Caught between a rock (life) & a hard place (DMP)

debitoluf

Hi - first post here. I just typed out my entire post but for some reason it disappeared, so hopefully this won't post twice.

I'm stuck in a really tricky situation and would welcome some help.

In Autumn last year my employer went bust, but for a number of reasons they didn't go into administration: they just refused to pay staff/suppliers. I'm currently mega-stressed as trying to pursue unpaid salary via ACAS/tribunal/other routes but it's very complicated and there is a chance I may not get anything, or if I do it won't be for a while.

Because of that, I found myself out of work from August until 2 weeks ago and ended up in a lot of debt: £24k to be precise (some of which is old debt that I've been repaying over time). Very quickly, I couldn't afford any repayments and so contacted StepChange.

They said that I didn't need a DMP because it was a short-term difficulty and they were right; I started a new job a few weeks ago. This is on a very good salary (£60k), which I'm very lucky for and I realise I earn an amount of money that is considered high by some.

I've got three massive issues, though.

1) Is that my debt repayments are £879 a month (forgetting the arrears for a minute) and in spite of my high salary, I'm drowning and struggling to keep my head above water. As a family we are also in a lot of debt (very long and complicated story which I'd rather not share, but it's our collective fault) and after I have paid priority debts, other debts, travel to work I have £200 left a month to live on. I don't go out, socialise, waste money so there's not really many places I can cut back.

2) All of my creditors gave me a moratorium, but they're now no longer waiting. StepChange say that I don't need a DMP because I'm now back in work, earning a decent salary and can (just about) afford the repayments, but the issue is that each of my creditors are now going super-aggressive to try and get me to repay what is owed now that they know I earn a fair amount. But, I can't afford to repay the arrears very quickly, so ironically some are suggesting I should consider a DMP, just for the arrears! In other words, each of them are trying to encourage me to pay them first, but I can't pay all of them all of the arrears in one go, and none of them are really willing to wait and spread it out over a fair time period (it's £2.4k arrears, and I can only afford to repay it over 12 months).

3) Around this, I need to sort my life out. Our family are in tonnes of debt and my wife doesn't know the full extent of my own personal debt. She knows I'm 'in trouble', but I'm truly sinking trying to keep our family afloat. It's a really complicated situation, but basically I think I'm on the verge of sinking. I don't really see much of a way out other than a DMP and that will kill all chances of us moving home going forward (we want to move home to clear our joint debts with the equity, but if I tell my OH about my own debts I think she will want to divorce me and won't want to move home, as it will mean giving up a nice house).

Life is such a mess. Basically, what I'm here to try and say is that I'm in a really weird situation: I'm 'rich poor', if that makes sense: I earn a lot, but I'm in so much debt on a monthly basis I'm drowning. And I don't know what to do about it.

I just wish life had an exit button where you could get off the treadmill and escape sometimes.

January2015

Hi and welcome

I think you need to look at the whole picture of your debt as a family. That may sway the decision on whether you need some sort of debt management plan or not.

Also, I know you've said you don't feel you have many options to cut back, but it may be worth posting a statement of affairs (SOA) anyway because you may be surprised at what others see you could change in your household budget that you have missed.

Your salary may seem high to some, but not to everyone. We have a higher household income than that and we still got way over our heads in debt and ended up needing a DMP to put us on the right path towards becoming debt free. It may not be for you, but a DMP has definitely been the best financial decision we made in years.... definitely not a hard place for us

National_Debtline

Hi debitoluf


Welcome to the forum. I'm sorry it sounds like you're having a difficult time but you will find lots of help and support on the forum. The first thing to do is complete a statement of affairs (SOA) and post it back on here. You can find the SOA here http://www.stoozing.com/calculator/soa.php and you'll need to click the MSE format button before posting back.


It will give us a good idea of your financial situation and allow us to give some specific advice. One thing to bear in mind is that if you fall too far into arrears some of your creditors are going to call in the whole balance of the debt. Once that happens your debts will certainly not be affordable and you can look at a DMP again.


