Mid 20s single mum drowning in debt

rachellouise11

Sorry its a long post. So I have finally accepted I have a debt problem and have no idea how best to deal with it. I have had debt 5-7yrs, mostly student overdrafts/storecards but have always felt in control of this manageing more than minimum payments or paying off full balances quickly to avoid interest. However now I find myself in an absolute downward spiral uncontrollably and recklessly spending the past 5 months or so. It all started when I missed a loan payment back In Novemeber due to expensive car repairs.

I contacted santander who were understanding and allowed me a break. For some reason my new dd covering the arrears never came out my bank the month after and from there I stupidly just decided to stop making any further payments as I thought my credit score was already damaged by this point. I have so much debt on 3 different store cards, totaling about £5000, a credit card of £200, £1300 SAAS ,my Santander loan of £8000, 2 student overdrafts worth £2500, my car roughly £11000 and other monthly dds such as carpet/sofas/camera etc. I am to date on my monthly car payments however I havent been paying any of my other debts other than my sofa/carpet occasionally if I have the money in.

I have been withdrawing all spare cash each month for things such a food/petrol/clothes etc (in the hope it would help me have more control of what I was spending seeing it in cash form opposed to just swiping my card)and leaving just enough in my account to cover my priority bills each month. I am a single mum on benefits and have done a budget with stepchange, and we have found that I do not have a spare penny to cover any debts after priority bills and a little towards my lifestyle which is certainly not lavish! I was hoping to return to work in March but my ex has totally walked out on me and the kids and I no longer have the childcare for nightshifts I had expected to have.

I am considering returning to work within the next 6 months but probably only 12hrs a week max and shifts arent always guaranteed which would boost my monthly income by £200-£300. I am getting phonecalls and letters on an almost daily basis for the last 4-6 months and have just been ignoring these in the hope they would go away. I am really ashamed of how bad Ive let things get after I have managed to live independently for 6 years managing my monthly bills with no issues. I was spending so recklessly without a care in the world fully aware that it was beyond what I could afford and now I have finally acknowledged my problem, I feel trapped in a vicious circle never being able to get out of debt now that interest and late fees etc are mounting up each day. I dont know what the best way forward is. I feel too ashamed to speak to any of the creditors and really really do not want to go down the route of bankruptcy if it can be helped.

Any advice appreciated none of my friends or family are aware of my situation and I am honestly terrified and so ashamed if they were to ever find out. I worry that I would lose my car if I were to go bankrupt which would give it all away, and that the judges would be really hard on me in court for spending so reckless.

Willing2Learn

Hi,

Don't be ashamed. Many of us who post here have walked a similar path...

You need to open your letters, as you need to know the current status of all the accounts. So that you can develop a workable plan with which to move forward, you need as much information as possible, information that is in those letters. Then you can make an informed choice on the best way forward.

It would be helpful if you could post up your completed Statement Of Affairs (SOA). This will assist us in providing you advice, guidance and support. Again, you will need the information from those letters, if you want the SOA to be accurate... This stuff is really important, as your monthly budget including debt repayments, needs to be accurate too for it to work...

http://www.stoozing.com/calculator/soa.php

And welcome to the forum rachellouise11

sourcrates

Hi,

You misunderstand the bankruptcy process slightly, your car, as an asset, would be at risk, but you no longer go to court, or see a judge, everything is done online and by post, there is also a telephone interview with an official receiver, which is mostly a box ticking exercise.

You need to post your SOA so we can get a better picture of your circumstances, then a solution can be sort, your situation is easily fixable, it’s just a case of finding the right solution for you.

rachellouise11

Thanks for your reply. Here is my soa.

