Help needed - no judgement please

warby68

My suggestion is not debt specific but that you should try and get control of the panic and take some time to think things through and 'reposition' yourselves for the longer term BEFORE committing to a DMP or similar.

Your post reads as if you've only just allowed yourself to look at the total extent of your debt and your commitments and its fairly obvious that you've been living beyond means for quite a while. Not only that but even without any debt your spends would be on the high side with lots of luxuries. I guess your high rates of interest suggest you haven't been 'prime' customers for a while too.

I'd review all your bills, reconsider the car and bike situation and prune a fair few of the luxuries and also run a spending diary and make sure you are accounting for everything.

And possibly most painful of all, examine what has caused you to get into this position and make sure you're fully ready to change.

I'm not saying AVOID dealing with the debts for very long but just take some time to get into the best position you can as this won't be a quick fix. You'll be in it for the long haul.

I DO think you need a debt remedy, if only to get out from under those penal rates and make some progress with repayment but you have to be ready for the long term trashed credit and careful budgeting.

SuzyN

Just want to thank you all so much.

I have just added it up over the last few days. Something seems to have hit me mentally over the last few days and has given me the power to face it.

How did I get here? Well living outside my means clearly! For a while I have £1200 childcare per month and my husband and I both have highly stressful jobs and we were also paying high school fees. I!!!8217;ve addressed that a few years ago and basically have just been using my credit cards when we run out of cash. Out of control.

We have and do lead a nice life. I grew up not at all any way well off and I swore my children wouldn!!!8217;t do the same and they haven!!!8217;t but now I must repair the damage I!!!8217;ve done. My fault.

BUT I feel able to tackle it at present. I!!!8217;ve spent hours and hours reading the dmp thread. I think it is the way for me to go eventually however I want to have some affairs in order before I progress to that. If I could freeze my card interest it would help massively. It!!!8217;s the reality that I can!!!8217;t afford to pay any more yet I!!!8217;m only making min payments and will end up doing so for years and years to come if I don!!!8217;t do something.

My house is in negative equity. I!!!8217;ve lost every penny I put into it - £220,000 in 2007 and now worth £95,000 BUT we have somewhere to live and I!!!8217;m able to make my essential payments.

Things could be worse. So I!!!8217;m going to be positive and sort it out. I!!!8217;d love to consolidate but it!!!8217;s not going to happen. My credit record is already trashed so I!!!8217;ve nothing to loose really.

Lots more research to come and I plan to contact StepChange on Monday for advice.

Once again - thanks all

zippygeorgeandben

and remember, you didn't rack this debt up on your own. Is the other half on board/aware of this?!
Two heads are always better than one! Good luck.

chunkytfg

Avoiding all the main points can I mention the Motorbike? Is it a scooter or a proper motorbike?

Your Husband uses it for summer month commuting. I get that, riding a bike in the summer is lovely but generally the running costs are probably not as low as you think.

Think about how much the car you're paying for costs to do 6,000 miles vs the cost saving of 6k in a car which you have to keep paying for anyway.

The additional cost to doing the miles in the car is 1/2 a service barely any tyre wear and the fuel. Insurance, Tax and the loan you have to pay anyway.

The motorbike will have a more than likely a 4-6k service interval, you'll need a new rear tyre at the least, maybe even a front as they will square off and you'll have worn the chain and sprockets about 50% plus of course you have to pay additional tax and insurance. They may use a bit less fuel but probably not enough to really make a huge difference.

Assuming 30mpg in the car and 50mpg on the bike the difference in fuel costs are £1150 for the car and £690 for the bike. £360 wont cover the cost of a service and pair of tyres let alone chain and sprocket, insurance, tax etc!

They really are great if you have a busy town commute but in the grand scheme of things they really are not as good as people think!

Kitten868

Just wanted to give my two penny's as no one else seems to have mentioned it yet. Can you get a better mortgage deal? I appreciate your LTV is against you but 4.74% is so high in today's market and could save you a lot of money. If you stay with the same lender they shouldn't credit score you. Most lenders are doing about 2%. You can call your lender to ask about the rate change. I appreciate you may have already tried this but just in case.

