£1000 a month debts and about to start Maternity Leave!

Lmh71365

Help! My partner and I spend £1000 a month paying back credit we have borrowed - this breaks down as £500 per month car finance, £400 per month over two 0% credit cards and a £100 a month personal loan.

This is on top of our normal outgoings which amount to approximately £1500 a month (rent, bills, fuel, gyms, phone bills and fuel).

I am the main breadwinner and we don't normally have any problems paying these high outgoings, however, I am now going on Maternity Leave - leaving me just £600 per month. My partner takes home approximately £1200 per month. Without our £1000pm debts, we would be fine.

We were expecting a large pay out from the sale of my Mum's house which would have cleared these debts but it hasn't happened in time. The house is still up for sale, no closer to a potential buyer.

To make it worse, the credit cards are in my mums name and the car finance is guaranteed by her.

Any suggestions?

Tixy

Hi and welcome to the forum,

If the debts were in your own name then the best option would probably be to make reduced repayments offers to each creditor (either through a debt advice charity/setting up a DMP or by contacting each creditor direct to explain the change in circumstances).
It would have impacted on your credit file, but would have probably been the best option.

As some of the accounts are in your mother's name that does complicate things.
What is the current position with the car finance? have you got to the point where you could voluntarily terminate the agreement and hand back the car?

Is mother in a position to make payments on your debts whilst you are unable? (presumably she is aware of all the debts in her name?)
If she is not in a position to keep up with payments then she may need to inform her creditors that she in unable to keep up with repayments, although obviously it will then affect her credit file. How important is her credit rating? e.g. will she be looking for a mortgage on a new property when she sales her current place?

Is your partner able to increase his income at all/ can he work overtime or a second job?
Does he also have a car? if you cannot VT your car agreement could he sell his car and run yours if you are tied in to repayments?

chelle1981

Hi, sorry if I have got the wrong end the stick but has your mum now passed away?

The first thing to do is use the statement of affairs template on here and write down all income and out goings.

Thus will give us all a clear idea of exactly how much you have to pay etc.

Congratulations on your bump!

There are some very fab ppl on this site that can help you x

Lmh71365

Thank you for your responses!

The car finance has only been running since November. It is costly and we knew the baby was coming but we had to refinance to get out of a lot of negative equity on a sports car I had. Again, pre-baby, none of these costs were an issue.

My mum is in no position to pay even part of my debts, unfortunately, she is struggling to cover her own outgoings and her credit card debts are spiralling herself - I used to be able to help support her financially too. Her credit rating is very important as she doesn't know what credit she will need in the future.

My partner is desperately job-seeking at the moment but it isn't going well so far. I am also worried about him not having job security and paternity leave, etc. A second job is always an option but seeing as it won't even get close to covering the debts, I would rather he was home to help with baby. Again, he has been trying to get a second job but it's proving very difficult.
He has no car, we share.

My mum has not passed away, I "unofficially" own half the house after we lost my father several years ago. My mum suggested we sell it, she downsize and we split the "profits".

Where can I find a statement of affairs template?

Tixy

The statement of affairs template is here - http://www.stoozing.com/calculator/soa.php and would be a good idea to assess what you can and can't afford.

Between Mother and yourself and with her also struggling with debts I guess you may want to consider some hard decisions about reducing the property price or even consider selling at auction?

But if you can post up a statement of affairs hopefully people will be able to see other options for you.

On_my_way

Personally I would avoid a DMP etc as it will affect credit files etc.

When are you due to go on maternity leave? You should be able to save a lot of money straight away by cancelling gym memberships, giving yourself a serious budget to live by -especially if you are still earning good money at the moment.

Although you say that your lifestyle wasn't a problem it was if you couldn't afford to save as well. Have you got any savings at all?

There are so many tips on this forum about how to save money, study it carefully and you will be able to resolve a lot of this very quickly allowing you to relax and enjoy your maternity leave and baby.

Pricivius

You 'unofficially' own half mum's house? I'm not sure how that works but please make sure you aren't planning anything that could cause trouble down the line. If the house is actually mum's, there could be all sorts of difficulties with her gifting you half - deprivation of assets, for example.

