4 CC's, childcare, mortgage, bills etc, need help.

Enigma80

Hi all,

I need some advice on sorting out my debts. These are the following debts I have personally:

4 CC's totalling: 28K
OD: 4250

My wife and I both work full-time and have a 7yr old in school and a 22month old so we need childcare. Older one has breakfast and afterschool clubs at £55 per week and the baby has full-time nursery at around £960-£1020 per calendar month.

We have childcare vouchers at £243 which help a little with the childcare.

The problems started when I lost my towards the end of 2013 and found difficulty getting a new job, relying solely on temping positions which didn't pay much at all. My wife helped us through with what little I was managing to bring in. I finally got back in to my career in Autumn 2015.

However, that period of 22months left it struggling quite a bit and as such I relied on CC's to help pay living costs such as groceries, car maintenance (nothing fancy, just 15yr old car), petrol etc.

Anyway after racking up this debt we've literally lived paycheck to paycheck. Every month has been a struggle.

However, in 2015 when we renewed our tax credits form (took until September for them to get back to us), we managed to luckily get childcare tax credits that helped immensely. I started my new job in September and due to confusion to how they calculated the costs (the forms asked for previous years income) and the way in which they worded (I misread???) their explanations I thought what I earned in the new job wouldn't affect credits until next tax year. This was mainly due to the fact that previously when asking for help they refused flat out due to my previous years income while I was employed.

Anyway, they eventually said we'd been overpaid (for 6 months) when I told them of my new job and as well as cutting payments they're taking half of the allowance as repayment.

Anyway to, cut a very long rant short, we're seriously struggling to meet living costs each month and I don't know the way out.

I'm paying around £600 on CC's and all of the deals have expired. I tried shifting across to a new Virgin card a couple of months ago, but got refused, I'm assuming I've reached my total credit limit.

I don't know what my options are. I was thinking of sorting out some kind of payment plan with the CC's, whether to contact them myself and sort it out with each individual CC company. Or whether to contact a debt management organisation like step change.

What are the pro's and cons of either? How will they affect myself and my family and what kind of costs am I likely to be able to bring it down to per month from £600? How will this effect my mortgage (currently on a base rate tracker after ending my fixed period).

The main issue that's caused us this current problem is the reduction in child care tax credits. We've explored all other options and nothing is affordable, eg my wife reducing hours or quitting work.

Last thing I want to do is loose our home.

Any help would be appreciated.

Sazzie23

Hi Enigma

I see your post is a 3am one, can't sleep maybe, I feel your pain.
Well done for looking at this and realising things have to change. Don't panic, debts like yours are commonplace and solve able with a bit if effort and know how. This type of debt has a habit of creeping up on us and you are not the first to get caught out by the tax credit system.

Remember DONT PANIC, I can remember when our debt caught up with us and I had visions of hiding the TV so the bailiffs wouldn't take it (we never got bailiffs), there is very little risk to your house if you take steps to sort this out.
Priorities debts are mortgage, rent, council tax, utilities, keep them paid, the others will give you time to sort things out, tell them you have problems and make time to sort it. I took a few days off (yes I went sick, but I was sick with worry).

Step 1
Post your SOA on here and ask for help reducing outgoings and maximising income, remember here that every little helps. Get deals on gas and electricity etc, reclaim ppi, get rid of any unnecessary direct debits etc.

Step 2. You might one to do this first, go to the stepchange website and complete the online debt remedy, it's free, you can a be anonymous if you wish, though there's no need to, just use an email address that only you use. This will help you look at your budget as well as what your options are.

If your debts are too great to manage, a DMP DRO or IVA might be suggested, before you take on any of these, stop, come back here and see what suggestions are. A DMP won't affect your house, not sure about the others.

Do not go to payday loans, paid debt management companies or take out an IVA without taking further advice on here

Keep coming back here, until you've got a fix on it all.
Saz

Enigma80

Thanks, I'll try the step change site and report back. Slightly unfamiliar of the initials and acronyms so will look them up too.

Yes you're right, I don't get much sleep, about 2-4hrs if I'm lucky.

I better get in 45mins now before I need to get up again to get ready for work.

Thanks again.

When_the_going_gets_tough

Hi enigma sorry to hear about your worries. First are you sure that your tax credit calculations and the rate at which they are reclaiming the overpayment are correct? Cab could help you check this. Second you have been given good advice about priority debts. Your debts are too high for a debt relief order. You should take more advice about the next best step. As well as step change try the national debt line and the cab websites. Do some reading and you will have a better understanding of your options. Good luck.

Enigma80

Hi, thanks for the reply.

Yes we've asked them twice to reduce the amount they're taking back, but they've rejected it, even though we've given them full details of all payments etc.

Just to top it off, the brakes started squealing this morning driving in to work, which I'll probably have to get sorted out today or tomorrow somehow.

