Not sure where to turn...

Morgan1188

Hi all,

So I am 25, my husband is 28 and we have two children, live in a privately rented house and the only asset we could say we have is a car that is on HP, my father in law is the guarantor for this, the payments go from his account and so we pay the monthly amount into his account to cover payments. Apart from that we have nothing of value, no savings, pension, investments, mortgage or anything!

My husband works full time and at the moment I am awaiting my youngest to start school in Sept so I can go to full time work! I am currently a housewife. Which is not helping.


A little about the debt situation... all in all it's roughly £5000 - £6000 worth of debt, this isn't including our car on HP and we have a loan of £3000 but again my father in law is guarantor so that gets paid no matter what as we can't let him down and ruin his credit.

Most of our debts are overdrafts from an old bank, credit cards, catalogues and payday loans. A couple of old phone contracts and they are our main debtors. It's absolutely crippling us. We simply cannot make any payments to any of these 15 companies because we barely live or survive let alone have extra money! It is incredibly hard, depressing and heart breaking that we are in such an awful situation and cannot do anything. We are paying the lowest amount on our Sky tv service, neither of us have mobile phone contracts anymore we are on pay as you go, we don't have any hobbies, extras or go out. Neither of us smoke or drink and apart from the car on HP, we shopped around and get the cheapest deal on electric and gas, water and have tried to look at any possible way we can bring our bills down but we can't budge on anything else which is rubbish as it means we are stuck.

We can't do a DRO or bankruptcy so we looked into an IVA a little but we're not sure where we stand with that as neither of us feel comfy going into a 5 year contract with something we are not sure we could maintain, it terrifies us. I just don't know where to turn. We want a mortgage but can't save. After bills are paid, fuel in car we barely have enough for £60 a week to shop for a family of four.


I am so fed up, I suffered badly with depression before and it's got to the stage I am terrified it's coming back and I am scared for my husbands life he is so down also. It breaks my heart that I can't help. I'd do anything to get us out of this situation. I know there are many people in these situations currently but it's so easy to feel like your the only one.

Thanks for any help or advice guys.

ReadingTim

The key to getting out of debt, saving money for a house etc is to spend less than you earn, then look at ways to earn more and spend less.

So, taking those in order:

Earn more - assuming you get a job once the kids are back at school then this is already in hand. However, you might want to see if there's anything you can do in the meantime either during the day or in the evenings.

Spend less - post an SOA, as there are often some pretty creative suggestions posted. Bear in mind that if things are that tight, Sky TV is not a necessity.

Your debt isn't too high, and things sound like they will improve in the near future, so chin up during the next few (admittedly hard) months, and things will be looking far letter this time next year!

sourcrates

Hi,

Your right, your not the only ones, posts like this average one or two a day, it's a pretty common situation nowadays.
First off, I would rule out an IVA, for one reason alone, you don't owe enough money, the fees on an IVA would likley be more than your entire debt as it stands, IVA' s are only really worth doing if you owe 30k and upwards, although there are no set levels of debt, the fees involved can be Hugh, so I would rule that out straight away.

Why do you think a DRO would be unsuitable ?

Possibly the only reason would be the negative effect on your guarantors credit file, is that your worry ?

A statement of affairs may be helpful, although you say your on the best deals for everything, it would give us an idea of who your creditors are.

http://www.stoozing.com/calculator/soa.php

At the moment I'm thinking token payments of £1 a month to each creditor, and a letter of explanation as to why you need to do this, would be a starting point.
Keeping the creditors in touch with your situation reduces the risk of legal action you see, if they are made aware you can't afford anything, it's unlikely they will take things further.

Remember, ALL unsecured debts are treated as non priority, essential bills always come first, you say you have no assets, then there is absolutely nothing to worry about as any further action will be EXTREAMLY limited, the worst that could happen is you are taken to court and a judgement for £1 a month to each creditor is awarded, due to your budget, there really is no need to panic here, your creditors options are limited.

midnitegremlin

Morgan1188 wrote: »

Most of our debts are overdrafts from an old bank, credit cards, catalogues and payday loans. .

I'm not sure about catalogues and payday loans, but with your banks and credit cards they will have a "call us if you are in financail difficulty" type number. There are various things they can do, and they will also recommend other people to call, eg Step Change. Even if they say they can't do anything, at least you know that, and you can make the particualr debt a priority.

Morgan1188

Hi all,

Firstly, thank you for reading and replying I do really appreciate it a lot!

We called StepChange today and were on the phone for a good 2 hours roughly. We went through income and expenditure. Sky is probably the only thing we have as a "luxury" item but we only took this out in Oct when we were forced to move from our home of 7 years due to landlord needing a quick sale. We had a very low and great package with Virgin Media but they aren't available in our new area and the best deal we got with Sky was £50 a month unfortunately as with Virgin we had no phone line as we didn't need it for internet as it was cable where as with Sky we do need the land line which sucks!

However our contract of 12 months isn't over until Oct 2016 but I have got in touch with them, explained our situation and that a drop or change in package would help so much!

The thing with the guarantor also is it is my father in law, he has been so good and understanding and where he could he's lent us £1000 or so instead of us getting loans etc. He is fantastic and part of the reason he was guarantor (our first car we didn't need one even though it was HP) but the reason he said yes was because he knew we' d always pay it and never let him down. I completely understand some peoples points of view but there is absolutely no way in the world I would put him in the "rubbish" to say it nicely. It really isn't an option unless we were absolutely forced to do so, then we would talk to him and he'd pay it instead.


Anyways... moving on! We spoke to StepChange Debt Charity today and they were fantastic. I got all the help in the world, a few emails with attatchments to send creditors and a big booklet of advice they've been incredible and I feel like taking that first step helped lift a little weight of my shoulders. I have already been in touch with 12 out of the 15 creditors we owe money to, to arrange £1 a month as this is all we can afford. We worked out we only have roughly £10 spare a month on a good one, £5 on a bad one but my husbands phone contract of £12 monthly ends in a few weeks and I am on GiffGaff and I top up £10 I am cutting that down to £5 so we can pay them all £1 a month. So it's going to be tough but doable!

We have also been told to change banks and get a basic account, I have some phone calls to make tomorrow and some things to chase up but I am feeling more positive already. We looked into IVA and did see that it'd cost us more than our debt was worth so pointless and the DRO would take the car finance into account we got told that it's showing preference to one creditor whilst the others get nothing and so we decided we didn't want to put our guarantor in that situation so we went through lots of options first.

Hoping in 2 years once the car is paid, the spare money will clear debts within 2 years and then we will be debt free within 4-5 years! It seems miles off but knowing it's achievable and based on just my husbands wage, with me working in 6 months when Sept comes around we are hoping it'll be a little quicker! Feeling positive!

Thank you all so much :money::beer::j:T:o