Susie
@natdebtline

debitoluf

On then, here goes:

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.................... 2

Monthly Income Details
Monthly income after tax................ 3582
Partners monthly income after tax....... 2500
Benefits................................ 0
Other income............................ 0
Total monthly income.................... 6082

Monthly Expense Details
Mortgage................................ 879
Secured/HP loan repayments.............. 333
Rent.................................... 0
Management charge (leasehold property).. 0
Council tax............................. 218
Electricity............................. 50
Gas..................................... 50
Oil..................................... 0
Water rates............................. 50
Telephone (land line)................... 10
Mobile phone............................ 45
TV Licence.............................. 13
Satellite/Cable TV...................... 0
Internet Services....................... 37
Groceries etc. ......................... 320
Clothing................................ 0
Petrol/diesel........................... 110
Road tax................................ 35
Car Insurance........................... 45
Car maintenance (including MOT)......... 0
Car parking............................. 0
Other travel............................ 230.1
Childcare/nursery....................... 340
Other child related expenses............ 100
Medical (prescriptions, dentist etc).... 25
Pet insurance/vet bills................. 53
Buildings insurance..................... 20
Contents insurance...................... 20
Life assurance ......................... 38
Other insurance......................... 0
Presents (birthday, christmas etc)...... 25
Haircuts................................ 0
Entertainment........................... 50
Holiday................................. 0
Emergency fund.......................... 0
Total monthly expenses.................. 3096.1


Assets
Cash.................................... 0
House value (Gross)..................... 565000
Shares and bonds........................ 0
Car(s).................................. 8000
Other assets............................ 0
Total Assets............................ 573000


Secured & HP Debts
Description....................Debt......Monthly...APR
Mortgage...................... 326000...(879)......1.99
Hire Purchase (HP) debt ...... 21000....(333)......0
Total secured & HP debts...... 347000....-.........-

Unsecured Debts
Description....................Debt......Monthly...APR
Barclaycard....................5845......173.......22.69
Capital One....................4329......160.......28.03
Lendable (loan)................6175......293.......31.3
Joint debts....................22000.....800.......0
First Direct (overdt)..........800.......0.........0
Barclays (overdraft)...........1700......50........0
First Direct (loan)............5621......253.......NaN
Total unsecured debts..........46470.....1729......-


Monthly Budget Summary
Total monthly income.................... 6,082
Expenses (including HP & secured debts). 3,096.1
Available for debt repayments........... 2,985.9
Monthly UNsecured debt repayments....... 1,729
Amount left after debt repayments....... 1,256.9

Personal Balance Sheet Summary
Total assets (things you own)........... 573,000
Total HP & Secured debt................. -347,000
Total Unsecured debt.................... -46,470
Net Assets.............................. 179,530

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

The thing is, this doesn't really tell the whole story. My OH runs her own business and her income fluctuates, so sometimes we might have spare money, other times we're £1k short. Some months she doesn't earn anything.

I've been working with a regional and national charity because my relationship is fairly stressed, I think it's fair to say, largely down to money and expectations. Hence why my OH hasn't really had this shared with them.

On a monthly basis I am expected to put £2k into the joint account; we both do. That 'just about' covers our costs. The SOA suggests we have £1.5k spare each month, but we really don't at all. My wife has perhaps £300 - £500, but there will always be 'expected unexpected' items: the car will need a service (£250), our windscreen chipped (£90), our son needs a new bed. The £800 joint debt repayments are taken out of the joint account.

The top-line summary is that our joint costs are around £3800 - £4000 a month. I put in £2k and my OH puts in £2k. That leaves me with £1.5k a month and her with £500 to live on. If she earns less, I need to put more in. When I was out of work, she put more in.

My £1.5k then loses £230 on travel, £879 on debt repayments, £45 on mobile phone and so there isn't much left (and the rest that is left goes on clearing the debt arrears).

I am happy living frugally, but let's just say a large part of this debt problem is caused by an OH who refuses to live within their means. And it's my fault - I've indulged it. But I've been going to counselling to try and work through things and understanding what's happened in our relationship.

The crux of the matter is this. The only way I can see myself getting out of this situation is sell the house. My OH wants to sell the house and move somewhere bigger but is coming to the realisation that we can't actually afford anywhere bigger (and she doesn't realise I'm drowning in debt, remember). I can't keep up with expectations and basically it appears as though I have to choose between my relationship or financial sanity.

