Serious Debt Help/Advice Please!

p1tst0p_2

..........

Determined

p1tst0p wrote: »

Hi Everyone,

It has come to the crunch and due to various reasons myself and my Husband need to address the serious debt problem we have and don’t really know what route to take.

A little background info on us. I am unemployed, I look after our son at home, study part time and am also pregnant with our 2nd child, due after Xmas. I was also made redundant in the spring (but I will go back to work once our 2nd baby is old enough). My husband is a self employed IT contractor and makes very good money but the debt is so much that even this cant help us. We have totally screwed up with the purchase of a new car (my husbands car), which has worsened the situation, plus the engine blew up on the car we were due to sell leaving us with a 5k bill. Also, the bank took thousands from our account to pay a credit card off (as agreed with husband, but he misunderstood this requirement for a new loan to be issued). Due to all these things we had to borrow some money from the tax savings of the business thinking we could make up the deficit in the next few months. It is now clear that we can’t do this.

Debts owed (approximations): - I know the guys on here will ask for APRs
£2500 (£487 per month) Remainder of a car loan, the same car that had the engine blow up, the car had to be sold for less than the loan amount owed
£3400 (£110 min payment) Credit Card
£7500 (£150 min payment) Credit Card
£7600 (£150 min payment) Credit Card
£6500 (£200 min payment) Credit Card
£8600 (£180 min payment) Credit Card
£1200 (£27 min payment) Credit Card
£3500 (£120 min payment) Credit Card
£23000 (£258 monthly payment) loan from previous mortgaged home which was in negative equity, so this is an unsecured loan resulting from us not being able to pay of the full amount owed.
£14500 tax deficit which would be due next spring (basically the first 3/4 of the tax owed for the year, up until year end tax money will continue to be saved each month as usual going forwards)

Other Outgoings:
Rent: £1350 (we are looking to make this cheaper when the lease is up in Jan) - wow v, v high - I'm sure you can get a far cheaper place in Jan
Car 1: £350 (PCP)
Car 2: £501 (bank loan)
Elec/Gas: £75
Council Tax: £224 - again v high - the advice I've been reading is to see if you can pay this over 12 months instead of 10
Phone: £27.50
Mobiles: £64 (can be reduced somewhat after my contract ends in Feb)
Sky: £63 (again can be reduced) - can you get ride of this altogether?
HP Agreement on Sofa £45
Car Insurance £110 - again v high. Is this for 2 of you?
Storage Costs £100 - are you storing essentials? perhaps it's your furniture and you're now in furnished accomodation? when you look to rent again look unfurnished this would sve on storage and also unfurnished is always cheaper.
Contents Insurance £14
Pet Insurance £12
Life Insurance £20
Savings Account for Son £10 - sounds bad I know but I would stop this till you get back in control
University Fees £73
Childminder £280
Tax Credits £55 (we were overpaid tax credits, so are paying the extra back over a year) - will they accept less payments since it was their mistake in teh first place?


TOTAL DEBT MIN PAYMENTS: £1700
PLUS TOTAL OUTGOINGS: £3373
TOTAL DEBT: £64k
TAX DEBT: £14.5k


Our income is hard to put a figure on because it changes every month depending on how many days are worked in the month. I would say it averages out between £5-£6k which I know sounds alot, but we have so much going out that what is left is needed for general expenses such as food/petrol. For alot of months we have less income coming in than going out because of the way the pay month has fell, so we are going into an overdraft again and again. Also, we have zero means to get the money together to pay the deficit in tax in the New Year with the current situation.


Any advice or experience of this type of situation would be appreciated. We have looked in IVA’s etc, but I’m not sure where we would stand being self employed with no assets as such (car loan owed is only a little less than car value). Also, not sure how doing something like this could address the tax problem.


Thanks for reading if you made it this far.

Hi there

I've asked a few questions up there. I've only recently faced up to my own situation which isn't to different from yours so you are in good company and there will be other more experienced folks along shortly to help too.

Keep your chin up!
:grouphug:

Determined

p1tst0p wrote: »

Hi Determined,

Thanks for the reply!

In particular order.....

Rent, we are in Hertfordshire, so rent is high due to the area. We we will be looking for something a little cheaper in January. But we need 3 bedrooms and a garage, so I only expect to be able to reduce this by maybe 300 pounds. We will also save the £100 a month on storage once moved as currently we have no where to store everything we own i.e. garden things, loft items (we have no garage or loft at the mo).

Sky, we cant cancel as we are in a contract, but could reduce the package I think.

Savings, yep can cancel for now.

Tax credits, 12 months is the only option they would consider for paying back, plus they accept no responsibility for getting it wrong.

Car Insurance, this is for both cars and is by far the cheapest we have had for a long time, no way to reduce this.

