Advice to sort out my debts please?

tyrrellracer

Hi,

Please can I have some sage advice?

Hi,

I am 38 with a good job earning around 30k a year. I have around £42k worth of personal, unsecured debt, and an additional 18k owing to my mum.
I am struggling to make payments, using credit to pay credit. I have no assets (other than a car worth about 2k which I need for my job which is driving based)
I will have about £250 surplus to pay creditors in either an IVA or IPA.
My main issue is I need to pay my mum back regulary so an IVA seems the only option where I can do that. I owe her about 16k and the IVA budget shet suggests around £100 a month might be accepted for that debt level.
Also, I would have occasional overtime which seems like it might relieve the pressure a bit, whereas in an IPA from BR, all this would be swallowed..
However, my job isn’t 100% secure and if the IVA fails then...

Any thoughts? Just thought I may have missed something here.

Thanks

I've heard about IVA but i think BR is a better option. Although I do like the idea of keeping 50% of my pay rises and overtime!

Statement of Affairs and Personal Balance Sheet

Household Information
Number of adults in household........... 1
Number of children in household......... 0
Number of cars owned.................... 1

Monthly Income Details
Monthly income after tax................ 2000
Partners monthly income after tax....... 0
Benefits................................ 0
Other income............................ 0
Total monthly income.................... 2000

Monthly Expense Details
Mortgage................................ 0
Secured/HP loan repayments.............. 0
Rent.................................... 675
Management charge (leasehold property).. 0
Council tax............................. 80
Electricity............................. 40
Gas..................................... 40
Oil..................................... 0
Water rates............................. 30
Telephone (land line)................... 0
Mobile phone............................ 30
TV Licence.............................. 12
Satellite/Cable TV...................... 0
Internet Services....................... 30
Groceries etc. ......................... 260
Clothing................................ 15
Petrol/diesel........................... 200
Road tax................................ 4
Car Insurance........................... 60
Car maintenance (including MOT)......... 50
Car parking............................. 5
Other travel............................ 5
Childcare/nursery....................... 0
Other child related expenses............ 0
Medical (prescriptions, dentist etc).... 25
Pet insurance/vet bills................. 0
Buildings insurance..................... 0
Contents insurance...................... 16
Life assurance ......................... 0
Other insurance......................... 0
Presents (birthday, christmas etc)...... 10
Haircuts................................ 15
Entertainment........................... 50
Holiday................................. 0
Emergency fund.......................... 20
Total monthly expenses.................. 1672


Assets
Cash.................................... 0
House value (Gross)..................... 0
Shares and bonds........................ 0
Car(s).................................. 3000
Other assets............................ 0
Total Assets............................ 3000

No Secured nor Hire Purchase Debts

Unsecured Debts
Description....................Debt......Monthly...APR
Credit Card 1..................3700......111.......19
Credit Card 2..................3000......90........19
Credit Card 3..................5600......168.......19
Family debt 1..................18000.....100.......0
Overdraft 2....................200.......5.........17
Overdraft 1....................3000......10........19
Loan 1.........................28000.....492.......11
Total unsecured debts..........61500.....976.......-


Monthly Budget Summary
Total monthly income.................... 2,000
Expenses (including HP & secured debts). 1,672
Available for debt repayments........... 328
Monthly UNsecured debt repayments....... 976
Amount short for making debt repayments. -648

Personal Balance Sheet Summary
Total assets (things you own)........... 3,000
Total HP & Secured debt................. -0
Total Unsecured debt.................... -61,500
Net Assets.............................. -58,500

Sharon87

Well the things that stick out most to me is your grocery budget. £260 for just you is extremely high. I live by myself and spend on average £160 a month, including lots of nice food!

Also your gas and electric are very high (especially electric), do a comparison to see if you can reduce it. And also do a comparison for your contents and car insurance and maintenance, they seem quite high. £50 a month on car maintenance seems extremely high.

Have you got any cards you can do a 0% deal on? The interest rate is what is killing you. Or if you can't get any deals, a DMP might be in order to freeze your interest rates otherwise you debt will spiral even more out of control.

theoretica

How large a property are you renting? Do you have a spare bedroom?

enthusiasticsaver

The groceries figure is way too high for one person. Where do you shop and have you downbranded? Try Lidl's or Aldi's.

The debt is huge considering you have no assets as such. Do you know how it got that high?

Pixie5740

You can cut back on groceries and get rid of your satellite television which could potentially free up £130 a month. Add that to the amount you already have available for your debt payments (£328) gives you £458 to pay towards your debts each month. With interest accruing each month then you'd really need to go down the DMP route and ask your creditors to freeze the interest but it would take you over 11 years to complete.

I plugged your SOA into the Step Change debt remedy tool and for both an IVA and Bankruptcy Step Change appear to have ring fenced the loan from your mother. I thought family debts got swept up during insolvency, you learn something new every day. Step Changes recommends an IVA but since your not a home owner and don't have any assets in your shoes I would probably go the nuclear option and declare myself bankrupt.

BookmobileBadGirl

Have you stopped overspending and are now on a budget?

- could you transfer any of these debts onto a 0% interest car
- would your mum be willing to give you a break from repayments for six months/year to give you a chance to try and sort yourself out?

MEM62

That level of debt is huge compared to your income. You really need to understand how you got there and make the necessary life changes to ensure that you do not repeat the experience. Otherwise any solution is only temporary and you will end up back at square one.

I appreciate that hindsight is always 20/20 but you were in trouble at the point you first starting borrowing to pay bills and service other debts. From that point on your debt would be spiralling.

I think bankruptcy will offer you the quickest and cleanest solution for a fresh start. Of course this is complicated by the debt to your mother and, as I understand it, you cannot treat her more favourably than your other creditors.