My Statement of Affairs

phil-99

Hi All,

I've been trying to sort out my finances for a while now and I'm getting nowhere fast. I spent about 18months spending more than I earnt through a bizzare series of events and for the last 6 months after I moved in with my patner things have settled down, at least now my outgoings are almost exactly the same as my income!

I've posted my SoA below.

My main request isn't one of how to spend less, because I can only cut out about £15-25/mo and by doing that I would lose my marbles (no mobile? No cinema? eep). It's how to go about writing to my lenders and asking them to freeze the inerest. I'll post a draught letter I've written and see what you all think. I think it's awful but can't think of another way to rewrite it again.

Regular Incomings
Wages £1,204.00

Total Regular Income: £1,204.00

Regular Outgoings
Rent/Bills/Food £600.00 Non-negotiable, includes all joint bills and food
Egg Loan £88.90 Min poss payment
A&L Loan £151.62 Non-flexible
Lloyds TSB C/C £69.00 Variable, min (2.5%) payments
Green Flag £17.17 Non-negotiable
Cineworld £11.99
T-Mobile £13.00

Total Regular Out: £951.68

Other Outgoings
Petrol £200.00 Minimum of 40 miles a day commute=1000 a month, plus 2*60mile round trips every week
Entertainment £30.00
Clothing £20.00

Total Other Out: £250.00

Remaining: £2.32

phil-99

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10 November 2007

Dear Sir,

In a recent review of my financial position I have found that my position is worse than I thought it was. I find myself able to pay all my commitments but nothing else – I have no money to save, no money to put towards large or unexpected expenses and any of these expenses leave me needing to borrow more to cover them.

As such I'd like to review my payments to all my creditors. I am not interested in consolidating or taking out more credit to do this. I'd like at least one of the following courses of action to be taken:

• Interest frozen
• Minimum payments reduced
• Part of the debt written off

My reasons for this request are:

• At my current rate of payment, I will be unable to pay off all my debts for at least 5 years
• Any large expenses (need to travel unexpectedly, car tax and servicing) are currently unaffordable out of my normal account, and get put onto my credit card. If I could reduce my debt repayments I could start saving.
• Any extra money that I receive (pay rise, presents, windfalls) can be used to fund increased payments to my debts.
• Being so close to the line means that I occasionally miscalculate and get charged unauthorised over draught fees by my current account provider. One of these fees can cause repercussions for the next 2 or 3 months while I get things under control again.

I hope you will understand this situation while not out-of-control is a huge burden and my debts could potentially become unserviceable.

Yours faithfully,

Phil xxxxxxxxxx

itsnever2lateisit?

Can you breakdown the £250 'other' down a bit more phil?

I would hold off sending any letters at the mo, as I'm sure some of the 'regs' will be along with some very helpful suggestions, after all you have stopped the rot, and now holding your own, it wont take too much to get you off the top of the debt mountain

thepinklady

I'm always rubbish at giving advice when it comes to outgoings, but just noticed you spend £200 on petrol. That is a BIG chunk of your wages gone. Any chance finding a job closer to home?

Do you own the place you live in at the moment? if not you must be paying a lot for rent if your other half pays the same amount each month as you. Can you get somewhere a little bit smaller and then you could save any spare cash, or throw it at your debts.

Can you list what bills you pay for your home each month, you might be able to get it cheaper!! Just to good to know what your £600 goes on.

CLAPTON

a few points

a. if they reduce payments / freeze interest etc you are aware they will default your debts and your credit records will be trashed for 6 years.
This will make it very difficult to obtain any credit at all (even that much loved mobile contract) or a mortgage at 'normal ' rates for this period.

b. they will want a full SOA (income/expenditure details and debt dertails) and words like 'Not negotiable are not recommended)

c. have you considered increasing your income.. overtime, parttime job etc


d. can you write out a full SOA showing all your spending and the full debt details.. amounts , APRs , minimum m monthly payments.

e. see the stickie above for full SOA details.

dancingfairy

Hi can you split bills/food/ etc down more so we can see what's what. We may be able to save you a bit of money you never know I also think cineworld 11.99 a month plus 30 a month socialising is quite a lot - can you think of cheaper ways of socialising at all?

I think your tone is coming across as quite harsh - non negotiable etc. It does sound a bit like if people go to the effort of suggesting things you would not be willing to listen - perhaps you could change it to essential item - any suggestions on how I could do this cheaper? Once people have had a chance to have a proper look over you soa - once you have broken things down a bit more you may not need to write a letter to your creditors.
Also can your partner not contribute more to your bills for a while?

chevalier

Really sorry to say this, but I rather think that your lenders are not going to care that you can't save, that you don't have an emergency fund etc. That is your problem to deal with.

