how do i get out of debt?

honeybee111

million dollar question?

please tell me how you would clear this and which first.
house value £220,000
cars 2 of £2000 & £2500

mortgage 96,000 repay £500 p/m
secure loan 10,000 repay £317 p/m 4yrs left
unsecured loan £6,500 repay £160 p/m 4yrs left
credit card £7,500 p/m repay £165p/m minimum
credit card £1,000 repay £60p/m
catalogue £850 repay £50p/m
catalogue £850 repay £50p/m
store card £850 repay £50p/m

i have £1000 debt to council tax and electricity.

wages £1700+ £880
benefits £147+ £190
my wage is set to go down drastically until i return to work after maternity leave.
we should have £400 spare each month when i return.
at the minute the smaller debts are in payment plans as i cant afford the minimum payments on them. i'm in such a pickle.
a positive is we have some money to pay these companies, but i dont want to spend the next few years scrimping and saving and borrowing cash every time a car breaks. or my husband is sick from work.
we are also due an insurance payout about 5k
and i have shares of about 3k.

how would you get out of this situation...?
and can i phone up companies and tell them not to give us any more credit?

sourcrates

Hi,
The insurance payout, plus your shares, would clear both catalogues, the store card, the smaller debt on one credit card, and you could use the remainder to make a full and final settlement offer, on the larger credit card debt.
That alone would free up almost £400 a month for you.

You need to sort the unpaid council tax as a matter of urgency, this should be a priority debt, and paid before anything else.

You could then save that £400 a month, and get enough to pay off the unsecured loan, then same process for the secured one, unless there is an early payment penalty.

You just have to be sensible and not re-borrow, easier said than done I know, but it's the only way to do it.

dancingfairy

Assuming I had the 3k from the shares (or could get it) I would pay off council tax and electricity first. Both these could cause problems if not paid, council tax can turn nasty and get bailiffs involved and the fees can be quite horrendous and electricity is a basic requirement so I wouldn't want to face a pre payment meter or getting cut off. After that I would attack the store cards/catalogues as they are likely to be charging horrendous interest.
It would be worth doing a budget for how things will be on maternity leave so you can see how much you have for essentials (maintaining a roof over your heads, paying the secured loan, gas, electric, food , clothes etc) and how much you have 'spare' for debt repayments.
df

dancingfairy

Do you need 2 cars or would 1 do whilst you are on maternity leave? Could you walk or catch the bus?
I'm not saying it would be easy (that's if it's possible) but you may decide you don't really need 2 or that you could manage with out and sell the car and chuck the money at the debts, it's an option anyway.
df

honeybee111

dancingfairy wrote: »

Do you need 2 cars or would 1 do whilst you are on maternity leave? Could you walk or catch the bus?
I'm not saying it would be easy (that's if it's possible) but you may decide you don't really need 2 or that you could manage with out and sell the car and chuck the money at the debts, it's an option anyway.
df

we both need a car, we live 10 miles from nearest shop, 10 miles from childs school.20 miles from his work.
my husband works nights, so in theory he could use a car at night and me through the day, but as we live so rural if one car breaks we dont have another, if it goes for an mot we are stuck, how do we collect it... and if i had an emergency when he was at work i cant do anything without calling him out of work.
Although i have looked into this option, as thats one less insurance policy, one less road tax, and one less to mot.thats at least an extra £100 a month.

honeybee111

Ok thanks everyone.

In regards to paying these debts, the smaller debts are in payment plans, as weve managed to keep up with payments on bigger things. can i do this with my larger credit card?
my understanding is as long as we dont default if we make contributions we should be ok.
my arrears with council tax and electricity are both being paid at £50 a month.

Can i keep these in payment plans until i return to work? im about to go through a period where i will not have a wage. as then that will be the end of my maternity.

I cant get access to the shares until next october and then will have to pay income tax on them.
The car accident caused more financial hardship as my husband took a long time out of work.And there is no light at the end of the tunnel regarding the claim as it may have to go to court.

If my debts have been in payment plans and then i clear them fully a few months down the line, will these payment plans tar my credit file for a long time?

we eventually would like to remortgage to extend the house. so we have to clear up this mess.
£32k in debt and bankcruptcy is not an option.

Dobbibill

Can I suggest you do a SOA, the very kind people of this forum will then be able to give you advice tailored to your circumstances and overall picture.

Your council tax is a priority though so any extra income from shares etc, use to pay this off ASAP.

my husband works nights, so in theory he could use a car at night and me through the day, but as we live so rural if one car breaks we dont have another, if it goes for an mot we are stuck, how do we collect it... and if i had an emergency when he was at work i cant do anything without calling him out of work.
Although i have looked into this option, as thats one less insurance policy, one less road tax, and one less to mot. thats at least an extra £100 a month.

On the odd occasion of an emergency, let's say once a month.....would it cost you more/less than £100? Just something to think about.

I cant get access to the shares until next october and then will have to pay income tax on them.

