Debt relief options

Mum2Boys_2

Hi all
I haven’t posted for a long while and my situation has massively changed. 

I’m a single parent to 3 boys, work full time and in receipt of certain benefits. 

I have a mortgage that is roughly sitting at £122,000
home owner loan -£25k (2 years old and 3.5% interest) 
and roughly about £20K debt elsewhere. 

My property is valued at between £200-220k (before the virus) 
and selling was something I have seriously considered, to clear my debts and get a smaller property. 

I am managing to meet all of my minimum payments but it Is a struggle and leaves no money for emergencies, or clothes. 

I am considering a DMP. 

I suppose I want to know the pros and cons really. Selling my house and moving to a smaller property or even a property further north is an option and it is something I’m considering although it would be a big change, we don’t live in a mansion but live in a decent convenient area and my children are able to access everything they need to be independent. 

Any advice would be appreciated, especially if you’ve had a dmp and the effect this has had on you. 

fatbelly

I would be really  reluctant to let non-priority debts drive a house move (not that anyone's going anywhere in the present climate)

If you can afford the payments on your mortgage and  the secured loan (ugh. debt consolidation?) then a dmp on the non-priority debts is probably the way forward.

When it's fixed there is a statement of affairs calculator and it would be interesting if you could post one here, formatted for mse.
https://www.lemonfool.co.uk/financecalculators/soa.php

Mum2Boys_2

I intend on calling Halifax tomorrow to request they keep my credit card at an interest free rate, that has doubled from £50 a month to £100 and I know it sounds sill but that extra £13 a week is easily 2 meals for me and my boys. 

I thought I’d be saving money at the moment but my boys seem to be eating more food and my gas an electricity seems really really high. Are you able to recommend any good sites where I could look at changing this? I’ve contacted OVO requesting a better plan but they have not gotten back to me. 

I don’t think I want to move, our house really is our home and the boys love it here, but I honestly lose so much sleep from owing so much money. 

I have done a statement of affairs and I’m roughly left with £120 for food, fuel, clothing and emergencies. 

fatbelly

Mum2Boys_2 said:

I intend on calling Halifax tomorrow to request they keep my credit card at an interest free rate, that has doubled from £50 a month to £100 and I know it sounds sill but that extra £13 a week is easily 2 meals for me and my boys. 

I thought I’d be saving money at the moment but my boys seem to be eating more food and my gas an electricity seems really really high. Are you able to recommend any good sites where I could look at changing this? I’ve contacted OVO requesting a better plan but they have not gotten back to me. 

I don’t think I want to move, our house really is our home and the boys love it here, but I honestly lose so much sleep from owing so much money. 

I have done a statement of affairs and I’m roughly left with £120 for food, fuel, clothing and emergencies. 

An interest free rate on the credit card won't affect the amount you have to pay - but it will mean that your payments are going towards paying the debt, rather than interest.

Use MSE energy club to switch energy supplier

Can you post that soa here? £120 per month is not enough for food, fuel, clothing and emergencies. 

Naomim

Hi and welcome back,
When I came back after a long absence, all I could think of was a DMP as the route out of my debt but after posting my SOA and working through it I'm in a better place mentally - I can sleep at night, I have a budget that actually works and am paying my debts without the need for a DMP.

Please post an SOA for us to go through and we may be able to spot something you've missed.

Good luck

Naomim

Mum2Boys_2

Hello all 

sorry not checked this for a few days. 

I plan to do an SOA over the weekend as I’m one of the lucky ones able to work from home and it’s been a nightmare this week. 

£120 is our weekly budget, not monthly, I definitely need to make this go further and I think that I could. 

I am still considering moving.... Not just to clear my debt but because my earning potential is higher up north and more opportunities for growth. 

I will also look into the energy saving tool as well. I am currently spending £150 a month of gas and electric, this seems like a lot and I’m trying to curb things like too many baths etc. 

Thanks for all your replies, I’ve got some places to start and will upload my soa to this thread shortly! 

Naomim

Just a note, whilst the SOA is a good tool to see what you have and need to afford your spends, I also found Martin's budget planner on this site really useful at the beginning.

Naomim

enthusiasticsaver

I would not recommend a move as a means of paying off unsecured debt especially as you will need a new mortgage to buy another property.  Are you sure you would get a decent rate mortgage if you were to apply?  Moving house is expensive so you would need to allow around £10k minimum in moving expenses, stamp duty etc etc. 
A new mortgage provider would take your current circumstances (ie current debt) into account if you were to be credit scored for a new mortgage. 
£120 is not enough to cover everything so I would suggest an soa too as a starting point but if that is all you are left with after all priority expenditure and minimum payments then it sounds like a DMP will work.  That will affect any new mortgage applications too as you will have to default on repayments. 