I'm also going to recommend a DMP (after the rate change of course). I don't know if you want to look at building up your emergency fund first or go ahead straight away. You can plug in all the info online or speak to a real human on the phone. Whatever you feel will help you best. Some people recommend saying you smoke to give you some slack in the budget.

You can do this and getting all the debt on 0% will make the difference as your debt will be going down all the time. Good luck. Maybe do a diary on the diary part of the forum?

undetterred

2007 house worth £220k,now £95k is that right?

enthusiasticsaver

If your mortgage is in negative equity this presumably is why your mortgage rate is so high. Was it originally Northern Rock?

I think you are between a rock and a hard place at this stage as presumably your credit rating is shot so no 0% deals available and of course you would fail on affordability grounds anyway. Contacting stepchange is the best way forward and I am pretty sure they will recommend a DMP. You can go bankrupt as there is no house equity to protect but you have 2 fairly pricey cars which would have to go so I think a DMP is a good solution. Hopefully interest will be frozen. You can stop relying on credit to live and set an affordable debt repayment.

You will need a basic bank account not connected with any of your creditors and I would suggest you default asap and start saving an emergency fund as you will not have access to any credit. The earlier the defaults start the sooner they drop off your file in 6 years time.

System

SuzyN wrote: »

The other insurance is my husbands morotbike insurance which he uses to try and keep petrol costs down for commuting in the dryer months.

But it doesn't achieve that because the cost of taxing, insuring, MOTing, repairing and servicing the motorbike massively outweigh the money you save on the fuel. I do 17,000 miles a year and own two cars, one does 37MPG and one does 55MPG. If I do the entire 17,000 miles in the least economical of the two the difference between doing it entirely in the most economical is £800. And that is almost a 20MPG difference over 17,000 miles.

In addition to other posts may I suggest going through absolutely everything you have in your house, clothes, jewellery, toys, electronic devices etc, finding anything you no longer use or haven't used for ages and sell them on Facebook and Ebay? That should generate some cash to pay off in full some of the smaller balanced credit cards which then frees up money to go towards paying the larger ones. Sell the motorbike and that'll pay off a few cards.

chunkytfg

Tarambor Has a point.

If you could sell the bike and maybe a few other bits to raise say a £1200. That clears both Phone debts, Overdraft 2, Capital1 and Halfords.

You're then £150 a month better off in minimum payments and add to that the cost of the Bike being removed and you then stand more of a chance of getting on top of the debts.

Also does your significant other know about the state of play? Always best to deal with it together!

LOVEHB

SuzyN wrote: »

Just want to thank you all so much.

I have just added it up over the last few days. Something seems to have hit me mentally over the last few days and has given me the power to face it.

How did I get here? Well living outside my means clearly! For a while I have £1200 childcare per month and my husband and I both have highly stressful jobs and we were also paying high school fees. I!!!8217;ve addressed that a few years ago and basically have just been using my credit cards when we run out of cash. Out of control.

We have and do lead a nice life. I grew up not at all any way well off and I swore my children wouldn!!!8217;t do the same and they haven!!!8217;t but now I must repair the damage I!!!8217;ve done. My fault.

BUT I feel able to tackle it at present. I!!!8217;ve spent hours and hours reading the dmp thread. I think it is the way for me to go eventually however I want to have some affairs in order before I progress to that. If I could freeze my card interest it would help massively. It!!!8217;s the reality that I can!!!8217;t afford to pay any more yet I!!!8217;m only making min payments and will end up doing so for years and years to come if I don!!!8217;t do something.

My house is in negative equity. I!!!8217;ve lost every penny I put into it - £220,000 in 2007 and now worth £95,000 BUT we have somewhere to live and I!!!8217;m able to make my essential payments.

Things could be worse. So I!!!8217;m going to be positive and sort it out. I!!!8217;d love to consolidate but it!!!8217;s not going to happen. My credit record is already trashed so I!!!8217;ve nothing to loose really.

Lots more research to come and I plan to contact StepChange on Monday for advice.

Once again - thanks all

Pleased to hear you are feeling motivated to change! Starting a DMP was the best thing I ever did, now the interest is frozen I can actually pay it off. It is a little daunting at first but I have to say all the creditors were very good about it, I dont know if I am lucky in this case or not but I wish you all the luck - its amazing how much better you will feel once its all organised!