SOA so ready to start - advice please:)

muppetscotland

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

Monthly Income Details
Monthly income after tax................ 2000
Partners monthly income after tax....... 3000
Benefits................................ 0
Other income............................ 0
Total monthly income.................... 5000

Monthly Expense Details
Mortgage................................ 1068
Secured/HP loan repayments.............. 395
Rent.................................... 0
Management charge (leasehold property).. 0
Council tax............................. 220
Electricity............................. 40
Gas..................................... 40
Oil..................................... 0
Water rates............................. 0
Telephone (land line)................... 40
Mobile phone............................ 0
TV Licence.............................. 13
Satellite/Cable TV...................... 35
Internet Services....................... 0
Groceries etc. ......................... 500
Clothing................................ 50
Petrol/diesel........................... 100
Road tax................................ included in contract hire
Car Insurance........................... 50
Car maintenance (including MOT)......... inc in contract hire
Car parking............................. 0
Other travel............................ 600 2 cars contract hire all inc service road tax etc
Childcare/nursery....................... 0
Other child related expenses............ 300
Medical (prescriptions, dentist etc).... 0
Pet insurance/vet bills................. 0
Buildings insurance..................... 50 includes contents cover
Contents insurance...................... 0
Life assurance ......................... 35
Other insurance......................... 0
Presents (birthday, christmas etc)...... 0
Haircuts................................ 0
Entertainment........................... 0
Holiday................................. 0
Emergency fund.......................... 100
Total monthly expenses.................. 3666


Assets
Cash.................................... 1000
House value (Gross)..................... 300000
Shares and bonds........................ 0
Car(s).................................. 0
Other assets............................ 0
Total Assets............................ 301000


Secured & HP Debts[/b]
Description....................Debt......Monthly...APR
Mortgage...................... 190000...(1068).....3
Secured Debt.................. 38000....(395)......0
Total secured & HP debts...... 228000....-.........-

Unsecured Debts
Description....................Debt......Monthly...APR
Credit Cards...................40000.....2000......20%+
bank loans....................34000.....1100......10% ish
Total unsecured debts..........74000.....3100......-


Monthly Budget Summary
Total monthly income.................... 5,000
Expenses (including HP & secured debts). 3,666
Available for debt repayments........... 1,334
Monthly UNsecured debt repayments....... 3,100
Amount short for making debt repayments. -1,766

Personal Balance Sheet Summary
Total assets (things you own)........... 301,000
Total HP & Secured debt................. -228,000
Total Unsecured debt.................... -74,000
Net Assets.............................. -1,000

WORTH NOTING that our income has plunged since January 2015. We have taken 4 rate cuts, totalling just over 20%...so far. This is due to the oil price crash and cannot be mitigated by changing jobs as our skills are specific to oil and we are extremely fortunate to have any job at all at the moment. Many of our friends are out of work with no hope of that changing this year.

We used savings to make up the shortfall for the whole of last year and these are now used up (apart from 1 lonely grand which I insist on keeping for emergencies). Like entire countries (Nigeria, Argentina, Saudi) we had no reason to expect the oil price to plummet so low or so fast and the reaction of our employers in reducing our rates was sudden, swift and deep. We are self employed contractors so it was literally a case of getting an email confirming the new rate at 5% less - 4 times in 12 months. We either accepted immediately or left immediately. No notice period, no benefits etc. Large personal tax bill just paid based on higher earnings in previous tax year so it will take a year to feel any benefit from lower earnings filtering through to lower tax bill.

I don't care about our credit rating. I am just hoping to keep our house and pay something to our debts.

When the rate cuts first started we took as much out of our household and company budgets as we could so there isn't much fat left. The cars are very expensive but we will have to repay the entire amount still due on the hire contract which has 2 years to run, so no point handing them back and at least they mean no nasty surprises in terms of failed MOT etc.

I was hoping to write to each unsecured creditor and offer lower payments.

MY BIGGEST WORRY is that we have unsecured loans all with RBoS totalling £34,000. We also owe them £19,000 on credit card Worried sick they will consider it worth bankrupting us or putting a charge order on our house.

Selling the house hardly an option as it has lost £10k value in 12 months due to the oil crash which has affected whole economy here in north east Scotland. Nobody except the "property for cash sharks" are buying at the moment. Thank you for reading.

thriftylass

muppetscotland wrote: »

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

Monthly Income Details
Monthly income after tax................ 2000
Partners monthly income after tax....... 3000
Benefits................................ 0
Other income............................ 0
Total monthly income.................... 5000

