Is my brothers situation fixable?

Timmymallett

Hi,

My brother has confided in me that him and his wife have collectively racked up six figures of unsecured debt. He couldn't give me the total amount as he needed to look through statements etc but he estimates that it is somewhere in the region of £105K. I am older than him and he tends to come to me for advice but I don't really know what to advise on this one!!

On the plus side, between him and his wife they earn a very healthy £110K per year and take home around 6.5K after tax etc. They live in a mortgaged house worth around 350K with an outstanding mortgage balance of £245K

The have accrued a lot of the debt due to fertility treatment, as well as some generally silly spending. They have a family now and the enormity of their debts has suddenly hit home. He estimates that they are spending well over 2k per month on debt payments alone, and that doesn't include the mortgage which is also a fairly hefty £1200 per month.

I have asked him to give more some more specifics so that I can post a SOA. I have used this myself to help with my own debt issues a few years ago ( nowhere near as bad as theirs!!) and it was a real help.

I am staggered by the amount of debt that they have. He has spoken to stepchange today and apparently his situation is not that uncommon these days!!! wow!!.

I will post SOA as soon as he gets the info to me but I will be asking you guys to help! I really wasn't to help him fix this.

sourcrates

Hi,

On that sort of salary, it will be eminently fixable.

Post the SOA.

MrsTinks

Fertility treatments are very very expensive, if your brother has then spent on other things too and not managed the APRs then I can see how it could easily happen. It's fixable, but he needs to deal with it and it may mean cutting back for a few years to get this sorted...

Depending on where he lives then his mortgage is not totally off the scale - because of where we are ours is way more than that (well the house value is and the mortgage is...) but importantly this is not beyond fixing if they have had their LBM

National_Debtline

Hi there and welcome to MSE,


You are right that the SOA is the first and most practical step. Debt is all relevant, so if they have high salaries they may be able to manage the monthly payments on high debts, or potentially overpay to drive the debt down, or even consider refinancing - but tread carefully - this would certainly require an independent financial advisor for this level of debt and they can cost money.


If the minimum payments have become unmanageable then generally speaking, I would say that he can't do bankruptcy because of the equity in the house - he would lose it if he did. He could consider selling himself to release the equity - but that may not be necessary. He may be able to consider an IVA but could be dangerous grounds because of his equity and a SOA will help work out if that is feasible. Or possibly a DMP to do an informal payment plan.


The key thing to remember is that he will have options, he just needs to think about his options carefully.


Laura
@natdebtline

enthusiasticsaver

If he and his wife are on that salary then yes it is fixable. I would get him to post the soa though as to get to a position where he really wants to deal with it he needs to face it himself rather than do this through you. This means owning the problem. Putting it all down on a soa so he can see exactly how much is coming in and where it all is going is part of the process. Direct him to this forum.

It is not unusual sadly and you often find the higher the income, the higher the debt because people who earn high salaries see little wrong with having high debt as they think they can easily cope with it. Before long though the accumulated effect of the debt, high repayments and maybe something affecting their income like illness, redundancy or loss of overtime and it all tumbles down like a deck of cards.

rachel99

Well done for being such a lovely brother! I must say though that I have never seen such a high unsecured debt figure. I have seen 20-40k on here many times but never really much beyond that. I hope that he manages to sort it out

blisteringblue

Plenty of 100k + around here. We started at 61K and almost paid 50% in under 3 years. It's definitely fixable on a good wage but it will take a massive change in lifestyle. First step taken confiding in you, but he now needs to take action.

Timmymallett

Met with my brother this morning to help put together his SOA - see below. He hadn't got all of the info regarding interest rates etc, however this does cover all of the debts that he has. It' quite shocking to see it written down...