Lets have a look now
Why is the mortgage/bills money non negotiable? Does this mean that you are never going to look for better suppliers of utilities, change your mobile provider to get a better tariff, cut down on the amount of food you waste, so save on your shopping bill.

You need to sit down with your partner, and explain that you need to see if all of the household bills are with the cheapest providers because you have very little spare money to pay extra off the debts, so want to make sure that all of your money is working as hard as possible. Explain that you need them on board with you about this, because things like food shopping and cutting this down, maybe changing how you prepare food, and what brands you buy will affect them too. I am sure if you show them the income and expenditure you have done for us, they will be sympathetic. They may no be aware just how close the difference is between income and outgoings.

There are also other things that you could be doing like asking to have council tax paid over 12 months not 10 which would help both of you.

Rather than the cineworld pass, how about cancelling that and then
1) getting a free orange sim, and then do two for 1 wednesdays
2) sign up to free dvd subscription via cash back sites like quidco etc, and see a films that way.

Guess what you CAN live without buying clothes each month. Even £20 will be a good boost off your debts each month. Have a look at www.whatsthecost.com and play around with the snow ball calculator. Input the debts and apr's you have now to see how much interest you will pay and what your debt free date is. Then see what a differenct putting that £20 from clothes does to the calculation, and then the cineworld subs, etc.

Sorry if this comes across as a bit harsh, but there is still money you could claw back, if you take control of your spending and negotiate with your OH.

chev

dancingfairy

chev's idea of orange 2 for 1 is a good plan and I'm sure if you sit down and have a think you can get socialising down a bit more - hire a dvd and invite friends over/cook a meal/ watch a match on t.v/ buy booze from supermarket and have at home/ go for walks/ get into competitions -see how much stuff you can win and then enjoy or sell on ebay etc. Take up a cheap hobbey like web development, hire books/cds from the library etc.

phil-99

Firstly thanks for all the comments, harsh or not. I do appreciate them.

I don't have regular uninterrupted internet access so apologies for the length of time getting back. I didn't break down the joint costs because we've discussed it and it is the lowest we can manage on at the moment. I haven't asked my partner about reducing my payments - I'd rather not - but it may be the best option to start with.

£30/mo socialising is tbh a bit of an estimate. As is £20 clothing, this is more of an average over the course of a year. £240/year on clothes doesn't sound like a huge or unreasonable spend.

The 2-4-1 Orange Weds thingie, good idea. Will investigate.

We rent a house, unfortunately Chester isn't exactly the cheapest part of the world to live in, but it was a necessary move for myself and partner's work. However she's just been offered a new job somewhere cheaper so fingers crossed we can move and start saving on rent

Petrol costs are darned high, I accept that, but it's a consequence of my employers moving 30 miles from where I started. I am actively looking for alternatives.

If I manage some time on the PC later I'll post a full SoA. I wasn't aware that by entering into an agreement with lenders they would still show as defaults. I thought that was the whole point of making an agreement! If that's the case, one might ask why bother making the effort of asking? (I'm not that daft really)

tyllwyd

I must admit that when I read your letter (trying to imagine myself as the person who would open it), I thought

phil-99 wrote: »

... I find myself able to pay all my commitments ...

Oh, that's OK then.

...I have no money to save, no money to put towards large or unexpected expenses and any of these expenses leave me needing to borrow more to cover them.

How is that my problem?

...I'd like at least one of the following courses of action to be taken:

• Interest frozen
• Minimum payments reduced
• Part of the debt written off

Yes, I bet a lot of people would like the same thing.

• At my current rate of payment, I will be unable to pay off all my debts for at least 5 years

So what? That's five years where we can be charging you interest.

I hope you will understand this situation while not out-of-control is a huge burden and my debts could potentially become unserviceable.

But they aren't unserviceable at the moment so why should I worry?

I'm sorry if my comments look a bit harsh, but people at these companies must hear hard luck stories every day, and I'm sure they must be a bit cynical about it all. You are writing to beg a huge favour from commercial companies that make lots of money from lending to people and charging interest and the tone of your letter comes across as a bit demanding - if it was me writing the letter I'd try to sound a lot more humble and try to come up with a better reason for helping you out rather than just that you are a bit short of cash.