I've got a £158 payment due out for one of the CC's this week on the 12th. I now need that money to get the car sorted. I travel around 330miles each week to work and back and spend about £70 on fuel so I need the car to get to work.

What do I do? Can I stop the DD that's setup for it and let them know that I can't pay it this month???

Sorry I'm ranting.

Little_Miss_Sunshine

Enigma80 wrote: »

Hi all,

I need some advice on sorting out my debts. These are the following debts I have personally:

4 CC's totalling: 28K
OD: 4250

My wife and I both work full-time and have a 7yr old in school and a 22month old so we need childcare. Older one has breakfast and afterschool clubs at £55 per week and the baby has full-time nursery at around £960-£1020 per calendar month.

We have childcare vouchers at £243 which help a little with the childcare.

The problems started when I lost my towards the end of 2013 and found difficulty getting a new job, relying solely on temping positions which didn't pay much at all. My wife helped us through with what little I was managing to bring in. I finally got back in to my career in Autumn 2015.

However, that period of 22months left it struggling quite a bit and as such I relied on CC's to help pay living costs such as groceries, car maintenance (nothing fancy, just 15yr old car), petrol etc.

Anyway after racking up this debt we've literally lived paycheck to paycheck. Every month has been a struggle.

However, in 2015 when we renewed our tax credits form (took until September for them to get back to us), we managed to luckily get childcare tax credits that helped immensely. I started my new job in September and due to confusion to how they calculated the costs (the forms asked for previous years income) and the way in which they worded (I misread???) their explanations I thought what I earned in the new job wouldn't affect credits until next tax year. This was mainly due to the fact that previously when asking for help they refused flat out due to my previous years income while I was employed.

Anyway, they eventually said we'd been overpaid (for 6 months) when I told them of my new job and as well as cutting payments they're taking half of the allowance as repayment.

Anyway to, cut a very long rant short, we're seriously struggling to meet living costs each month and I don't know the way out.

I'm paying around £600 on CC's and all of the deals have expired. I tried shifting across to a new Virgin card a couple of months ago, but got refused, I'm assuming I've reached my total credit limit.

I don't know what my options are. I was thinking of sorting out some kind of payment plan with the CC's, whether to contact them myself and sort it out with each individual CC company. Or whether to contact a debt management organisation like step change.

What are the pro's and cons of either? How will they affect myself and my family and what kind of costs am I likely to be able to bring it down to per month from £600? How will this effect my mortgage (currently on a base rate tracker after ending my fixed period).

The main issue that's caused us this current problem is the reduction in child care tax credits. We've explored all other options and nothing is affordable, eg my wife reducing hours or quitting work.

Last thing I want to do is loose our home.

Any help would be appreciated.

Hello and welcome. I remember the feeling of worrying all night! Our financial world crashed in on us in December last year. My advice would be not to rush into anything. I contacted step change immediately ( they are fantastic) but we in the end wanted more flexibility ( which we definitely needed with family circumstances). We are self managed and have paid token payments since December. Lots of letters, a few phone calls ( all blocked now). But nothing more. We are in total control of our dmp and I feel it's given me responsibility back. Which I needed.
It's not for everyone and as a say step change are brilliant.
Take your time, explore all options (step change, NEDCAB for self managed dmp). The world will not end when you stop paying your minimum payments. Honest
Keep posting. It really helped me.

Enigma80

Thanks so much. It's become really difficult and has made family life quite difficult, with arguments over money and stressful situations. We don't want the children to suffer, but I know the older one can sense tension and overhears us sometimes as he's asked us if we're going to loose the house and will we have to live on the street?

He's only 7 and I feel that it's my fault the he now feels like this. I know he thinks about stuff a lot as he's that type of kid and goes quiet sometimes.

We've only had the house since 2010 after we had to leave my parents following a big family row and had to rush out. Sometimes I feel like I'm just ranting and moaning when there's people out there dying and in much worse situations than us, but that doesn't help me feel that we've just had back luck after back luck.

We didn't get out son in to any school we wanted and were given a failing school even after appealing, my flexible working got taken away from me, leaving us to pay increased childcare fees, and my wife suffered through 5 miscarriages (in some way I think partly due to stress), in between which both of her parents died a year and half apart. I lost my job not too long after and found it difficult to get to work along with everything breaking down while I was unemployed, car, fridge, washing machine etc.

I would just like things to work out for a change, and not to have to worry about things too much. I know we're not the only ones and I feel like I'm just moaning for no reason.

