£79k non mortgage debt!!!!

MrsExhausted

Dear all,

I think I'm at my wit's end and desperately need a fresh pair of eyes.

Having lost a job due to illness and OH had to quit to look after me, I'm now on the mend and working freelance. He has been job hunting for a few months now. Due to our sudden drop in income 2 years ago, we got into a foolish debt spiral having refused to notice that we were no longer higher rate taxpayers and it's now gotten on top of us.

We have a £162k mortgage on a help-to-buy house worth between £390k and £405k . The govt owns 20% of the equity and do not allow for any additional borrowing. We do not earn enough to remortgage. We live where we do because our son is in 'voluntary care' with the local authority and his care package costs about £200k per year. It's very severe and we spent about £50k in legal and professional costs to get this through a tribunal. We cannot move and start this battle all over again as getting this package pretty much broke us in the first place. I think the house or part of it may be in some sort of disabled trust as part of our wills

I was about to explore getting an IVA when I was informed by the school where I volunteer as a governor told me it would make things worse. I make a little bit from doing some accounting and bookkeeping work and have been in talks with one of the clients about doing more general consulting work on their behalf for the next 9 months.
I think there may be another option but I just can't think straight. I have posted our figures below. Business expenses have not been included because the business which is a separate limited company pays for those. Will be grateful for further advice.



Statement of Affairs and Personal Balance Sheet

Household Information
Number of adults in household........... 2
Number of children in household......... 2
Number of cars owned.................... 2

Monthly Income Details
Monthly income after tax................ 610
Partners monthly income after tax....... 0
Benefits................................ 1559.2
Other income............................ 205
Total monthly income.................... 2374.2

Monthly Expense Details
Mortgage................................ 740
Secured/HP loan repayments.............. 80
Rent.................................... 0
Management charge (leasehold property).. 25
Council tax............................. 185
Electricity............................. 122
Gas..................................... 0
Oil..................................... 0
Water rates............................. 50
Telephone (land line)................... 25
Mobile phone............................ 80
TV Licence.............................. 13
Satellite/Cable TV...................... 10
Internet Services....................... 30
Groceries etc. ......................... 300
Clothing................................ 100
Petrol/diesel........................... 50
Road tax................................ 25
Car Insurance........................... 20
Car maintenance (including MOT)......... 50
Car parking............................. 0
Other travel............................ 50
Childcare/nursery....................... 0
Other child related expenses............ 75
Medical (prescriptions, dentist etc).... 0
Pet insurance/vet bills................. 0
Buildings insurance..................... 20
Contents insurance...................... 15
Life assurance ......................... 0
Other insurance......................... 0
Presents (birthday, christmas etc)...... 100
Haircuts................................ 35
Entertainment........................... 0
Holiday................................. 0
Emergency fund.......................... 20
account fees............................ 50
Total monthly expenses.................. 2270


Assets
Cash.................................... 500
House value (Gross)..................... 390000
Shares and bonds........................ 750
Car(s).................................. 10000
Other assets............................ 0
Total Assets............................ 401250


Secured & HP Debts
Description....................Debt......Monthly...APR
Mortgage...................... 162000...(740)......1.99
Secured Debt.................. 80000....(80).......2.3
Total secured & HP debts...... 242000....-.........-

Unsecured Debts
Description....................Debt......Monthly...APR
tesco..........................35000.....631.......7.1
mbna...........................9975......203.......4.9
OH debts.......................35000.....650.......7.9
Total unsecured debts..........79975.....1484......-


Monthly Budget Summary
Total monthly income.................... 2,374.2
Expenses (including HP & secured debts). 2,270
Available for debt repayments........... 104.2
Monthly UNsecured debt repayments....... 1,484
Amount short for making debt repayments. -1,379.8

Personal Balance Sheet Summary
Total assets (things you own)........... 401,250
Total HP & Secured debt................. -242,000
Total Unsecured debt.................... -79,975
Net Assets.............................. 79,275

sourcrates

Hi,

£1300 a month is a massive shortfall, how are you currently funding this ?

You cannot access any debt solution unless you have disposable income, and you have non.

MrsExhausted

We make payments to the credit cards then spend most of it on groceries. Also, my credit card isn't maxed out yet. I have 1 other card with £5k and the business has a £25k costco amex currently used as a charge card, between balance transfers and paying in the grocery monies, we used to tell ourselves that we were servicing the debts. I tried an app called money dashboard and was shocked to see how much the debts had grown. Moving money around and forgetting about it only made things worse. We decided to stop the cycle and OH will be defaulting next cycle as a result. I'm not far behind

MrsExhausted

sourcrates wrote: »

Hi,

£1300 a month is a massive shortfall, how are you currently funding this ?

You cannot access any debt solution unless you have disposable income, and you have non.

so we're pretty much screwed with no way out?

enthusiasticsaver

You need to stop the cycle which means defaulting. Bankruptcy is not an option as you have house equity and an expensive car. I suggest you speak to stepchange and see what they suggest. Clothing and presents could be reduced which would leave you a small surplus for a DMP. What are the account fees for?

Ethel_and_Ernest

Hiya!

According to some guy called Martin Lewis, there is a solution to every debt situation!

Have you been in touch with Stepchange for advice? That first call is scary but they are really helpful.

If you stop paying your unsecured debts, you'd be pretty much breaking even (give or take £100). I know token payment plans are often recommended as a short term solution while you figure out what to do next.

You're not alone though. Good Luck!!

Ethel x

Pixie5740

What's the £80k secured debt? Is that the equity loan?

sourcrates

MrsExhausted wrote: »

so we're pretty much screwed with no way out?

Not necessarily, no, without the debt repayments you would have a small surplus, more careful budgeting could increase that amount, most people in your situation opt for an informal debt management plan, whereby you agree to spread your available disposable income amongst your creditors, even if each one only receives say £1 a month.

In return they agree to stop all interest and charges (hopefully) this then allows you to chip away at the debt, and as things improve, pay off accounts as and when circumstances allow.

The cycle of borrowing must end though, otherwise the decision may be taken out of your hands.

MrsExhausted

The £80k is the equity loan and since it's now over 5 years, we pay a monthly admin fee.

OH called a charity (not sure which) and they recommended an IVA but I'm not sure it's an option for the line of work I'm picking up so we're looking to alternatives. I think we will call Stepchange and ask for a DMP.

Pixie5740

MrsExhausted wrote: »

The £80k is the equity loan and since it's now over 5 years, we pay a monthly admin fee.

OH called a charity (not sure which) and they recommended an IVA but I'm not sure it's an option for the line of work I'm picking up so we're looking to alternatives. I think we will call Stepchange and ask for a DMP.

Since your self employed and struggling with debt Step Change will direct you towards Business Debtline. You don't need a debt charity to start a DMP though, you can write to your creditors yourself.

BookmobileBadGirl

Your OH needs to get a job, any job, NOW

Even if he just got a job working full time for minimum wage that would be almost enough to service all your debts, so if he got one that pays more than NMW you are sorted.

Your water bill looks high to me, maybe one to submit a meter reading for.

Do you really need two cars? Sell one and you might be able to clear on of OH debts, or make a good chunk towards your MBNA one