Another option to consider us you going back to work and leaving OH to care for the baby. You have a job to go back to, whilst he is struggling to find one, so it might make sense to call time on mat leave early on...

weeblesim

Hi,
Hasn't the law recently changed where either parent can take maternity leave or share it?

Couldn't you go back to work earlier and your husband take paternity?

Would this improve your financial situation?

Just a thought.

Lmh71365

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\f0\fs22 \cf2 \cb3 \expnd0\expndtw0\kerning0
\outl0\strokewidth0 \strokec2 Statement of Affairs and Personal Balance Sheet\
\
Household Information\
Number of adults in household........... 2\
Number of children in household......... 1\
Number of cars owned.................... 1\
\
Monthly Income Details\
Monthly income after tax................ 0\
Partners monthly income after tax....... 1200\
Benefits................................ 590\
Other income............................ 0\
Total monthly income.................... 1790\
\
Monthly Expense Details\
Mortgage................................ 0\
Secured/HP loan repayments.............. 499\
Rent.................................... 795\
Management charge (leasehold property).. 0\
Council tax............................. 120\
Electricity............................. 30\
Gas..................................... 30\
Oil..................................... 0\
Water rates............................. 55\
Telephone (land line)................... 0\
Mobile phone............................ 100\
TV Licence.............................. 16\
Satellite/Cable TV...................... 0\
Internet Services....................... 25\
Groceries etc. ......................... 100\
Clothing................................ 20\
Petrol/diesel........................... 120\
Road tax................................ 2.5\
Car Insurance........................... 120\
Car maintenance (including MOT)......... 5\
Car parking............................. 2\
Other travel............................ 0\
Childcare/nursery....................... 0\
Other child related expenses............ 0\
Medical (prescriptions, dentist etc).... 40\
Pet insurance/vet bills................. 0\
Buildings insurance..................... 0\
Contents insurance...................... 0\
Life assurance ......................... 0\
Other insurance......................... 0\
Presents (birthday, christmas etc)...... 10\
Haircuts................................ 0\
Entertainment........................... 0\
Holiday................................. 0\
Emergency fund.......................... 0\
Total monthly expenses.................. 2089.5\
\
\
Assets\
Cash.................................... 0\
House value (Gross)..................... 0\
Shares and bonds........................ 0\
Car(s).................................. 11000\
Other assets............................ 0\
Total Assets............................ 11000\
\
\
Secured & HP Debts\
Description....................Debt......Monthly...APR\
Mortgage...................... 0........(0)........0\
Hire Purchase (HP) debt ...... 20000....(499)......19\
Total secured & HP debts...... 20000.....-.........- \
\
Unsecured Debts\
Description....................Debt......Monthly...APR\
Credit Card 1..................10000.....300.......0\
Credit Card 2..................6000......50........0\
Loan...........................380.......101.......29.9\
Total unsecured debts..........16380.....451.......- \
\
\
Monthly Budget Summary\
Total monthly income.................... 1,790\
Expenses (including HP & secured debts). 2,089.5\
Available for debt repayments........... -299.5\
Monthly UNsecured debt repayments....... 451\
Amount short for making debt repayments. -750.5\
\
Personal Balance Sheet Summary\
Total assets (things you own)........... 11,000\
Total HP & Secured debt................. -20,000\
Total Unsecured debt.................... -16,380\
Net Assets.............................. -25,380\
\
Created using the SOA calculator at.stoozing.com. \
Reproduced on Moneysavingexpert with permission, using other browser.}

Lmh71365

Oh dear that didn't copy well... I hope it's still legible?

I'm due to go on Maternity Leave in two weeks. I get 6 weeks at 90% pay then severely reduced rate.

I have no savings at all, in fact, I also have a £1000 0% overdraft. It was irresponsible but at the time I was more interested in fast cars and holidays, I didn't plan my pregnancy and felt my income was invincible. Foolish.

We already live on a very tight budget as my income is commission based and has slid significantly since being pregnant, due to illnesses and complications. I've still worked but haven't been able to achieve my usual sales numbers. Our gym memberships are the only "luxury" that we have, and we both use them daily so it's not wasted money.
At the moment, we have enough to get by but that's it, definitely not enough to save anything.