Sorry.

lazer-zxr

Hi, I didn't want to read and run.
You're not just ranting and moaning, your engaging on a forum, a group of people that will grow to support and help you. Make sure you have a good look around for money saving tips while on here.
When I came to this board, I was at the bottom of a trough. I hadn't been through the mill as much as you, my problems were purely financial (£52k in debt with two young children).
You now have a challenge. Embrace it. Post your SOA (statement of affairs) on here, pull a plan together, and complete the plan. Good luck with the challenge, and trust me, you will feel better about this, and start to enjoy the challenge aspect of it.

Little_Miss_Sunshine

Enigma80 wrote: »

Thanks so much. It's become really difficult and has made family life quite difficult, with arguments over money and stressful situations. We don't want the children to suffer, but I know the older one can sense tension and overhears us sometimes as he's asked us if we're going to loose the house and will we have to live on the street?

He's only 7 and I feel that it's my fault the he now feels like this. I know he thinks about stuff a lot as he's that type of kid and goes quiet sometimes.

We've only had the house since 2010 after we had to leave my parents following a big family row and had to rush out. Sometimes I feel like I'm just ranting and moaning when there's people out there dying and in much worse situations than us, but that doesn't help me feel that we've just had back luck after back luck.

We didn't get out son in to any school we wanted and were given a failing school even after appealing, my flexible working got taken away from me, leaving us to pay increased childcare fees, and my wife suffered through 5 miscarriages (in some way I think partly due to stress), in between which both of her parents died a year and half apart. I lost my job not too long after and found it difficult to get to work along with everything breaking down while I was unemployed, car, fridge, washing machine etc.

I would just like things to work out for a change, and not to have to worry about things too much. I know we're not the only ones and I feel like I'm just moaning for no reason.

Sorry.

You're not moaning at all. My children are 16 and 13. They became aware of money problems. I sat them down and told them that we were sorting things out. Promised them that nothing would happen to the house. We also told them that we had to be more careful with our money and that we had to budget. We decided to set up young accounts for them and give them slightly more pocket money but they would have nothing extra. I want them to be better than we were with money. ! It's worked really well. It means I don't have to constantly say no! We did cancel our holiday this year and probably won't go next year - but we've had plenty of holidays abroad ( hence the £55k debt) so we can manage without for a while.

Your son just needs to be reassured. The arguments will stop once you have a clear plan.

jamesd

Enigma80 wrote: »

I've got a £158 payment due out for one of the CC's this week on the 12th. ... What do I do? Can I stop the DD that's setup for it and let them know that I can't pay it this month???

You can tell them not to take the direct debit. That's your legal right under the Payment Services Regulations.

Given the date today it may legitimately be too close to the direct debit date for them to stop it because they may have already sent off the batch of requests for the 12th. So you should also contact your bank and tell them not to allow the direct debit to be taken. Depending on the bank they may offer you the option to keep the direct debit instruction in place or not.

If the payment is taken anyway just contact your bank and tell them that you'd already told the card company not to take the payment and ask for it to be reversed.

Also tell your credit card companies that you have started to work with the debt management charity and ask them to suspend any collection activity for a month, as is provided for in the standard processes for such things. The purpose of this is to give you time to sort out with the charity how to proceed.

jamesd

Enigma80 wrote: »

I would just like things to work out for a change, and not to have to worry about things too much. I know we're not the only ones and I feel like I'm just moaning for no reason.

You're not moaning for no reason. You're in the early stages of doing the things that will reduce the level of ongoing worry and strife. That's what the people here will do supporting you with ideas and it's what StepChange will do in working out a payment arrangement.

At the moment you've been juggling the payments and the companies may not have realised that you have trouble. Often they will only be willing to make arrangements to help once you've already started to miss payments. Just the way they work. StepChange getting involved should help to overcome that block because as an independent charity the people who've lent you money also know that they are not trying just to help you dodge what you could pay but to find a solution to the problem.

While it may not seem like it, the law is on your side in this. A court will not force you to pay more than you can afford after paying your key expenses like housing and utilities as well as in your case car and petrol you need to get to work and necessary childcare so you can. StepChange knows this and the card companies also know it. So in general the process will be too work out what you have to spend for the essentials of life then split the rest among the places which are owed money.

As long as your income is sufficient to pay the mortgage as part of your essentials then there's no chance of you being forced out of your home. Not even close. sometimes people might choose to move or downsize to save money but given that you've been juggling so well so far it's likely that you're not close to having to consider that beccause there's enough money around to deal with things without it.

What may well happen is StepChange suggesting that you switch to interest only if the mortgage lender will agree. The reason for this is that it can make it faster to get rid of the other money you owe. Mortgage lenders know this and are often willing to help out in this way because it beats you being forced to default on the mortgage and all the costs for them that follow if you do.

At that point you can relax a fair bit, though life will be tough financially for quite a while. All debt collection activity should stop so you won't be getting hassled.

Bit too soon to relax yet and it'll take a few months after things are in place for you to believe it but it'll be all right in a little while.