Household Information[/b]
Number of adults in household........... 2
Number of children in household......... 2
Number of cars owned.................... 2

Monthly Income Details
Monthly income after tax................ 3568
Partners monthly income after tax....... 3271
Benefits................................ 132
Other income............................ 0
Total monthly income.................... 6971

Monthly Expense Details
Mortgage................................ 1299
Secured/HP loan repayments.............. 280
Rent.................................... 0
Management charge (leasehold property).. 0
Council tax............................. 140
Electricity............................. 70
Gas..................................... 70
Oil..................................... 0
Water rates............................. 40
Telephone (land line)................... 25
Mobile phone............................ 60
TV Licence.............................. 12
Satellite/Cable TV...................... 36
Internet Services....................... 27
Groceries etc. ......................... 350
Clothing................................ 150
Petrol/diesel........................... 300
Road tax................................ 25
Car Insurance........................... 100
Car maintenance (including MOT)......... 0
Car parking............................. 0
Other travel............................ 0
Childcare/nursery....................... 1000
Other child related expenses............ 0
Medical (prescriptions, dentist etc).... 0
Pet insurance/vet bills................. 0
Buildings insurance..................... 40
Contents insurance...................... 30
Life assurance ......................... 25
Other insurance......................... 0
Presents (birthday, christmas etc)...... 100
Haircuts................................ 40
Entertainment........................... 200
Holiday................................. 200
Emergency fund.......................... 0
Total monthly expenses.................. 4619


Assets
Cash.................................... 0
House value (Gross)..................... 350000
Shares and bonds........................ 0
Car(s).................................. 17000
Other assets............................ 0
Total Assets............................ 367000


Secured & HP Debts
Description....................Debt......Monthly...APR
Mortgage...................... 245000...(1299).....2.45
Hire Purchase (HP) debt ...... 12000....(280)......6.5
Total secured & HP debts...... 257000....-.........-

Unsecured Debts
Description....................Debt......Monthly...APR
credit card 1..................12000.....240.......0
Credit card 2..................14800.....315.......0
Personal loan (him)............25000.....415.......0
Very...........................400.......35........0
Argos..........................500.......30........0
HSBC Credit card...............5000......75........0
Barclaycard....................11900.....245.......0
Tesco Loan.....................15000.....364.......0
Personal Loan (her)............20000.....350.......0
Total unsecured debts..........104600....2069......-


Monthly Budget Summary
Total monthly income.................... 6,971
Expenses (including HP & secured debts). 4,619
Available for debt repayments........... 2,352
Monthly UNsecured debt repayments....... 2,069
Amount left after debt repayments....... 283

Personal Balance Sheet Summary
Total assets (things you own)........... 367,000
Total HP & Secured debt................. -257,000
Total Unsecured debt.................... -104,600
Net Assets.............................. 5,400

barbarawright

Couple of things leap out. Do they really get £131 a month in benefits? Surely they earn too much for child benefit. And £150 a month for clothes? That has to be an easy one to cut

theoretica

A few comments below - especially shop around for all the things where they might be able to have exactly the same life but cheaper. The main part of this site is great for that sort of thing.

Timmymallett wrote: »

Electricity............................. 70
Gas..................................... 70
Check this is the cheapest deal

Telephone (land line)................... 25
Mobile phone............................ 60
TV Licence.............................. 12
Satellite/Cable TV...................... 36
Internet Services....................... 27
Likewise - do they really use everything and could they get it cheaper. That is £1920 a year on communications!

Car Insurance........................... 100
Shop around at every renewal

Buildings insurance..................... 40
Contents insurance...................... 30
Shop around at every renewal - seems high to me

Presents (birthday, christmas etc)...... 100
Entertainment........................... 200
Holiday................................. 200
All targets for major cutting - as the kids are young (I presume) they can be made happy at Christmas pretty cheaply.

enthusiasticsaver

How has the debt arisen in the first place? That soa sows a surplus so they are seriously underestimating what they really spend to have accrued that much debt.

There is room to cut down but they have to want to. I have to say though this is the first time I have seen a family member posting re their relatives debts on this forum. Does your brother and his wife want to sort this out or do they not think it's a problem? Clearing debt is tough and requires commitment so your brother posting his own soa would have been a good start.

You are obviously trying to help them but they need to own this themselves.