Is this October 2015 or 2016?

HappyMJ

honeybee111 wrote: »

Ok thanks everyone.

In regards to paying these debts, the smaller debts are in payment plans, as weve managed to keep up with payments on bigger things. can i do this with my larger credit card?
my understanding is as long as we dont default if we make contributions we should be ok.
my arrears with council tax and electricity are both being paid at £50 a month.

Can i keep these in payment plans until i return to work? im about to go through a period where i will not have a wage. as then that will be the end of my maternity.

I cant get access to the shares until next october and then will have to pay income tax on them.
The car accident caused more financial hardship as my husband took a long time out of work.And there is no light at the end of the tunnel regarding the claim as it may have to go to court.

If my debts have been in payment plans and then i clear them fully a few months down the line, will these payment plans tar my credit file for a long time?

we eventually would like to remortgage to extend the house. so we have to clear up this mess.
£32k in debt and bankcruptcy is not an option.

You're right bankruptcy isn't an option as you have too much equity in your house and would lose it all.

The damage that defaulting on debts will be cleared 6 years after the default is first applied to the account. If you're paying your agreed payment each month then in 6 years even if you are still paying small instalments each month you can remortgage your property and should get very good rates. If you're also making payments it's also very unlikely a creditor will go to court to get a CCJ against you.

honeybee111

Statement of Affairs and Personal Balance Sheet

Household Information
Number of adults in household........... 2
Number of children in household......... 3
Number of cars owned.................... 2

Monthly Income Details
Monthly income after tax................ 840
Partners monthly income after tax....... 1700
Benefits................................ 190
Other income............................ 0
Total monthly income.................... 2730

Monthly Expense Details
Mortgage................................ 500
Secured/HP loan repayments.............. 317
Rent.................................... 0
Management charge (leasehold property).. 0
Council tax............................. 130
Electricity............................. 105
Gas..................................... 60
Oil..................................... 0
Water rates............................. 0
Telephone (land line)................... 15
Mobile phone............................ 30
TV Licence.............................. 15
Satellite/Cable TV...................... 0
Internet Services....................... 15
Groceries etc. ......................... 300
Clothing................................ 50
Petrol/diesel........................... 240
Road tax................................ 30
Car Insurance........................... 160
Car maintenance (including MOT)......... 20
Car parking............................. 0
Other travel............................ 0
Childcare/nursery....................... 0
Other child related expenses............ 140
Medical (prescriptions, dentist etc).... 0
Pet insurance/vet bills................. 0
Buildings insurance..................... 15
Contents insurance...................... 15
Life assurance ......................... 30
Other insurance......................... 0
Presents (birthday, christmas etc)...... 100
Haircuts................................ 20
Entertainment........................... 50
Holiday................................. 50
Emergency fund.......................... 100
Total monthly expenses.................. 2507


Assets
Cash.................................... 0
House value (Gross)..................... 220000
Shares and bonds........................ 3000
Car(s).................................. 4500
Other assets............................ 0
Total Assets............................ 227500


Secured & HP Debts
Description....................Debt......Monthly...APR
Mortgage...................... 96000....(500)......0
Secured Debt.................. 10000....(317)......0
Total secured & HP debts...... 106000....-.........-

Unsecured Debts
Description....................Debt......Monthly...APR
credit union...................6500......160.......0
barclaycard....................7500......165.......0
capital one....................1000......50........0
argos..........................850.......50........0
kays...........................850.......50........0
studio24.......................850.......50........0
Total unsecured debts..........17550.....525.......-


Monthly Budget Summary
Total monthly income.................... 2,730
Expenses (including HP & secured debts). 2,507
Available for debt repayments........... 223
Monthly UNsecured debt repayments....... 525
Amount short for making debt repayments. -302

Personal Balance Sheet Summary
Total assets (things you own)........... 227,500
Total HP & Secured debt................. -106,000
Total Unsecured debt.................... -17,550
Net Assets.............................. 103,950

honeybee111

shares available october 2016.
also i've inputted figures we cant afford to spend... i.e i dont budget for emergencies. or chritsmas! (shocking)
and my wage is due to go to £552 for 3 months. as of november.

i have no money for christmas this year and no idea what im going to do.

HappyMJ

honeybee111 wrote: »

shares available october 2016.
also i've inputted figures we cant afford to spend... i.e i dont budget for emergencies. or chritsmas! (shocking)
and my wage is due to go to £552 for 3 months. as of november.

i have no money for christmas this year and no idea what im going to do.

You have £100 for Presents, £50 for Entertainment, £50 for holiday and £100 for Emergency fund.

Reduce all of them to zero and your budget balances.

Have a cheap Christmas. Use some of your £300 groceries budget to buy some nice food the the day and anything else you might need.

Use your £50 clothing budget to buy clothes as presents for your children. The more things wrapped the happier they seem to be. They don't really care what's in the wrapping.

Reduce your electricity bill...it's far too high at £105 per month.