The maternity laws have changed but only if your baby is due after 5th April, ours is due in March. My husband is entitled to my additional maternity leave but not my ordinary maternity leave , which is 6 months. If I went back to work and he looked after baby, we would not get paid. Add to this, as I explained, I'm struggling to achieve my targets and my wages are variable and not as strong as they were - it's a seriously risky move.

Mums house - it's her decision, my father would have left me half the house but didn't rewrite his will in time. She's chosen to honour his wishes. Is that still deprivation of assets?
We have already reduced the house, any more and she claims we won't have enough to cover all our debts & buy her a smaller property. She cannot get a mortgage as her income is only £500 a month now.

bambos

Lmh71365 wrote: »

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\f0\fs22 \cf2 \cb3 \expnd0\expndtw0\kerning0
\outl0\strokewidth0 \strokec2 Statement of Affairs and Personal Balance Sheet\
\
Household Information\
Number of adults in household........... 2\
Number of children in household......... 1\
Number of cars owned.................... 1\
\
Monthly Income Details\
Monthly income after tax................ 0\
Partners monthly income after tax....... 1200\
Benefits................................ 590\
Other income............................ 0\
Total monthly income.................... 1790\
\
Monthly Expense Details\
Mortgage................................ 0\
Secured/HP loan repayments.............. 499\
Rent.................................... 795\
Management charge (leasehold property).. 0\
Council tax............................. 120\ is this over 12 months
Electricity............................. 30\
Gas..................................... 30\
Oil..................................... 0\
Water rates............................. 55\ are you on a meter?
Telephone (land line)................... 0\
Mobile phone............................ 100\ this is very high :eek:
TV Licence.............................. 16\ should be £12.12
Satellite/Cable TV...................... 0\
Internet Services....................... 25\
Groceries etc. ......................... 100\ for the month?
Clothing................................ 20\ you can't afford this at present
Petrol/diesel........................... 120\ can this be lowered
Road tax................................ 2.5\
Car Insurance........................... 120\ have you shopped around?
Car maintenance (including MOT)......... 5\
Car parking............................. 2\
Other travel............................ 0\
Childcare/nursery....................... 0\
Other child related expenses............ 0\
Medical (prescriptions, dentist etc).... 40\ per month??? Seems high
Pet insurance/vet bills................. 0\
Buildings insurance..................... 0\
Contents insurance...................... 0\
Life assurance ......................... 0\
Other insurance......................... 0\
Presents (birthday, christmas etc)...... 10\ you can't afford this at the moment
Haircuts................................ 0\ never?
Entertainment........................... 0\ never?
Holiday................................. 0\
Emergency fund.......................... 0\ you need something in here
Total monthly expenses.................. 2089.5\
\
\
Assets\
Cash.................................... 0\
House value (Gross)..................... 0\
Shares and bonds........................ 0\
Car(s).................................. 11000\
Other assets............................ 0\
Total Assets............................ 11000\
\
\
Secured & HP Debts\
Description....................Debt......Monthly...APR\
Mortgage...................... 0........(0)........0\
Hire Purchase (HP) debt ...... 20000....(499)......19\
Total secured & HP debts...... 20000.....-.........- \
\
Unsecured Debts\
Description....................Debt......Monthly...APR\
Credit Card 1..................10000.....300.......0\
Credit Card 2..................6000......50........0\
Loan...........................380.......101.......29.9\
Total unsecured debts..........16380.....451.......- \
\
\
Monthly Budget Summary\
Total monthly income.................... 1,790\
Expenses (including HP & secured debts). 2,089.5\
Available for debt repayments........... -299.5\
Monthly UNsecured debt repayments....... 451\
Amount short for making debt repayments. -750.5\
\
Personal Balance Sheet Summary\
Total assets (things you own)........... 11,000\
Total HP & Secured debt................. -20,000\
Total Unsecured debt.................... -16,380\
Net Assets.............................. -25,380\
\
Created using the SOA calculator at.stoozing.com. \
Reproduced on Moneysavingexpert with permission, using other browser.}

i think as others have stated your only option at the moment is for your husband to take the leave and you go back to work as soon as possible. Can you sell the car as its really costing you a lot. Could your husband take a temporary evening or weekend job to help out, I know you said he's looking for a new job but in the meantime he could do some cleaning or care work? Have you got anything to sell?