Advice needed please

BigLuke

We have found ourselves in a bad place financially and would really appreciate some advice please. First a bit about us.

I have been with my partner now for nearly 3 years. She has a 5 year old from a previous relationship who we have every other week. We also have an 11 month old together. I earn an average salary and she currently doesn't work, although this will probably change soon. I have done an SOA and our debts total £30k which is madness. The reasons behind this level of debt are partially bad luck but also partially stupid spending. Like a lot of other people with massive debts we have nothing to show for it.

On the bad luck side we have had loads of unexpected bills. We had to go to court for custody of her daughter. I had a £650 repair carried out on a previous car, I had a hire car which I crashed with a repair bill of £1000. The nursery her daughter was at didn't tell us that the 15 hours of free childcare couldn't be taken over 2 days a week so we had an over £1100 bill from them.

But then we have also been stupid with money. While my partner was on maternity leave we were spending money we didn't have and putting it on credit cards because at the time she intended to go back to work at the end of it. Unfortunately childcare arrangements wouldn't have worked out so she wasn't able to return to work. We have also just ignored the fact we had a shortfall each month and carried on spending anyway.

We have now come to the realisation that this can't continue and something needs to change. With the exception of food I can't see anything we can cut back. Gift spending is high but next year we are going to significantly cut this back. But anyway here is the SOA:

Statement of Affairs and Personal Balance Sheet

Household Information
Number of adults in household........... 2
Number of children in household......... 2
Number of cars owned.................... 1

Monthly Income Details
Monthly income after tax................ 1665
Partners monthly income after tax....... 0
Benefits................................ 100
Other income............................ 0
Total monthly income.................... 1765

Monthly Expense Details
Mortgage................................ 0
Secured/HP loan repayments.............. 0
Rent.................................... 850
Management charge (leasehold property).. 0
Council tax............................. 130
Electricity............................. 40
Gas..................................... 45
Oil..................................... 0
Water rates............................. 45
Telephone (land line)................... 52
Mobile phone............................ 50
TV Licence.............................. 12
Satellite/Cable TV...................... 0
Internet Services....................... 0
Groceries etc. ......................... 350
Clothing................................ 40
Petrol/diesel........................... 100
Road tax................................ 25
Car Insurance........................... 45
Car maintenance (including MOT)......... 5
Car parking............................. 0
Other travel............................ 0
Childcare/nursery....................... 0
Other child related expenses............ 0
Medical (prescriptions, dentist etc).... 40
Pet insurance/vet bills................. 0
Buildings insurance..................... 0
Contents insurance...................... 0
Life assurance ......................... 0
Other insurance......................... 0
Presents (birthday, christmas etc)...... 100
Haircuts................................ 10
Entertainment........................... 20
Holiday................................. 20
Emergency fund.......................... 10
(Unnamed monthly expense)............... 0
Total monthly expenses.................. 1989


Assets
Cash.................................... 0
House value (Gross)..................... 0
Shares and bonds........................ 0
Car(s).................................. 500
Other assets............................ 0
Total Assets............................ 500

No Secured nor Hire Purchase Debts

Unsecured Debts
Description....................Debt......Monthly...APR
loan...........................9500......215.......10
santander cc...................1694......38........17.9
mbna...........................2205......25........0
dfs............................300.......67........0
mum............................1700......100.......0
store card.....................600.......30........33.9
halifax cc.....................1000......25........18.9
lloyds cc......................2000......20........0
Tesco cc2......................5422.42...55........0
Tesco cc1......................5559.35...56........0
Total unsecured debts..........29980.77..631.......-


Monthly Budget Summary
Total monthly income.................... 1,765
Expenses (including HP & secured debts). 1,989
Available for debt repayments........... -224
Monthly UNsecured debt repayments....... 631
Amount short for making debt repayments. -855

Personal Balance Sheet Summary
Total assets (things you own)........... 500
Total HP & Secured debt................. -0
Total Unsecured debt.................... -29,980.77
Net Assets.............................. -29,480.77

Created using the SOA calculator at
Reproduced on Moneysavingexpert with permission, using other browser.

The income will be a bit higher as I can do overtime at work, although the first few months of the year are normally very quiet. I also bring home outwork but this stops between December and about April. My partner has limited availability for working due to childcare but is looking into an evening job where her friend works which will relieve some of the pressure.

Any advice you can give me will be greatly appreciated.

enthusiasticsaver

The shortfall is too high for there to be much impact by adjusting the soa. The phone costs, mobile costs and gifts are high and the groceries could probably come down a bit but none of that will solve the problem of the £855 monthly shortfall. I am assuming that some of those debts are now defaulted?

I think ringing stepchange and considering a DMP is your only option unless your partner can get a job.

MrsSave

Even if you had no debts, you would still be overspending each month. I agree with enthusiasticsaver and recommend giving one of the debt charities a ring.

StopIt

As above really.


You're insolvent without a change up in income really, that's before paying debts at all.


As you're above the £20k limit for a DRO, you're looking at bankruptcy. There's a fee, and that can be paid in instalments but call a debt charity ASAP for specific help.

System

I think there a number of ways you can save personally. Your rent compared to your income is the biggest problem, so is your grocery bill!