Hey P1tst0p

We live in Cambridgeshire but out rent is £710 permonth unfurnished 3 beds and a garage so have a wee look around and I'm sure you'll find something alot cheaper. Do you have any friends of family nearby with a garage for the time being perhaps they could store your things for you? I know I've done this for friends in the past?

I would ditto albertross on selling the second car and then your insurance would come down too

Larumbelle

Hi Pitstop, and welcome :hello:

Determined, you are really picking up stuff fast!!!:D

You really need to speak to CCCS or national debt line, and fast.

Your tax bill is the big, absolute priority, only second to roof over your head, council tax paid up and utilities. you need to get that money together but I think you need to speak to the professionals about it, see what they say then come back to us and we can help with everything else. The TAX BILL IS FAR MORE IMPORTANT THAN LOAN OR CREDIT CARD DEBT!!!

Hint for cancelling sky: when you move to your new (cheaper) place, you landlord WON'T LET YOU HAVE SKY THERE Not your fault at all, and covenietly the only way to pull out of their 12 month contract

Determined

Let us know how you go P1tst0p!

dsljfreeman

p1tst0p wrote: »

Debts owed (approximations):
£2500 (£487 per month) Remainder of a car loan
£3400 (£110 min payment) Credit Card
£7500 (£150 min payment) Credit Card
£7600 (£150 min payment) Credit Card
£6500 (£200 min payment) Credit Card
£8600 (£180 min payment) Credit Card
£1200 (£27 min payment) Credit Card
£3500 (£120 min payment) Credit Card
£23000 (£258 monthly payment) loan from previous mortgaged home

£63,800 Total Debt
£1682 Minimum Payment


Other Outgoings:
Rent: £1350 (we are looking to make this cheaper when the lease is up in Jan)
Car 1: £350 (PCP)
Car 2: £501 (bank loan) Could your hubby sell his car? My hubby sold his and bought a moped to get back and forward to work
Elec/Gas: £75 Look at www.quidco.com for quotes plus earn cashback
Council Tax: £224 Is this paid over 10 or 12 months?
Phone: £27.50 Ditto quidco
Mobiles: £64 (can be reduced somewhat after my contract ends in Feb)
Sky: £63 (again can be reduced) Definitely reduce for the term of the contract then cancel, I cancelled mine the other week and we will still get all the free channels for nothing, no need to buy extra freeview box
HP Agreement on Sofa £45
Car Insurance £110 Ditto quidco
Storage Costs £100 Is this the cheapest? What do you need storgae for?
Contents Insurance £14 Quidco
Pet Insurance £12 Quidco
Life Insurance £20 Quidco
Savings Account for Son £10 Could you put this on hold for a wee while?
University Fees £73 Is this something that has to be done or could it be put on hold for a year?
Childminder £280 If you stay at home with your son, why do you need a childminder?
Tax Credits £55 (we were overpaid tax credits, so are paying the extra back over a year)

£3373.50 per month
You should also include food shopping and petrol in the outgoings


Total monthly outgoings: £5055.50 not including food shopping and petrol


Our income averages out between £5-£6k How often do you get as much as £6k per month or is the average more nearer the £5k mark, when I work out our budget I always use the basic earned then if we get anymore than that it is extra.

£5000 - £5055.50 = -55.50
£5500 - £5055.50 = 444.50
£6000 - £5055.50 = 944.50
I've only put these sums up as a guideline to what is left over each month iyswim

Also, we have zero means to get the money together to pay the deficit in tax in the New Year with the current situation.
When does this have to be paid by?

quote]


I've just added my thoughts above, so sorry if it's already been covered.

Welcome to MSE, it's a fab place to be, I love it here and have to physically drag myself away xx

Homework

You have a lot of debt, tax is a worry and expecting a new baby. I can't see how you can get your tax money together while paying creditors and living too.

To keep working and this great wage coming in I would start putting money aside for tax even if it stops you making minimum payments for a few months. You must pay the tax.

Reduce your expenditure. Accept that you are a bit behind so downsize for a year, take a 2 bedroom house and park the car outside and reduce your rent and council tax. Stop the childminder and or Uni, put the money towards the debt as you have plenty of time to improve your future career prospects. Reduce Sky and phones and storage if you can. Sell if you have too much stuff you can always buy things again when you have paid everything off.

If this gives you enough money to pay the tax then great, if it doesn't negotiate with the creditors to reduce drastically the monthly payments until the tax is paid. If they won't then contact CCCS/Payplan if you cannot pay the minimum payments.

You have a great wage coming in but with a new baby you don't know when you will be able to return to work and will have 2 childminding fees to pay. If you are able to reduce your creditors through a payment plan and pay your tax it will be much easier for you in the long run. In a short period you will have paid it all off and be free to start over again, bigger house and money to spend and no worries.