My debts are beyond me...

LJW_87

Hi all,

I am struggling to properly support my family after meeting minimum payments on my debts.

I end up adding what I have paid off back on by the end of the month.

I think a DRO might be right for me. No assets, renting, under £20k debt. SOA below.

I will be speaking to one of the debt charities shortly but a friend told me this place was great for answering questions.

One question - my payments are up to date and haven’t been missed once. Should I default prior to applying for a DRO?

The car is owned by my husband.

Would I be better not to declare his income?

Household Information[/b]
Number of adults in household........... 2
Number of children in household......... 4
Number of cars owned.................... 1

Monthly Income Details
Monthly income after tax................ 750
Partners monthly income after tax....... 2650
Benefits................................ 80
Other income............................ 230
Total monthly income.................... 3710

Monthly Expense Details
Mortgage................................ 0
Secured/HP loan repayments.............. 0
Rent.................................... 825
Management charge (leasehold property).. 0
Council tax............................. 140
Electricity............................. 70
Gas..................................... 70
Oil..................................... 0
Water rates............................. 55
Telephone (land line)................... 20
Mobile phone............................ 62
TV Licence.............................. 12
Satellite/Cable TV...................... 40
Internet Services....................... 20
Groceries etc. ......................... 750
Clothing................................ 100
Petrol/diesel........................... 250
Road tax................................ 20
Car Insurance........................... 60
Car maintenance (including MOT)......... 25
Car parking............................. 10
Other travel............................ 0
Childcare/nursery....................... 0
Other child related expenses............ 50
Medical (prescriptions, dentist etc).... 25
Pet insurance/vet bills................. 0
Buildings insurance..................... 0
Contents insurance...................... 15
Life assurance ......................... 0
Other insurance......................... 0
Presents (birthday, christmas etc)...... 50
Haircuts................................ 50
Entertainment........................... 25
Holiday................................. 50
Emergency fund.......................... 50
Husband Mobile Phone.................... 50
Husband Child Support & Spousal......... 850
Total monthly expenses.................. 3744


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
Credit Cards...................8000......200.......0
HMRC...........................2000......80........0
Total unsecured debts..........10000.....280.......-


Monthly Budget Summary
Total monthly income.................... 3,710
Expenses (including HP & secured debts). 3,744
Available for debt repayments........... -34
Monthly UNsecured debt repayments....... 280
Amount short for making debt repayments. -314

Personal Balance Sheet Summary
Total assets (things you own)........... 0
Total HP & Secured debt................. -0
Total Unsecured debt.................... -10,000
Net Assets.............................. -10,000

Thank you all in advance LJW

DorisTrousers

When looking at any debt solution, I personally prefer to look at a full household budget, but it is only personal preference and I understand others may disagree. However, your budget does not look overly unreasonable to me at first glance, though it may need a little "tidying up".

A DRO does look appropriate, but is the HMRC debt joint with your husband?

LJW_87

Hello and thanks for your reply : )

The HMRC debt is from before meeting my husband.

[Deleted User]

You really spend 750 a month on groceries ???


That's a shocking amount unless you are a family of 15.

sourcrates

If applying for a DRO you will have to reduce the food bill somewhat, that said, you can increase other costs to make up for it, make sure you budget for everything you use, add it all up prior to applying, make 100% sure the budget is correct.

You must not have excessive allowances, and you must not have more than £50 left at month end after all other essential payments (not including debts).

Try and find out the allowances they afford you in a DRO beforehand, Fatbelly may be able to help on that score.

silverwhistle

There seems to be a bit of fat in there, and your groceries are very high, as mentioned. But you don't need a TV package, your car insurance seems pretty high and your car mileage is very high. Mobile cost might also be trimmable: I've a reasonable smart phone and a package from giff gaff and reckon on £20 (or less) over a two year period. I even managed that with my previous one which didn't last the two years as it wasn't waterproof enough for a loo visit..


I guess the line for clothing is bumped up by growing kids. Could you save a bit on haircuts by doing a bit yourself?

System

The average family in the UK spends £56 a week on groceries according to the ONS statistics so you shouldn't be spending any more than £100 at the most.

Mobile phone at £62 and £50 a month is ridiculous, I'm paying £19 a month for unlimited calls/texts and 16GB data. If I didn't need as much mobile data I could halve that.

I'm assuming husband's child support is arranged through the CSA or official channels? If so then he needs to update them as he shouldn't be paying anywhere near that much with having a second family unless he has a load of kids. They'll then re-assess the amount he has to pay. To me that seems to be the straw breaking the camel's back. You can calculate what it should be here:

https://www.gov.uk/calculate-your-child-maintenance

sourcrates

On the other hand, if you trimmed your budget down to more realistic levels, and revisit the CSA payment, that would release more funds for paying off the debt, and avoiding insolvency altogether.


Even without the CSA payment, i could find over £500 in savings on that budget easily.

LJW_87

The £850 is a fixed court consent order following his divorce and will not change for several years yet.

The £62 mobile includes 2 sims for the older children. Both mobiles are tied in for another 18 months approx.

We don’t actually spend that amount on groceries and housekeeping but I was advised to set it higher as we both smoke (we are trying to cut down and stop using e-cigs). We probably spend nearer £500-£600 each month on groceries and cleaning etc.

Sky is in contract for 16 months but we intend to get rid once clear.

Unfortunately we have had a drop in income and notice to leave our rented home as the landlord needs to sell. That’s twice in 3 years : (

We will not find a big enough house for the money we pay for this one.

Hence why I am looking to start afresh, not having the debt minimum payments will mean us being able to afford a home in our local rent market.

The SOA was posted to see if it would be acceptable for a DRO according to allowable amount for our family size.

I can then adjust it where nescessary prior to speaking to Stepchange, therefore making the whole process smoother and quicker.

Thanks for all your comments so far x

sourcrates

LJW_87 wrote: »

We dont actually spend that amount on groceries and housekeeping but I was advised to set it higher as we both smoke (we are trying to cut down and stop using e-cigs).

Have to say it, stopping smoking altogether will not only improve yours and your families health, but will improve your finances as well.


20 a week each will give you £80 a month freed up, if you use more than that, the savings just carry on going up.


Usually when a crisis hits, people make a conscious decision to make changes in all areas of their lifestyle, so a real positive change can be a benefit to all.

fatbelly

sourcrates wrote: »

If applying for a DRO you will have to reduce the food bill somewhat, that said, you can increase other costs to make up for it, make sure you budget for everything you use, add it all up prior to applying, make 100% sure the budget is correct.

You must not have excessive allowances, and you must not have more than £50 left at month end after all other essential payments (not including debts).

Try and find out the allowances they afford you in a DRO beforehand, Fatbelly may be able to help on that score.

The DRO application now works on the SFS figures, which of course are a trade secret.

Depending on the ages of the children (I note the op is only getting child benefit for one of them) the food and housekeeping section for 2 adults, 4 kids could easily top £1000 without breaching the guidelines.

As Doris said, it needs a bit of exploration and tweaking but a DRO is not out of the question here.