In any event, I'm not sure that if we sold the house I would ever be allowed a mortgage anyway, given my credit history.

debitoluf

This might be a more realistic view, as it covers just me. Obviously I've stripped out the joint costs and replaced with £2k which is what I'm required to put into our joint finances each month:

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.................... 2

Monthly Income Details
Monthly income after tax................ 3582
Partners monthly income after tax....... 0
Benefits................................ 0
Other income............................ 0
Total monthly income.................... 3582

Monthly Expense Details
Mortgage................................ 2000
Secured/HP loan repayments.............. 0
Rent.................................... 0
Management charge (leasehold property).. 0
Council tax............................. 0
Electricity............................. 0
Gas..................................... 0
Oil..................................... 0
Water rates............................. 0
Telephone (land line)................... 0
Mobile phone............................ 45
TV Licence.............................. 0
Satellite/Cable TV...................... 0
Internet Services....................... 0
Groceries etc. ......................... 0
Clothing................................ 0
Petrol/diesel........................... 0
Road tax................................ 0
Car Insurance........................... 0
Car maintenance (including MOT)......... 0
Car parking............................. 0
Other travel............................ 230.1
Childcare/nursery....................... 0
Other child related expenses............ 0
Medical (prescriptions, dentist etc).... 0
Pet insurance/vet bills................. 0
Buildings insurance..................... 0
Contents insurance...................... 0
Life assurance ......................... 0
Other insurance......................... 0
Presents (birthday, christmas etc)...... 25
Haircuts................................ 10
Entertainment........................... 50
Holiday................................. 0
Emergency fund.......................... 0
Total monthly expenses.................. 2360.1


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


Secured & HP Debts
Description....................Debt......Monthly...APR
Mortgage...................... 0........(2000).....0
Total secured & HP debts...... 0.........-.........-

Unsecured Debts
Description....................Debt......Monthly...APR
Barclaycard....................5845......173.......22.69
Capital One....................4329......160.......28.03
Lendable (loan)................6175......293.......31.3
First Direct (overdt)..........800.......0.........0
Barclays (overdraft)...........1700......50........0
First Direct (loan)............5621......253.......NaN
Total unsecured debts..........24470.....929.......-


Monthly Budget Summary
Total monthly income.................... 3,582
Expenses (including HP & secured debts). 2,360.1
Available for debt repayments........... 1,221.9
Monthly UNsecured debt repayments....... 929
Amount left after debt repayments....... 292.9

Personal Balance Sheet Summary
Total assets (things you own)........... 0
Total HP & Secured debt................. -0
Total Unsecured debt.................... -24,470
Net Assets.............................. -24,470

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

Onebrokelady

If your OH is partly responsible for the debts then I dont see why she shouldnt be included in the plan to repay them,maybe if she knew how much trouble you are in she might view the situation differently and start to live within her means,I don!!!8217;t think it!!!8217;s fair that you should shoulder the burden on your own
Some people on here are doing self managed DMPs,Im not sure how they work but maybe it could be an option for you,Im quite new here and have just started a DMP with SC because I was too nervous of going it alone but its defintely an option,hopefully someone will be along to advise you soon

National_Debtline

Hi again debitoluf


I think your first SOA is quite telling. You explain why it is not accurate, whereas actually you should be changing the figures to make it accurate. For example, your partner is self employed and her income varies, sometimes she can't contribute as much as you have shown. I'd recommend getting in touch with Business Debtline about that. They specialise in helping self employed people, including how to budget when their income can fluctuate. You can call them on 0800 197 6026 for advice.


You also mention the car needing a service, but you haven't included anything under car maintenance on your SOA. The idea of the SOA, as much as possible, is to take into account all the things you may need to pay for during the year. This can be one off payments like getting the car serviced, or unexpected costs and emergencies.


You haven't budgeted for clothing, which undoubtedly needs to be in there with 2 children in your household. Your food shopping is also quite low for a family of 4, are you sure you've budgeted a realistic figure you can stick to?


All of these things make a big difference as to whether your debts are going to be affordable, and what options you then have to deal with them. I'd recommend looking over it again. It's rare that selling your house is the only option available to deal with your debts but an accurate SOA must be your starting point.


Susie
@natdebtline