful and I'll get my head into gear this weekend and contact those companies we owe to, thanks again!

Lisa
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