We can't pay our credit cards this month. What should I do? Please help.

hetherdrinkstea

Hi,

We are in a bit of a financial mess. We have a lot of debt (credit card and one loan) which we have just about been managing to pay. However my husband has now become ill and is on SSP and will soon be dismissed from his job anyway. I don't work at the moment.

We received his pay into the bank this morning and it is just enough to cover the Direct debits (ie our essential bills) but there is nothing to pay credit cards. We also need to keep some cash to feed ourselves and our children.

I have made an appt with CAP but the earliest I could arrange was in Sept. So, my question is what do I do now about the credit cards. Do I phone/write and admit our position or ignore them all for now. When I phoned the CAP advice line she suggested I use the template letter she sent to fill in and send to my creditors. Do I offer £1 payments of nothing for this month.

Please be gentle - I know we have got ourselves into a massive mess and I need to know what to do next. My husband has had a mental breakdown and been sectioned so I am doing everything for both of us at the moment.

Thanks!

Arleen

Call all your creditors and inform them of your situation - they may be more understanding than you think! Make sure to mention that you will be reaching out to one of the debt charities for help in that regard.

The next step is to prepare a complete SOA: http://www.stoozing.com/calculator/soa.php and post it here, as you clearly do not live within your means right now. And with this step out of the way, best contact one of the debt charities, like StepChange to seek out debt advice.

sourcrates

Hi,

You can call your creditors as suggested above, but sometimes its easier to put your situation down in writing, let them know your struggling, they will automatically give you a 30 day period of grace, free from any collection activity, in reality, as long as you keep them informed, you can take as long as you like to get your situation sorted out.

Definitely contact stepchange, they will help you choose which debt solution will be appropriate for you.

If you cant afford token payments, then dont make them, they are normally a waste of time anyway due to payment processing costs, a £1 payment costs more to process than its worth.

hetherdrinkstea

Ok, I will make the phone calls on Monday. Do you think husband's credit card companies will talk to me? He is not well enough to deal with it.

We are in touch with CAP (Christians against poverty) but our appt is Sept.

I will do the SOA, We definitely do not live within our means, plus hubby losing his job means we will have to apply for benefits. I think we have been stupid to get into debt but our efforts to get out seem to have sunk us further in.

sourcrates

hetherdrinkstea wrote: »

Ok, I will make the phone calls on Monday. Do you think husband's credit card companies will talk to me? He is not well enough to deal with it.
.

No they wont due to data protection.

Thats why i said do everything in writing, then you bypass that particular problem.

hetherdrinkstea

Ok, I will do the letters then this weekend.

Thanks

hetherdrinkstea

Statement of Affairs and Personal Balance Sheet

Household Information
Number of adults in household........... 2
Number of children in household......... 4
Number of cars owned.................... 0

Monthly Income Details
Monthly income after tax................ 0
Partners monthly income after tax....... 1183
Benefits................................ 335
Other income............................ 0
Total monthly income.................... 1518

Monthly Expense Details
Mortgage................................ 0
Secured/HP loan repayments.............. 0
Rent.................................... 500
Management charge (leasehold property).. 0
Council tax............................. 105
Electricity............................. 93.43
Gas..................................... 0
Oil..................................... 0
Water rates............................. 43.3
Telephone (land line)................... 0
Mobile phone............................ 52.5
TV Licence.............................. 12.36
Satellite/Cable TV...................... 0
Internet Services....................... 22.27
Groceries etc. ......................... 600
Clothing................................ 0
Petrol/diesel........................... 200
Road tax................................ 0
Car Insurance........................... 0
Car maintenance (including MOT)......... 0
Car parking............................. 0
Other travel............................ 48.75
Childcare/nursery....................... 0
Other child related expenses............ 0
Medical (prescriptions, dentist etc).... 60
Pet insurance/vet bills................. 15.2
Buildings insurance..................... 0
Contents insurance...................... 0
Life assurance ......................... 0
Other insurance......................... 0
Presents (birthday, christmas etc)...... 0
Haircuts................................ 20
Entertainment........................... 0
Holiday................................. 0
Emergency fund.......................... 0
Total monthly expenses.................. 1772.81


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

No Secured nor Hire Purchase Debts

Unsecured Debts
Description....................Debt......Monthly...APR
Barclaycard 1..................2800......83........19
Barclaycard 2..................7410......175.......18
Bank of Scotland...............2996......79........21
Loan...........................18000.....343.......4
Visa Vanquis...................3200......140.......27
Tesco..........................4550......91........19
Royal Bank ofScotland..........689.......16........17.5
Halifax........................2200......65........18.9
Total unsecured debts..........41845.....992.......-


Monthly Budget Summary
Total monthly income.................... 1,518
Expenses (including HP & secured debts). 1,772.81
Available for debt repayments........... -254.81
Monthly UNsecured debt repayments....... 992
Amount short for making debt repayments. -1,246.81

Personal Balance Sheet Summary
Total assets (things you own)........... 0
Total HP & Secured debt................. -0
Total Unsecured debt.................... -41,845
Net Assets.............................. -41,845

hetherdrinkstea

Just to clarify about the fuel costs/car. We don't own a car, we have a company car at the moment which we lose when dh loses his job in a couple of weeks.

Arleen

Thanks for the SOA!

There is a lot you can cut in terms of expenses, but I don't think it will be enough. You really should give stepchange a call and discuss your options. As it doesn't seem that you own any assets and owe over 40k, bankruptcy may be the only option.

hetherdrinkstea

Yes, I think you may be right. I have done quite a lot of thinking and reading over the last few weeks and I can't really see any other option for us.

ontheup1972

With an income of 1,183 and four children, I'm surprised that you only receive £335 in benefits. Child benefit, tax credits etc, have you made sure that you are claiming everything that you're entitled to?

Can you not get a part time job, even a few hundred a month? You need to increase income just to break even, before any debt repayments are taken into account..

So you need to think of ways to increase income as well as how to sort your debt.