Newbie with issues

Uselesswithcash

Hello. I have followed this website for a good while now but never joined or commented etc. So now I feel the need to, here I am.
I know everyone has probably heard the same thing time and time again but here is my scenario (in full!)

I have debt (surprise surprise). Never had a bad credit rating, always managed to get credit. However, my wife recently lost her well paid full time job (she was a pa for a solicitor) and now can only get a job part time. Since then things have been tight and it was getting the point where we ended up using overdrafts / credit cards to make ends meet.
Long story short, racked up a mountain of debt on cc's (£25,000 to be precise) over about the last 5 years. I always switched the credit cards onto interest free deals so I wasn't that too concerned. Outgoings have always been less than our income so again I was not too worried. However, when I looked at the grand scheme of things I realise that £25k was far too much to handle. We now cannot afford to anything at the moment, we can't afford to save, can't afford a new car, holiday etc.
It was really only when I did a budget which is always suggested on this site I realised I was in trouble. We did the budget and saw how we could reduce our outgoings but the majority of my debt is fixed and there is nothing I can do about it.
It really started to go downhill when one of my credit card deals was over so I tried to switch it to another 0% deal only to be declined. I checked both Equifax and Experian (for what they're worth) and although Equifax still has me down as excellent, Experian has downgraded me to 860 (fair). I have never missed any payments or had any issues with creditors but they have 2 negative factors listed: The first is that I have a high amount of non mortgage debt, and the second is that I am utilising a high percentage of my credit card allowance.
After I did my latest budget, after everything has come off (mortgage, credit cards, bills etc) We are left with £600 a month. With that I have to get food and clothing for a family of 4, petrol for work and other bits and bobs (this month it was mot for the car).
Bottom line is we hav nothing left to even try and bring the debt amount down. If anything it is going to get worse as I will start to pay interest on my credit cards as I can't get a 0% deal.
Just a few things to note: other than my credit cards I do not believe I have any other "ridiculous" debts. I cannot switch my mortgage as I am on a fixed deal. My car payment is only £100 a month and is not worth the amount outstanding so i would be worse if I sold it and we are not entitled to any benefits because of my salary. I have looked into getting a loan to pay off all the credit card debt so that there is a light at the end of the tunnel at least but my main concerns are that I will not get a loan for this much because of my credit score now and also I fear that whilst paying it off I will rack up more debt. I have had debt advice from my local credit union who's only suggestion is trying to get a loan over a long period but I don't feel that is a good option for us.
Trust deeds / bankruptcy are not an option as I would lose my job. Any advice?

National_Debtline

Hi

Welcome to the forum. As you mentioned trust deeds am I right in thinking that you live in Scotland?

If that’s the case a Debt Arrangement Scheme (DAS) could be a viable option for you if you can’t meet the minimum payments on your debts. It’s a payment plan where you make one affordable payment per month to an approved adviser and they distribute it to your creditors. The DAS stops interest being added to your debts and would prevent the use of diligence if a creditor goes through the sheriff court.

Obviously check whether your job would be affected by a DAS. There is a factsheet with more information here:

www.nationaldebtline.org/S/factsheets/Pages/22%20SCOT%20Debt%20Arrangement%20Scheme%20%28DAS%29/Default.aspx

Bear in mind a DAS would mean defaulting on your contracts which would have a negative impact on your credit history for six years.

James
@natdebtline

KirstyO

Hi Uselesswithcash
Welcome! We're all in (or have been in) the same boat, life throws a curveball and our once comfortable situation becomes untenable and scary.


Start by posting a statement of affairs (SOA) so that people can see your income and expenditure and make suggestions.
If you need some free, impartial advice, ring one of the debt charities (StepChange or National Debtline) and they will be able to advise if there are any remedial actions you or they can take to stop things getting worse.


Don't put too much reliance on your credit 'scores', these are just numbers that only make sense to the CRA that generated them. Different lenders have their own criteria for lending so just because one lender has declined you, doesn't mean that they all will. However don't be tempted to go applying to everyone offering a 0% deal now, as the searches from all of these applications will show on your credit file and have a negative impact.
What does matter is that all of the information on your credit file is accurate and up to date (addresses etc.), make sure you are registered for the electoral roll and that you recognise all of the accounts that are on your report. Any that you don't use any more, make sure they are closed. You can access your credit report for free at Noddle and ClearScore. I would recommend using both as they are from different credit reporting agencies.

yasmin2

^^^

Hi, just wanted to say Good Luck with the journey and you can do it!!About 3 years ago, I was approx. £20,000 in debt and I have halved it so its doable... achievable.. Post up a SOA and people will comment on how you can cut down your spending and get the debt GONE!!