BigLuke wrote: »

Monthly Income Details
Monthly income after tax................ 1665
Partners monthly income after tax....... 0
Benefits................................ 100
Other income............................ 0
Total monthly income.................... 1765

Monthly Expense Details
Mortgage................................ 0
Secured/HP loan repayments.............. 0
Rent.................................... 850 Compared to your wages, this rent is far too much. Can you downsize? I pay less than half your rent and my wage is slightly higher.
Management charge (leasehold property).. 0
Council tax............................. 130
Electricity............................. 40 quite high
Gas..................................... 45 again quite high - probably look for more like £60 month deal and be careful with heating and lighting
Oil..................................... 0
Water rates............................. 45
Telephone (land line)................... 52 this needs to go. Loads of £15 deals out there for a year, then move provider
Mobile phone............................ 50 again, crazy to spend this on a mobile phone - this must be one of the latest handsets or massive amount of data, either of which may have to go.
TV Licence.............................. 12
Satellite/Cable TV...................... 0
Internet Services....................... 0
Groceries etc. ......................... 350 you could half this easily with a bit of planning
Clothing................................ 40
Petrol/diesel........................... 100
Road tax................................ 25 this is steep really unless you have a gas guzzler?
Car Insurance........................... 45
Car maintenance (including MOT)......... 5
Car parking............................. 0
Other travel............................ 0
Childcare/nursery....................... 0
Other child related expenses............ 0
Medical (prescriptions, dentist etc).... 40
Pet insurance/vet bills................. 0
Buildings insurance..................... 0
Contents insurance...................... 0
Life assurance ......................... 0
Other insurance......................... 0
Presents (birthday, christmas etc)...... 100 per month? you can't afford this with your debts
Haircuts................................ 10
Entertainment........................... 20
Holiday................................. 20 you can't affort this
Emergency fund.......................... 10 is this worth it?
(Unnamed monthly expense)............... 0
Total monthly expenses.................. 1989


Assets
Cash.................................... 0
House value (Gross)..................... 0
Shares and bonds........................ 0
Car(s).................................. 500
Other assets............................ 0
Total Assets............................ 500

No Secured nor Hire Purchase Debts

Unsecured Debts
Description....................Debt......Monthly...APR
loan...........................9500......215.......10
santander cc...................1694......38........17.9
mbna...........................2205......25........0
dfs............................300.......67........0
mum............................1700......100.......0
store card.....................600.......30........33.9
halifax cc.....................1000......25........18.9
lloyds cc......................2000......20........0
Tesco cc2......................5422.42...55........0
Tesco cc1......................5559.35...56........0
Total unsecured debts..........29980.77..631.......-

HairyHandofDartmoor

You've had great advice from the other posters.

Unless you can raise your income by over £800 per month by cutting expenses or your partner getting a job, you are not going to be able to manage.

Also what if you start getting refused for 0% deals? As your debts are mainly on 0% it would have a big impact upon you if you had to start paying interest on all of your debts.

Ring Stepchange or one of the other debt charities and they will talk you through your options. They are very kind and they don't judge.

My DH and I did token payments to our creditors (of £1 a month each for two years) with the help of Stepchange, because we were in a similar situation to you.

Alternatively you could consider bankruptcy. Both token payments and bankruptcy would have a negative impact upon your credit reputation, but only for six years and then you could start again.

Good luck whatever you decide

StopIt

andydownes123 wrote: »

I think there a number of ways you can save personally. Your rent compared to your income is the biggest problem, so is your grocery bill!

Rent is highly area dependant.


I pay more than that for a 2 bed house, just because of where I live. Given their family size, I imagine they cannot downsize.


The rest would be tinkering to get to a level before debt payments, leaving nothing realistically for debt payments anyway. However a full review of expenses is probably needed to address some overspending going forward.

Mnd

Although I agree about the mobiles and holidays, you really aren't going to sort this without help. Follow the above advice

BigLuke

Thank you all for your replies. I thought a DMP was probably going to be the only way forward, I hadn't considered bankruptcy. I will call Stepchange and see what they suggest.

To answer all of the comments:

andydownes123 wrote: »

I think there a number of ways you can save personally. Your rent compared to your income is the biggest problem, so is your grocery bill!

Unfortunately I live in the South East in an area that is an hour from London on the train and 15 minutes away from motorways so rent is high. We have just moved into a house rented from family, if they were renting to anyone else it would be £1250 a month. We can't move anywhere cheaper as OHs daughter goes to school here and that's not something we can change.

Gas and electric is the DD amount paid but in the summer we don't use anywhere near that amount and so far we have only just gone over it after having the heating on. As mentioned we have an 11 month old so need the house to be warm.

The telephone includes broadband and the lowest TV package from Virgin. We are currently in a contract but when this expires we are going to shop around.

Mobile phone is also in a contract and will be changed when it ends.

My car is a nearly 20 year old Zafira. A gas guzzler it is but I have no money to buy one that is any better

I know the gift spend is really bad. We are not spending anywhere near that next year.

I have put the maintenance figure down as we are responsible for basic house maintenance as part of our tenancy. In reality we probably won't spend that.

HairyHandofDartmoor wrote: »

Also what if you start getting refused for 0% deals? As your debts are mainly on 0% it would have a big impact upon you if you had to start paying interest on all of your debts.

I have a big fear of being declined for 0% offers and TBH its very likely that will happen.

enthusiasticsaver wrote: »

The shortfall is too high for there to be much impact by adjusting the soa. The phone costs, mobile costs and gifts are high and the groceries could probably come down a bit but none of that will solve the problem of the £855 monthly shortfall. I am assuming that some of those debts are now defaulted?

I think ringing stepchange and considering a DMP is your only option unless your partner can get a job.

Strangely enough none of the debts have defaulted so far. I think part of the reason the CC debts are so high is because I was paying food and fuel on them to allow me to pay everything else. Even if she does get a job it won't cover anywhere near the shortfall. It will probably be around 16 or so hours a week at minimum wage.

Hiddenidenity

Are you benefits correct?

Child benefit is more than £100 a month for 2 children.

Are you sure you don't qualify for anything else?

Sarastro

Ring the debt charities as suggested. Avoid bankruptcy if you possibly can. You should be entitled to more benefits than you are getting.