46k debt help

anfieldred

cdow78 wrote: »

As title

My family debt is at 46k the reasons for this was a massive family crisis 2 years ago and recently dealing with finding out my youngest son is autistic, we let things slip my partner was off work with depression etc and things have just got out of hand

Now when we were in the crisis we moved house pushed all bad debt onto 0% credit cards etc we was in a good place, now that isn't the case..

We owe around 46K to 13 providers and the monthly bill for all these is a £1400 per month, up until recently we have managed to pay these payments but sadly a few have now fell behind by a few months meaning our credit rating have fell.

My current mortgage sits a 160k on a property worth 225k
current mortage lender will not lend higher than 75%

We have not had a family holiday for 2 years we currently have cut all out goings to minimum and have spare per month approx £600 which pays for food fuel etc i know that might seem a lot but we have 3 children to look after and it does not last normally having to borrow of parents

mortgage is at £730
debt at £1400
bills at £550

our income is £3300 monthly

The debt is killing us and if im honest getting just too much my options as i see them are as followed..

IVA/DMP but im worried that i will just be in the same situation ie no holidays or even a night out that all my money will just be tied up again, hope that dont sound off just we cant save money for if the boiler breaks or car fails MOT etc and id like to have some cash if you know what i mean.

Second charge on my property.... yes yes i know but even google searching the likes of ocean finance brings back results of £570 a month for 7 years, almost freeing up £1000 and that means we live very comfortably and hopefully after a few years possible get that tied into a better mortgage once credit rating improves?

The way i see it is i owe money and earn money while the second charge isnt great thing to do it potentially gives me more free income than any DMP could or is this theory wrong? would any plan give me free money of £400 per month?

also on a side note my son is autistic and currently we haven't claimed any DLA for him currently filling out form would this need to be included in a IVA/DMP?

Any advise please

Can you switch lenders? are you coming to the end of a fixed term? if not check out the early repayment fees. If you're genuinely considering this, it will be a lot cheaper than a secured loan.

Appreciate it's not the best/ideal scenario - definitely take on what Sourcrates etc. are saying above! I'm only going off personal experience, as I was in a similar position

anna_1977

as others have said consolidation is a BAD idea (speaking from experience).

You keep mentioning a holiday, that is a luxury. I would focus on putting may £20 a month aside a having a couple of family days out instead. I totally understand it's hard not getting a holiday but you will still get paid leave from work so take time with the family doing days out, trips etc.....

Gemsy81

It doesn't sound like you can afford a holiday......believe me, I've been there and still gone on the holiday. But this year we are going camping for 5 days and spending £200 instead of the £4000 we spent last year that we couldn't afford.

I'm not talking about your debt repayment costs, I am talking about your day to day living costs. The fact you are in debt shows that then (and possibly still now), you lived beyond your means and/or where not prepared for when things went wrong. Again, that is not said in a judgemental way - I speak from bitter experience. One of my priorities now is to build up an emergency fund for my family, as everyone should do.

Agree 1000% with the others, you need to stop borrowing right now. A DMP will get the interest frozen on your repayments. You already have your house and your mortgage so you don't need to worry about your credit rating, but you do need to worry about keeping a roof over your family's heads.

fatbelly

Pixie5740 wrote: »

What happens if your partner is off work again with depression? Where would the money to pay the mortgage and the secured loan come from?

You're right, Pixie. In fact you could add a 5 to your previous list

5) The safety net for mortgage arrears is not as generous as it used to be (Support for Mortgage Interest). Nevertheless it still exists, as long as the mortgage covered was used to buy the property. However, secured lending for debt consolidation is not part of the SMI scheme.

kazwookie

I don't thinkyou fully know where your money is going, or the rates % you have to pay on these debts.
You mention holidays, until you know where the moeny is gonig in the first please IMO you really cannot consider a holiday. Have free days out and stay at home.

sambaird

Hi,

I'm a long time lurker, but your thread touched a nerve as I have been in exactly in the same situation as yourself.

You're thinking as I did - if I consolidate all of my debts into one loan and because that one monthly payment that is lower than what I'm paying at the moment for all of my debts, then yes... I'll be saving money... there will be more cash freed up to put aside and save for emergency's or a holiday. You'll think once I get that consolidation loan, I'll pay off and cancel all my credit cards.

Except you won't... you'll pay off and cancel them all apart from one (with the highest credit limit) - "for emergency's only" you'll say.

And you'll be fine for a few months... you'll enjoy having a bit of breathing room. But then something will happen or you'll see something new and think... well one purchase on the credit card can't hurt.
And before you know it, that card will be maxed. The cash that you freed up by consolidating will now go to make the minimum payments of your "emergency" card. Again... you'll get by for another few months, but then get fed up of scraping by... and then you'll apply for a new card, and another and another, until you are pretty much in the same situation you are now. Except it's worse as you have a massive secured loan you can't afford to pay back.

That's exactly what happened to me.

Consolidation can work, but only if you have total control over your budget and have the willpower to see it through - ie... not take on more debt during the life of the loan. But not to sound harsh... if you did have that level of willpower you wouldn't be in the situation you are in at the moment where you are borrowing and adding more to your overall debt each month to get by.

Hope this helps - its really good that you are asking for help now rather than after... trust me, I wish I had.

Lydia42

Hi
As others have said, definitely post a SOA to begin with. We too have stupidly consolidated a number of times, onto our mortgage. We have been in our current house since 2005. Our original mortgage was for approx £130,000, it currently stands at over £150, 000 after consolidating twice and paying into the mortgage all these years. And we are back to where we started with over £19,000 of debt which will not be added to our mortgage this time. It makes me cry to see how much money we have wasted in the time it has taken us to properly have our light bulb moment. Please don't consolidate. I wish we hadn't!

dionysia

look at a secured loan of £29000 searching comes to approx £350 to £450 depending on which lender the max I’d be paying would be £780 per month

I totally get why this is a source of hope to you (been there! Although not with a secured loan) but you don't actually know what you'll get until you apply. I think the advertised rates have to go to something like 51% of customers... that leaves an awful lot who get much higher interest. With debt of £46k over 13 creditors I think you might find it hard to be offered a rate that would reduce your monthly payment as much as you want.

middleclassbutpoor

Consolidation is a bad idea.

As others have said, you clearly don't have your spending under control as you have got to this stage and the only thing that has given you a wake up call is that you can no longer afford the debt.

If you free up affordability, the temptation will be there to eat into this again and the problem just gets worse.

Some times the easiest solution isn't the best or right one.

January2015

Please, please do not consolidate. I (and many others on here) have been there, done that, got more secured debt and still not learnt our lesson and run up more unsecured debt.

You have done better than I did because you found this forum and asked the question before consolidating. Please listen to everyones advice and post your SOA.

You 'think' you know where your money goes, but in reality you have lived off credit and spent beyond your means to build up your debt. That's not said to be horrible. I definitely did that and it took a huge step for me to recognise that although I kept spreadsheets and 'managed' my money, I wasn't actually living within my means and dealing with my debt problem.

Welcome to our forum and good luck with your journey to clear your debts