Monthly Expense Details
Mortgage................................ 1068
Secured/HP loan repayments.............. 395 what for, can it be sold?
Rent.................................... 0
Management charge (leasehold property).. 0
Council tax............................. 220
Electricity............................. 40
Gas..................................... 40
Oil..................................... 0
Water rates............................. 0
Telephone (land line)................... 40
Mobile phone............................ 0 no mobiles?
TV Licence.............................. 13
Satellite/Cable TV...................... 35 Sorry needs to go if possible as you can't afford this
Internet Services....................... 0
Groceries etc. ......................... 500 even if this includes household and cleaning it's high, have you tried Aldi etc and the grocery forums to cut this?
Clothing................................ 50 No need for 50 quids worth every month, try ebay or Tesco for the kids, you can go without
Petrol/diesel........................... 100
Road tax................................ included in contract hire
Car Insurance........................... 50
Car maintenance (including MOT)......... inc in contract hire
Car parking............................. 0
Other travel............................ 600 2 cars contract hire all inc service road tax etc
Childcare/nursery....................... 0
Other child related expenses............ 300 what does that cover, can you cut it
Medical (prescriptions, dentist etc).... 0
Pet insurance/vet bills................. 0
Buildings insurance..................... 50 includes contents cover
Contents insurance...................... 0
Life assurance ......................... 35
Other insurance......................... 0
Presents (birthday, christmas etc)...... 0
Haircuts................................ 0 nothing?
Entertainment........................... 0 northing?, no personal spending?
Holiday................................. 0
Emergency fund.......................... 100
Total monthly expenses.................. 3666


Assets
Cash.................................... 1000
House value (Gross)..................... 300000
Shares and bonds........................ 0
Car(s).................................. 0
Other assets............................ 0
Total Assets............................ 301000


Secured & HP Debts[/b]
Description....................Debt......Monthly...APR
Mortgage...................... 190000...(1068).....3
Secured Debt.................. 38000....(395)......0
Total secured & HP debts...... 228000....-.........-

Unsecured Debts
Description....................Debt......Monthly...APR
Credit Cards...................40000.....2000......20%+ what was that for, can you sell it
bank loans....................34000.....1100......10% ish what was that for, can you sell it
Total unsecured debts..........74000.....3100......-


Monthly Budget Summary
Total monthly income.................... 5,000
Expenses (including HP & secured debts). 3,666
Available for debt repayments........... 1,334
Monthly UNsecured debt repayments....... 3,100
Amount short for making debt repayments. -1,766

Personal Balance Sheet Summary
Total assets (things you own)........... 301,000
Total HP & Secured debt................. -228,000
Total Unsecured debt.................... -74,000
Net Assets.............................. -1,000

Although your income has dropped you lived beyond your means before that, and I'm sure you know that. So now is about creating extra income (night work, evenings, weekends?) or making savings. I highlighted a few areas in red.

Your house is worth 300000, so seems quite big, how many bedrooms, can you rent one out even temporarily. I think there is a threshold how much you can earn from that before paying tax etc.

every penny saved/ earned extra needs to go to the debt with the highest interest first.

Pixie5740

£300k for a house in Aberdeen isn't a lot and with jobs being cut there aren't a lot of folk out there looking to rent rooms. Landlords are dropping rents by 20% and more.

There are things you can cut back on but I'm not sure that even by doing that you'll make ends meet. I think there are things missing from your SOA like hair cuts, entertainment, presents and an emergency fund so the gap between income and expenditure is probably greater than what's reported on your SOA.

I'm guessing that as contractors you have your own limited companies so you'll be limited in what debt solutions are available to you but I do think it's time you contact one of the debt charities and look at a DMP or similar.

National_Debtline

Hi muppetscotland and thanks for posting.

muppetscotland wrote: »

I was hoping to write to each unsecured creditor and offer lower payments.

MY BIGGEST WORRY is that we have unsecured loans all with RBoS totalling £34,000. We also owe them £19,000 on credit card Worried sick they will consider it worth bankrupting us or putting a charge order on our house.

Selling the house hardly an option as it has lost £10k value in 12 months due to the oil crash which has affected whole economy here in north east Scotland. Nobody except the "property for cash sharks" are buying at the moment. Thank you for reading.

No need to throw the baby out with the bathwater here - your mortgage payments are up to date, and there is virtually zero chance of RBS attempting to bankrupt you for their unsecured debts, so there's no case for panic-selling your home.


Even if you were to find some savings and economies in that budget, I can't see you being able to plug that £1766 gap right now, so your initial plan to write to them offering reduced, affordable repayments seems sensible enough for now. Of course, you shouldn't let that stop you from seeking opportunities to trim your bills, whether that be by changing suppliers or supermarkets.


If your creditors agree to accept reduced payments and reduce or freeze further interest/charges, your credit report will naturally reflect this, as you appear to understand.


This is advice for the short to mid-term. What is best for you in the long run is another matter and will depend on the outlook for your job sector, among other things. There's an overview of the various debt options available in Scotland here:


https://www.nationaldebtline.org/S/information/10%20ways%20to%20clear%20your%20debt/Pages/default.aspx


Dennis
@natdebtline