Starting to stress over debt & how to get out of it.

RicVic

Hi, I hoping that someone will be able to help.  It's getting to the point whereby I'm living off credit to pay for food etc and my monthly income is going on paying bills and meeting the minimum repayments on loans & credit cards.  I'm scared that I'm going to end up having to declare either bankruptcy or apply for an IVA which I really do not want to do.

I've read on some other threads that it's good to do an SoA so see below, unfortunately I don't know the APR on all credit cards but I am trying to find out (they're quite high I think).  Also I have a shared ownership property (50%)

[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......... 0
Number of cars owned.................... 1[b]

Monthly Income Details[/b]
Monthly income after tax................ 1540.59
Partners monthly income after tax....... 0
Benefits................................ 0
Other income............................ 0[b]
Total monthly income.................... 1540.59[/b][b]

Monthly Expense Details[/b]
Mortgage................................ 299.4
Secured/HP loan repayments.............. 0
Rent.................................... 172.5
Management charge (leasehold property).. 0
Council tax............................. 101
Electricity............................. 78.92
Gas..................................... 0
Oil..................................... 0
Water rates............................. 25.56
Telephone (land line)................... 0
Mobile phone............................ 35
TV Licence.............................. 0
Satellite/Cable TV...................... 64
Internet Services....................... 0
Groceries etc. ......................... 200
Clothing................................ 25
Petrol/diesel........................... 40
Road tax................................ 17.5
Car Insurance........................... 30.11
Car maintenance (including MOT)......... 50
Car parking............................. 0
Other travel............................ 0
Childcare/nursery....................... 0
Other child related expenses............ 0
Medical (prescriptions, dentist etc).... 22
Pet insurance/vet bills................. 0
Buildings insurance..................... 0
Contents insurance...................... 19.73
Life assurance ......................... 0
Other insurance......................... 0
Presents (birthday, christmas etc)...... 10
Haircuts................................ 0
Entertainment........................... 50
Holiday................................. 0
Emergency fund.......................... 0[b]
Total monthly expenses.................. 1240.72[/b]
[b]

Assets[/b]
Cash.................................... 0
House value (Gross)..................... 182000
Shares and bonds........................ 0
Car(s).................................. 100
Other assets............................ 0[b]
Total Assets............................ 182100[/b]
[b]

Secured & HP Debts[/b]
Description....................Debt......Monthly...APR
Mortgage...................... 66624.2..(299.4)....2.99[b]
Total secured & HP debts...... 66624.2...-.........-   [/b]

[b]Unsecured Debts[/b]
Description....................Debt......Monthly...APR
Loan...........................9608.89...296.1.....7.1
Loan...........................10152.8...231.6.....0
Credit Card....................848.71....25........25.93
Overdraft......................1100......0.........0
Credit Card....................240.81....25........0
Credit Card....................702.43....25........0
Credit Card....................669.69....25........0[b]
Total unsecured debts..........23323.33..627.7.....-  [/b]

[b]
Monthly Budget Summary[/b]
Total monthly income.................... 1,540.59
Expenses (including HP & secured debts). 1,240.72
Available for debt repayments........... 299.87
Monthly UNsecured debt repayments....... 627.7[b]
Amount short for making debt repayments. -327.83[/b]

[b]Personal Balance Sheet Summary[/b]
Total assets (things you own)........... 182,100
Total HP & Secured debt................. -66,624.2
Total Unsecured debt.................... -23,323.33[b]
Net Assets.............................. 92,152.47[/b]

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

RAS

Well  done for tackling this and a decent first SOA.

Unfortunately you're in a long term mess because of your loans; your income simply doesn't cover them. It would help if you could check out when they end and what early repayment penalties there are?

Your overdraft is likely to cost you 40% when the new rules come in.

Regardless, you need to talk to one of the debt charities, not a debt company. So national debt line or step change.

Do you absolutely NEED a car? 

In the very short-term to prevent things getting worse:
Get shot of satellite TV
See if you can reduce your phone.
Accept that for the next two months clothes and entertainment combined is limited to a fiver.
Cut the food budget back really hard. That means cooking from scratch, getting supermarket reduced food and menu planning. Tough as it sounds, a bag of 29p penne makes 6 portions with a bit over. That's 5 mains and enough to make 4 pasta salads, get a jar of budget mayo for about 50p. 