Statement of Affairs and Personal Balance Sheet

Household Information
Number of adults in household........... 1
Number of children in household......... 2
Number of cars owned.................... 1

Monthly Income Details
Monthly income after tax................ 0
Partners monthly income after tax....... 0
Benefits................................ 840
Other income............................ 317
Total monthly income.................... 1157

Monthly Expense Details
Mortgage................................ 0
Secured/HP loan repayments.............. 189
Rent.................................... 0
Management charge (leasehold property).. 0
Council tax............................. 24
Electricity............................. 36
Gas..................................... 36
Oil..................................... 0
Water rates............................. 0
Telephone (land line)................... 0
Mobile phone............................ 45
TV Licence.............................. 0
Satellite/Cable TV...................... 0
Internet Services....................... 25
Groceries etc. ......................... 340
Clothing................................ 70
Petrol/diesel........................... 120
Road tax................................ 15
Car Insurance........................... 48
Car maintenance (including MOT)......... 15
Car parking............................. 0
Other travel............................ 0
Childcare/nursery....................... 40
Other child related expenses............ 20
Medical (prescriptions, dentist etc).... 0
Pet insurance/vet bills................. 15
Buildings insurance..................... 0
Contents insurance...................... 10
Life assurance ......................... 15
Other insurance......................... 0
Presents (birthday, christmas etc)...... 0
Haircuts................................ 15
Entertainment........................... 60
Holiday................................. 0
Emergency fund.......................... 40
Dry cleaning............................ 10
Total monthly expenses.................. 1188


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


Secured & HP Debts
Description....................Debt......Monthly...APR
Mortgage...................... 0........(0)........0
Hire Purchase (HP) debt ...... 11275....(189)......0
Total secured & HP debts...... 11275.....-.........-

Unsecured Debts
Description....................Debt......Monthly...APR
SAAS...........................1309......0.........0
Santander loan.................7100......0.........0
Santander overdraft............2000......0.........0
Argoa..........................374.......0.........0
Next ..........................3523......0.........0
Very ..........................1305......0.........0
Capital 1 credit card..........200.......0.........0
Barclays - carpet.............1005......0.........0
Barclays - sofa................728.......0.........0
Barclays - camera..............237.......0.........0
Bank of scotland o/d...........500.......0.........0
Total unsecured debts..........18281.....0.........-


Monthly Budget Summary
Total monthly income.................... 1,157
Expenses (including HP & secured debts). 1,188
Available for debt repayments........... -31
Monthly UNsecured debt repayments....... 0
Amount short for making debt repayments. -31

Personal Balance Sheet Summary
Total assets (things you own)........... 0
Total HP & Secured debt................. -11,275
Total Unsecured debt.................... -18,281
Net Assets.............................. -29,556

I used my credit report generated earlier by Noddle to get an idea of all my debts. I have not added monthly payments as I am unsure as to what these are for some of the debts. I also have not included my car as an asset as it is hp and requires a lumpsum payment at the end which i cannot afford to do. Is it an asset if I dont in fact own it, if so I will edit later. Also my rent is covered by Universal credit.

Thanks

sourcrates

Are you a homeowner or do you rent ?

You haven’t put a figure in either box.

Edit, just seen that you rent.

benbay001

£120 on fuel is a huge amount for someone not working. Whats the car and what is it worth?
If youre truly determined to get out of this could it be sold and downgraded or even take the bus?
A significantly cheaper mobile most also be possible?

TripleH

What is childcare for? Are you undertaking a training course at all?

Karonher

Your mobile phone is expensive so that should be changed as soon as possible. £340 on food when you have 2 young children is also high. I agree about the car - that should be changed for a much cheaper one and public transport used more.

Clothing can be cut as well - charity shops if anything is needed right away.

You could end up with around £350 - £400 a month to pay back the debt.

Willing2Learn

Hi rachellouise11,

Your Universal Credit income of £840/month. Is that gross (including allowance for rent) or is that nett (after rent is deducted)?

rachellouise11

Hi there

It is a kia sportage so not a small car at all. I could probably realistically cut fuel expenses to £90 per month i added a little extra on for some leeway. I initially needed or thought i needed a bigger car when my new baby came along last year however I wouldn't have a problem downgrading if it may solve issues. Just not sure exactly how to go about it as it is HP with a large sum still due and Im pretty sure will also be in negative equity.

rachellouise11

@TripeH

Childcare is a new expense I have starting next week. Basically I have very important weekly psychiatrist appointments coming up which Ive been on the waiting list for 2yrs. Family and friends are reluctant to help with childcare so I haven't really any choice. This expense will double come July as Ill have to pay for both children when my daughters nursery closes for term.