£40,000 in debt, please some advice

jjfay

We dont know what to do, £40,000 in debt mostly from consolodating loans etc. Barclays just kept on helping us pay off the cards.
Child very ill for years, took trip to Disneyland on credit cards. Pay cuts at work,just kept on spending! Put house up for sale, to pay off debts and buy one cheaper, just found out house is over priced by £25,000 which means if we pay off debts we cant afford to buy another house.
Husband seeing psycologist, baby due in few weeks, cant see anyway out for us all. I feel I am going to crack up!
Does anyone know much about I. V. A ? :-[

Fran

jjfay -

You have made a good start by posting here. There are a lot of people who can help with with different aspects of your situation.

I would personally suggest a visit to your local Citizens Advice Bureau. They will be able to help you with your debt situation and also look at your overall situation and make sure that your family is receiving all the benefits they should be.

There is help you can get for taking holidays and other aspects of having ill children - the CAB have sources of information about this.

Much as you might feel the urge to keep spending, you have reached a point where you have realised that you can't continue in the same manner, which is why professional help (eg. CAB) is essential to get your finances back in order. Once you have actually started to sort the cash flow situation out, you'll be able to deal with other things better too.

CAB will also be able to advise about your maternity rights if you are still at work to make sure you get everything you are entitled to.

Regarding pay cuts (you or your husband or both?) - if you have a reduction in income by more than £2,500 you should inform Inland Revenue and you might then get more Tax Credits (assuming you already receive them - if not, you probably should be).

As you are expecting a baby in a few weeks you are probably feeling vulnerable anyway and you have a lot of other people to consider. Are you getting support from family and friends?

From what you have written it seems to me that the one thing you can start to do immediately that will have a knock on effect on everything else is to get control over your debts. I recommend Citizens Advice Bureau in your situation because of all the other things they might also be able to help you with. Take along all details of your and husband's income (including info for tax year 2003-4 so they can check your Tax Credits too). They might also be able to suggest other help for your husband like a local support group if he is interested. There may also be local support groups for you which you don't know about.

Regarding your house - is it still for sale? You might want to post specific questions regarding this on the "Mortgages" board.

There is a way out even though you maybe can't see it at the moment. You have made a move to sort things out by posting here and once you've visited CAB you will know that things can improve because you'll have started to get the money issues sorted out.

Good Luck

Please keep posting here too and let us know how you get on or ask more questions. Fran

Jen_Jen_5

Fran beat me to it - Go to local CAB to see debt specialist or phone advice line such as National Debtline 08088084000.

An IVA is an Individual Voluntary Arrangement and is a formal form of insolvency which can lead to bankruptcy. It is basically an arrangement with the creditors where you pay a monthly sum and they agree to write off some of the debt at the final payment, they usually last 5 years and can be a good idea but you must get proper advice.

They are set up by an Insolvency Practicioner and there are fees to pay. Some companies want these up front and some have pay as you go schemes.

This is just the basics and you should try to get an insolvency firm that will support you throught the IVA, if your cics change you may need to ask for ammendments etc. The best advice is get advice!

DiggingOut

1. Fran is right about CAB.
2. On the property/mortgages board there is a thread about house-selling. Read it ASAP.
3. Never give up! People get into and out of worse trouble than this.
4. Remember what is important, and it isn't money. You'll have a real reminder of that in a few weeks.
5. Rome wasn't built in a day. Start to look for every small savings.

If you want specific advice on handling the different debts, targeting payments and minimising interest, you can post here with specific details of each debt and we will try to help. But in all probability, with this level of debt, it is better for you to sit down with someone at CAB. It costs you nothing except time and a commitment to make some major changes in your approach to money. It may save your home, and solve the stress that is threatening to tear your family apart.

Former_MSE_Moderator

Have a look at 'Q. Help. My debts are completely out of control. Its a crisis, what should I do?' on the FAQ page of the main site.

mort58

Believe it or not £40,000 is not the end of the world,although it will feel like it.

I had debts totalling over £50,000 and know exactly what you are going through right now.

There really is light at the end of the tunnel but you need to move towards it rather than stand still or back away from it!

The key to solving your problem is getting that professional help,the CAB is a good option but I personally used a specialist charity organisation called CCCS(consumer credit counselling service)they were excellent and specialise in debt management.

Never use a so called "professional" debt management company as advertise in the national press,they just end up costing you money.

The CCCS will give you excellent advice/help,it works and its free!

They will tell you to pay things like your mortgage,council tax,utility bills and tv license first as you need the roof above your head and the others will potentially take you to court for non payment.

People like credit card companies come last........
That doesnt mean stop paying them,it basically means they get a share of what surplus income you may have left after paying your priority bills.

The CCCS correspond with you by both phone and mail and will negociate with your creditors on your behalf to  reduce your monthly repayments.

You will find that most people like credit card companies will stop charging you interest on your account if they know you are in genuine difficulty and will except substantially reduced repayments each month.

You say you are selling your house to repay your debts,presumably you see this as the only way out.

In reality you are probably right,what you need to be aware of is that people like credit card companies etc are in the main prepared to accept a lesser amount than the full debt if you were to settle in full as its alot less hassle than chasing for money you dont have!

I dont believe the CCCS cover that part of negociating for you as I think they just cover the day to day repayment help.

Having got the CCCS to negociate my repayments to my creditors I later wrote to all my creditors one by one informing them that I was selling my house in order to have funds to settle my debts with them,but told them I would not have sufficient funds to repay the debt in full and would they be prepared to settle at a lesser amount.I had 8 credit cards! and only 1 stuck out for the full amount the rest settled for quite a bit less.

I got to this website purely by chance and found some excellent advice on saving money on my home phone,I hope my advice to you in some way repays others help.

Dont put off facing up to your problem,it doesnt go away!When the CCCS get involved and help you you really will wish you had done it a long time ago........

I've been there,it works.

If you want more detailed advice/tips I will post an e-mail addy for you to contact me.

The CCCS have a website by the way,its: https://www.cccs.co.uk

DiggingOut

Agree with all mort58 has written. CAB often gets mentioned first here, but CCCS is also excellent.

Most important thing he said, IMO:

There really is light at the end of the tunnel but you need to move towards it rather than stand still or back away from it!

If you wait around for things to happen, they will probably be bad things. Start moving towards a solution. Good luck.

Edinburghlass_2

What a great first post Mort58! Its good that you found your way here and even better that you can now help other people through the mire

Hopefully this will give the lift to jjfay to make a start on her problems.

Fran

Agree with all mort58 has written. CAB often gets mentioned first here, but CCCS is also excellent.

Just a note D_O - I particularly think CAB is relevant in a situation such as this when there is more than one issue that someone might be able to find help with. The advantage of the CAB in this case is that all the information can be got under one roof, and also they can look at the whole situation and not just the debt.

DiggingOut

Well, I did mention CAB myself.

Either one would be a step forward. CAB may be best.

gibby

cab are a good start

40K is not a massive amount

everyone I ahve known get in a mess like this seems to be in a far better state when they work themselves out of it.

its only money - just take it as you can

G