Go over to the oldstyle money saving forum for help. If you can take an inventory of what's in the cupboard fridge and freezer, it would help.

And start hunting for a second job, because you need to increase your income to cover the loans.


It's doable but will hurt.

Grumpelstiltskin

I notice you have satellite TV but no TV licence? Is this correct.
Do you have the single persons reduction on your council tax?

sourcrates

Hi,

Short term solution here, all your credit debts are unsecured and are all termed as "non priority", which means they are non essential payments, which you simply cannot afford to service, so don`t, stop your payments immediatly.

Without your credit repayments you have a few quid disposble income available to you, i would suggest saving up as much of an emergency fund as you can, for a rainy day event in the future, you need something behind you.

Write to your creditors telling them of your situation, include a copy of your budget, i would suggest a six month stay of payments, to allow you to build up sufficiant funds for your EF, then either, continue with a £1 a month token payment plan, and wait to see if circumstances improve, or start a debt mangement plan, again, your contribution must be affordable, so around £200 a month on your figures. i don`t thing an IVA is possible due to your lack of disposable income, but you may want to run your situation past stepchange or National Debtline.

RAS

The one thing we did not check is whether this is a one bed flat or two bed?

If it's two bed then getting a lodger could mean tax free income that could pay off the consumer debt?

BabyStepper

You need to make use of the payment holidays that are available just now, for your mortgage, credit cards, everything. Martin has some good up to date info on here about doing that, go and have a read. This is not a long term solution but will give you some breathing space for a few months to figure out what to do next. 

It looks like you've been overspending for a while, are the loans for debt consolidation? Is one of them for your car? As has been said, you might need to get rid or at least get a cheaper one. Do you have anything else you can sell for a quick cash boost? If you have, do it now. Can you get second job? Whatever happens, you will need to get used to a change in lifestyle and figure out how to manage your money. The advice about food is good, we have a £200 budget for 2 people, you can cut your budget in half. 

We need to know the interest rates on the credit cards and when your loans end before we can offer any more advice. A lot will depend on how long they have to go.

Keep posting and let us know how you're doing with it all. 

RyanHello

You're paying £50 a month on entertainment... stop that now.
Mobile phone £35 a month. Get rid of that and get a cheap pay as you go phone.
Sky TV cancel it.
Clothing £25 a month? no new clothes until debt is paid!
Groceries £200 a month? You could get that down to £100 a month. Live on rice and beans, cheap high protein food to keep you going.

Presents £10 a month... end that.

Sell your car

Looking at your finances, you need to take DRASTIC action now. It's utterly depressing but you need to cut back on EVERYTHING! Live way below your means and you'll slowly get out of it.

enthusiasticsaver

I agree that the loans are the issue.  Were they previous debt consolidation loans or were they for the car? I am guessing not as the car is only worth £100.  I think you will need to consider a DMP which means defaulting on the loans and credit cards and then either self managing or using stepchange to organise a DMP.  The soa shows you only have around £250 to put towards the debts so it will take you around 8 years to clear it at that rate.  You have to stop using credit full stop.  Default on the debts, open up a bank account where you do not owe them any money.  No overdraft or credit card and save up emergency money until the DMP starts.  It will stop you getting further debt but that is no bad thing.  

Do you not have a TV  Licence?  You need £50 in emergency savings and that groceries can be brought down by £50 if it is just you.  What about haircuts?  Can you ditch the cable tv? 

mark55man

Firstly well done on recognising and accounting for you situation, that is the best first step.

Secondly it is a game of two halves - the first half is literally the next 6-8 weeks to get yourself into a new and sustainable way and the second half is the next 6-8 years to get back in the black!. BUT lot's of people have done it, and some from deeper in the whole.  Take some consolation from that - you are in trouble but it could have been a whole lot worse.  This will make it easier (once you get into the swing of money saving) to get to the light at the end of the tunnel.

It will be tough but the advice you have received above is good, and the benefit of coming clean with yourself is that it gives you the power to deal with it.  You will not be the first person to have taken the steps advises and you won't be the last, but you do need to seize the moment and start turning off the payments for now

you can do this - and you will get so much help from here if you ask for it

darrannah

Well done on taking the 1st step and holding your hands up. Like others have said, cancel ALL unneccesary spending such as TV, clothes, entertainment, it will be a long, hard journey but with determination you will get there, good luck