Any ideas when there is no money to pay towards debt?

CLAPTON

Let me say this again; I'm sorry if its brutal but its as I see it.


At the moment your minimum living expenses including mortgage and secured debts exceed you income by at least a £100 even if you do drastic things like cut sky, mobile, internet completely let alone simply reduce.

Also in practice you have made insufficient allowance for longer terms expenses like house/appliance/car repairs or indeed the costs of your DD.

I'm sure a spending diary would greatly help you determine what your spending is.

In addition the interest alone on your unsecured debts must be at least £300 (based on 1% of 30k) so every month your debts are increasing by at least £400 which presumably you are funding on the CCs.

What you can't do

1. you can't snowball as you have already recognised because you can't pay anything towards your unsecured debts at all whereas snowballing requires a surplus.
2. you can't enter a DMP; again because you have no money to pay towards your debts at all. The CCCS site has already told you this.
3. you can't do a IVA for the same reason.
4. You can't consolidate your unsecured debts because you can't possibly pay any additional unsecured debt as you can afford nothing. Also I would doubt if anyone will lend you more money unless secured and you say now have no equity left on the house
5. you cant realistically swap the mortgage ... partly due to the erf but also because any new deal will probably be more rather than less expensive.

You are currently only paying an interest only mortgage so you are effectively renting anyway.


In reality you have the following options

a. increase income significantly and/or reduce the cost of child care to at least break even on the essential spending and just default on the unsecured debt.

b. go bankrupt ... I think your best option.

c. sell the house now before (d) below. As it allows you reduce your mortgage/secured debt you may then be able to cover living expenses and set up a DMP for the unsecured debts. You have mentioned the erf but thats the least of your problems.

d. do nothing until the CC are on their limits and creditors stopping lending to you.
Once that happens you will have to choose between eating and paying your secured debt/mortgage. Its as brutal as that.
Obviously you will choose to default on the secured debt and so your house will be repossessed. You will by then probably have debts of 40K and no home.

So i'ts really a choice between increasing income or getting rid or the house either voluntarially or by repossesion.

Speak to CCCS and Payplan and nationaldebtline and get their views.
See whether they can see any way to avoid selling the house and/or whether they see bankruptcy as the best way forward.

poppy10_2

Broadband - £24.99 - Your entitled to FREE broadband with your sky package. (So long as you keep either movies or sports)

Actually you don't need movies or sports - I've got the basic Sky package (£15/month for 2 mixes, no premium channels at all) and I can get free 2MB broadband - check their website for confirmation.

carolinep1

Hi fiveyearplan

Thanks for your replies. You said the CCCS told you the same as me....can I ask what you did to resolve it?

Thanks

Caroline

Gemmzie

Hi carolinep, I just wanted to say please throughly read CLAPTON's post. He's a very very knowledgeable member.

ms_fashionista

I really feel for you. I am in a similar situation except I am seperated from my partner (who does not work) and I am responsible for all bills and upkeep of 2 children. Could you possibly not rent your house out and perhaps stay with family/friends short term.

I am moving back to my parents which would save me £1240 per mth just on mortgage. Unlike you I have no tie ins with my mortgage but I have arrears on my mortgage which when I offerred a payment plan they refused it. I sent a letter to my mortgage co & their solictor about my situation and explained the reasons why I was behind payments and they then accepted my payment terms. I have been trying to sell my house but 6 months later & 2 sales fallen through I will rent until I can sell the house and use the money I am saving to pay off all my outstanding debts.

Good luck!

solventguy

I'm afraid I agree with Clapton's post. Your debt is increasing each month because of your budget deficit, and because of the interest on debts. Even if you could cut your expenses to meet the deficit, you still won't be dealing the interest monster.

I don't know anything about bankruptcy, so a question I have for other posters is: if one goes the bankruptcy route, does one lose their house?

If not, this might be the best way of keeping your house, and starting again.

I wish you well.

Karmacat

Gulp. I hadn't added things up the way Clapton did.... unless you can get to at least breakeven point, I don't see how things are going to work - thats a cut of £300 a month, more or less. You could get maybe £80 of that from fiddling around switching services, cutting sky, all the rest of it, but those childcare costs are enormous, I don't see that they can simply be left alone if you're cutting the kind of amount you're trying to cut. And the other element is raising more money. Selling the odd thing on ebay or whatever isn't going to cut it, as you've already said...... What about more hours at the job for one of you, and/or a second job?

The other thing about jobs/childcare, is that if you earn £1,000 and you pay £484 in childcare, you're actually earning half your hourly rate. I'm sure in one of Martin's programmes on ITV he worked with a couple who were actually doing really well, and already claiming their childcare vouchers, but he had some kind of tax reclaim thing or something going on, and their value suddenly tripled (sort of like Tesco deals for clubcard points, where the value quadruples over the face value). Please research that. Sorry I can't explain it properly, I don't have kids.

debt_doctor

Hi, How many in your family ? I see that you have childcare costs but do not see child benefit in your 'income' and an important question how much in negative equity are you ?
Bankruptcy may be an option for you, another family member may be able to 'buy' the OR interest in the property for £1.00, and allow you to keep your house ( porvided you could keep up current secured loan payments ) and write off your unsecured debts via bankruptcy.
If your OH is a sole trader, he will still be able to carry on trading ( credit very difficult though )

Full exploration has to be done before you decide this route, specialist advice needed on 1 to 1 basis, the above is a potential option, the receiver can wait for up to 3 years to realise an interest in your property.

Best wishes, DEBT DOCTOR, CAB debt caseworker.

supersavershal

Have you thought about evening and night childminding.I work nights and my OH works a 3 shift pattern.We have been looking for someone for the crossover times.There isnt anyone out there who provides this service and im sure its a hole in the market, a lot of people I work with have a problem with evening and nights.You would only need a spare cot or one of those roll out beds.Its just a thought, been thinking of doing it myself.Nurseries and childminders usually run from 6am to 6pm but what about the 12 hours in between?

GingerSte

I'm afraid I have to agree with Poppy about the elephant in the room. It really looks like you can't afford to live where you are, in which case taking on a second job or selling the house and downgrading are serious options.

Also, just out of curiosity, how long does your unsecured loan have left to pay off? Once this is done, you will obviously be in a better position. If you do have to take on a second job, it might be easier to tell yourself that this is only a temporary situation until things do improve.