Uselesswithcash

Ok here goes:

My monthly take home £1980
My wife's monthly take home £550
Child benefit monthly £120
Combined income £2650

Outgoings
Mortgage £451
Council Tax £215
Gas/electricity £122
Car (personal loan) £97
Wife's car £87
Tv licence £12
Mobile me £22
Wife's mobile £17
Argos store card £35
DVLA car tax (paid monthly) £17
Factors fee £11
Child trust fund £25
Sky (tv) £60
Virgin (phone/broadband) £44
House insurance £16
Life insurance £30
Santander cc £50
Mbna cc £201
Barclaycard cc £144
Halifax cc £60
Lloyds cc £35
Loan (taken out almost 10 years ago) £300
Total £2051

Firstly, the loan taken out 10 years ago is my wife's which I took on when she was made redundant. This finishes in July this year. I know everyone will say there's an extra £300 a month but this extra £300 will probably mean we won't have to use credit cards to get by as we'll be able to use this. Also, I've always paid my car insurance annually however this looks like it will have to be monthly come August as I have no savings to pay it off all in one. And yes I live in Scotland. Also, I am bound by regulations in my employment which forbids me from being bankrupt, entering into IVA's and trust deeds.

thriftylass

Uselesswithcash wrote: »

Ok here goes:

My monthly take home £1980
My wife's monthly take home £550
Child benefit monthly £120
Combined income £2650

Outgoings
Mortgage £451
Council Tax £215 that seems a lot, are you paying arrears?
Gas/electricity £122 that should be coming down in the next few months, are you on the best deal
Car (personal loan) £97
Wife's car £87
Tv licence £12
Mobile me £22
Wife's mobile £17
Argos store card £35
DVLA car tax (paid monthly) £17
Factors fee £11
Child trust fund £25
Sky (tv) £60 luxury, can you cancel and try free view etc?
Virgin (phone/broadband) £44
House insurance £16
Life insurance £30
Santander cc £50
Mbna cc £201
Barclaycard cc £144
Halifax cc £60
Lloyds cc £35
Loan (taken out almost 10 years ago) £300
Total £2051

Also you say you have about £600 left for food etc. How is this money actually spend, how big is your grocery bill etc.

Good luck with your journey

Uselesswithcash

£215 for council tax is correct. We have a new build house which was banded when it was built 2 years ago. Bare in mind we don't have water bills in Scotland, this is incorporated into council tax.
£122 for gas/electricity is going UP as apparently this does not cover the amount used according to E-on. Part of the condition of sale was we had to stay with E-on for the first 24 months. This is up in June so this can be looked into.
£60 for Sky IS a luxury and this is one of the areas I will be sorting out. Don't have a choice though, it's the easiest thing to change.

Uselesswithcash

Grocery bills are approx £75-100 a week. There are 4 of us to feed. Also have to factor in petrol bills for getting to work and other unforeseen things like MOT this month, sister had a baby boy so a we prezzie and card. There always seems to be something. As you can see, we can just about manage if we really knuckle down but my issue is how do we REDUCE the debt?

Bouncybubbles

I would speak with step-change you can do it online and they can advise you by seeing how much per month you can put to certain debts etc and be able to advise you from there. There are more experienced people on here though than me but that is my advice as that is what I did

thriftylass

Uselesswithcash wrote: »

£215 for council tax is correct. We have a new build house which was banded when it was built 2 years ago. Bare in mind we don't have water bills in Scotland, this is incorporated into council tax. ah ok, I'm in Scotland too but our house is only 160 a month, so I just wondered
£122 for gas/electricity is going UP as apparently this does not cover the amount used according to E-on. Part of the condition of sale was we had to stay with E-on for the first 24 months. This is up in June so this can be looked into. Does that mean you do not read the meter? Does someone stay at home? Can you make savings by having the timer on the heating/hot water etc? Sorry probably obvious questions.
£60 for Sky IS a luxury and this is one of the areas I will be sorting out. Don't have a choice though, it's the easiest thing to change.

Also below you mentioned £75 to £100 on groceries. How old are your children? I have a 5 and a 2 year old and we try to keep it to about £300 a month excluding household goods and alcohol. Do you batch cook, take you lunch etc? Sorry again obvious questions for some, not for others. Check out the grocery threads/forums on here. you could probably find another 50-100 to go to your debt.

P.S. the MOT isn't unforeseen as such, although I'm guilty myself of this. Could you put away even just 20 quid a month and next year same time you had £240 to put towards this?

You only reduce the debt by reducing your outgoings/or generating more income and paying more off. That said I know it's not easy, but by gradually reducing the grocery bill, maybe reducing your Sky package, and maybe using some of the payment for the loan that is finished soon too (maybe half for savings for pressies etc and half towards the debt) in will come down. Slowly but steadily.

All the best

ReadingTim

Uselesswithcash wrote: »

Grocery bills are approx £75-100 a week. There are 4 of us to feed. Also have to factor in petrol bills for getting to work and other unforeseen things like MOT this month, sister had a baby boy so a we prezzie and card. There always seems to be something. As you can see, we can just about manage if we really knuckle down but my issue is how do we REDUCE the debt?

You reduce the debt by making sure you spend less than you earn, then working out ways to spend less and earn more. It really isn't rocket science, but it does take a bit of organisation to get a proper picture of what's coming in and (more crucially) what's going out.

Suggest you fill out a proper statement of affairs which includes categories for every sort of spending, and fill it out fully, honestly and accurately. Refer to bank and credit cards or keep a spending diary to see where every penny goes - your first attempt didn't include food - does that mean you and the family don't need to eat?!? With the loans etc, you need to put in ARPs, rates etc, as it's often better to clear the ones with the highest rates first - that'll stop the interest mounting up as fast.

Once you know what's happening in the present, you can plan for the future. MOTs aren't unforeseen - they happen at the same time every year.

So do birthdays.

And Christmas.

True accidents are rare. Boilers and washing machines (for example) tend to make some warning noises before giving up the ghost - this is the time to starting thinking about servicing/replacing them, but they rarely "explode" spontaneously.

Get yourself properly organised and give the people here something to work with - there are lots of good ideas out there.

I won't say good luck because becoming debt free isn't a matter of luck - it's a matter of planning, so plan well!