Mum2Boys_2

Hello everyone. 

I am so sorry I have not gotten back sooner but I work in a school as a safeguarding lead and work is incredibly busy over the past few weeks. 

Below is my SOA, I did this in my notes quickly but it is very honest....I am aware I have gotten myself in a pickle, but I believe I Made the right decision to get a homeowner loan to keep my house. My home is currently (before the virus) valued at £210000-22000, my mortgage is at £123k, it would cost me £850 to rent my house in my Area.

Income monthly 

Wages-£1208

Tax credits-£771.33

Child benefit- £212.11

Child Support-£216

Total-£2407.44

Outgoings-Bills

Mortgage- £403

Homeowner loan-£351 (ends sept 2028)

Council Tax-£94

Halifax loan-£180.45 (ends dec 2026)

Nationwide loan- £95.94 (ends dec 2022)

Car- £174 (ends Mar 2022)

Car insurance-£64.18

Gas & Elec-£150

Water-£38

Home insurance-£8.26

Tv licence-£13.20

Now-£44.97

Netflix-£8.99

Gym-£20

O2- £60 (3 contracts)

Childcare-£128

Credit card-£50

Littlewoods-£50

Total-£1933.90

Total left for food and fuel £473.54 (118 weekly) 

I will be contacting my car insurance provider too as I’ve done some quotes and it’s literally just rolled over this month, a new quote with them saves me £20 a month. 

Willing2Learn

I hope you don't mind, but it looks better when presented properly:

[font=courier new][b]Statement of Affairs and Personal Balance Sheet[/b][b]

Household Information[/b]
Number of adults in household........... 1
Number of children in household......... 3
Number of cars owned.................... 1[b]

Monthly Income Details[/b]
Monthly income after tax................ 1208
Partners monthly income after tax....... 0
Benefits................................ 1199.44
Other income............................ 0[b]
Total monthly income.................... 2407.44[/b][b]

Monthly Expense Details[/b]
Mortgage................................ 403
Secured/HP loan repayments.............. 525
Rent.................................... 0
Management charge (leasehold property).. 0
Council tax............................. 94
Electricity............................. 75
Gas..................................... 75
Oil..................................... 0
Water rates............................. 38
Telephone (land line)................... 0
Mobile phone............................ 60
TV Licence.............................. 13.2
Satellite/Cable TV...................... 0
Internet Services....................... 53.96
Groceries etc. ......................... 300
Clothing................................ 0
Petrol/diesel........................... 500
Road tax................................ 0
Car Insurance........................... 64.18
Car maintenance (including MOT)......... 0
Car parking............................. 0
Other travel............................ 0
Childcare/nursery....................... 128
Other child related expenses............ 0
Medical (prescriptions, dentist etc).... 0
Pet insurance/vet bills................. 0
Buildings insurance..................... 8.26
Contents insurance...................... 0
Life assurance ......................... 0
Other insurance......................... 0
Presents (birthday, christmas etc)...... 0
Haircuts................................ 0
Entertainment........................... 0
Holiday................................. 0
Emergency fund.......................... 0
Gym..................................... 20[b]
Total monthly expenses.................. 2357.6[/b]
[b]

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

Secured & HP Debts[/b]
Description....................Debt......Monthly...APR
Mortgage...................... 0........(403)......0
Secured Debt.................. 0........(351)......0
Hire Purchase (HP) debt ...... 0........(174)......0[b]
Total secured & HP debts...... 0.........-.........-   [/b]

[b]Unsecured Debts[/b]
Description....................Debt......Monthly...APR
Littlewoods....................0.........50........0
Card...........................0.........50........0[b]
Total unsecured debts..........0.........100.......-  [/b]

[b]
Monthly Budget Summary[/b]
Total monthly income.................... 2,407.44
Expenses (including HP & secured debts). 2,357.6
Available for debt repayments........... 49.84
Monthly UNsecured debt repayments....... 100[b]
Amount short for making debt repayments. -50.16[/b]

[b]Personal Balance Sheet Summary[/b]
Total assets (things you own)........... 215,000
Total HP & Secured debt................. -0
Total Unsecured debt.................... -0[b]
Net Assets...........................… 215,000[/b]

[i]Created using the SOA calculator at www.LemonFool.co.uk.
Reproduced on Moneysavingexpert with permission, using other browser.[/i][/font]


Edit:  I will drop back in later with my thoughts on your SOA.  Just looking at it briefly, this appear aspirational as opposed to being a fair reflection of reality.  (You spend nothing on clothes with three kids, nothing on gifts and nothing on entertainment for example)

Mum2Boys_2

I haven’t allocated money for those things, they would have to come out of my weekly budget, my friend cuts our hair for a good meal. 

This is where I need the help because I need to cut back so I have more money for those things.