70k debt - what are my options? SOA included

Imogen_trucker

Hello everyone,

I'm really hoping I can get the help I've finally accepted that I need.

To cut a very long story short, I left a severely abusive relationship 5 years ago. I left with nothing except my children and the clothes we were wearing at the time. During that relationship, I accumulated various debts unbeknown to me, including some relating to government benefits which I have listed on my SOA as 'DV debt'.

In the last 2 years I have lost; my Mum (tragically, aged 58), my home (it was a private rent I'd been in for 4 years, my landlord needed to sell), my job (redundancy), my car (not worth repairs needed), and a pregnancy.

I've foolishly relied upon credit to survive, and now I'm at the point where I can't cope anymore and I would really appreciate any advice on what to do going forward.

I feel like my only option is to go bankrupt. I don't 'need' a good credit rating anymore, I don't intend to ever borrow any more money. My only concern is that my car will be taken, and I have no idea how I will commute the 50 miles a day I currently do. My place of work is very rural, there's no public transport. 

Will the debts I accumulated in the abusive relationship be included in the bankruptcy? They consist of a housing benefit overpayment, unpaid council tax, overpaid benefits and overpaid tax credits.

I'm genuinely concerned for my state of mind at the minute about it all, I want to make the most realistic decision when it comes to my finances.

I'm a single parent, I work between 60-70 hours a week, and I just feel it's for nothing at the minute. I'm missing out on my children. My Dad is currently on life support also, and I'm not able to spend any time with him because missing even just one day of work will make such a difference to my financial situation.

It's disheartening having absolutely nothing to show for the debt I'm in, and knowing I'm just paying so much in interest every month. My Barclaycard for example, last months payment was £185.63, of which £111.73 was interest. I'm just getting nowhere.

I'm up to date with all my payments, I've never been late or missed any.

Please don't hesitate to ask me any questions, no matter how intrusive they may seem, I would really appreciate any suggestions.

Thank you

 

Number of adults in household........... 1

Number of children in household......... 2

Number of cars owned.................... 1

Monthly Income Details

Monthly income after tax................ 2025.98

Partners monthly income after tax....... 0

Benefits................................ 236.78

Other income............................ 0

Total monthly income.................... 2262.76

Monthly Expense Details

Mortgage................................ 0

Secured/HP loan repayments.............. 137.6

Rent.................................... 358.41

Management charge (leasehold property).. 0

Council tax............................. 69.89

Electricity............................. 47.53

Gas..................................... 49.33

Oil..................................... 0

Water rates............................. 37.97

Telephone (land line)................... 0

Mobile phone............................ 0

TV Licence.............................. 13.25

Satellite/Cable TV...................... 45.99

Internet Services....................... 0

Groceries etc. ......................... 400

Clothing................................ 50

Petrol/diesel........................... 150

Road tax................................ 0

Car Insurance........................... 51.76

Car maintenance (including MOT)......... 25

Car parking............................. 0

Other travel............................ 0

Childcare/nursery....................... 0

Other child related expenses............ 20

Medical (prescriptions, dentist etc).... 20

Pet insurance/vet bills................. 0

Buildings insurance..................... 0

Contents insurance...................... 15

Life assurance ......................... 15

Other insurance......................... 0

Presents (birthday, christmas etc)...... 30

Haircuts................................ 20

Entertainment........................... 0

Holiday................................. 0

Emergency fund.......................... 0

Total monthly expenses.................. 1556.73

Assets

Cash.................................... 0

House value (Gross)..................... 0

Shares and bonds........................ 0

Car(s).................................. 5210

Other assets............................ 0

Total Assets............................ 5210

Secured & HP Debts

Description....................Debt......Monthly...APR

Mortgage...................... 0........(0)........0

Hire Purchase (HP) debt ...... 4543.77..(137.6)....7.75

Total secured & HP debts...... 4543.77...-.........-  

Unsecured Debts

Description....................Debt......Monthly...APR

Barclaycard CC.................7502.7....185.6.....17.28

MBNA CC........................2917.31...87.13.....26.93

Halifax CC.....................2750.99...82.84.....27.29

DV debts.......................47000.....410.......0

Utilities arrears..............427.57....35.63.....0

Rent Arrears...................446.26....50........0

Paypal Credit..................584.51....25........25.9

V12 Finance (Laptop)...........113.89....16.27.....12.61

Next Catalogue.................1427.86...72........23.9

Capital One CC.................369.29....19.14.....30.34

Total unsecured debts..........63540.38..983.61....-

Monthly Budget Summary

Total monthly income.................... 2,262.76

Expenses (including HP & secured debts). 1,556.73

Available for debt repayments........... 706.03

Monthly UNsecured debt repayments....... 983.61

Amount short for making debt repayments. -277.58

Personal Balance Sheet Summary

Total assets (things you own)........... 5,210

Total HP & Secured debt................. -4,543.77

Total Unsecured debt.................... -63,540.38

Net Assets.............................. -62,874.15

EssexHebridean

Oh goodness haven’t you been through it, I’m not surprised you’re at the end of your tether, the only surprise is you didn’t pass it long ago. I’m so sorry you’ve had so much to contend with, and I hope you see an improvement in your Dad very soon. 

Allowing that you’re not concerned about your credit file right now, I see no logical reason in theory why you don’t just stop paying the cards (NOT the DV debt though) at the moment while you decide what to do next. You do look like a good candidate for bankruptcy on the face of it, but I have a feeling that car may be an issue. Is the secured finance for the car? If so have you reached the point where you could simply hand it back and walk away?

I’m by no means sure, but what’s occurring to me is whether you can stop the card payments for a few months, set that money aside (and a saving on your SOA made by getting the grocery bill under control, as that’s quite high) in order to in a few months time by a “runaround” car that falls below the value level that’s relevant for bankruptcy but that will do you for a few years, AND save an emergency fund ahead of a more drastic debt solution like - as you say - bankruptcy. 

Someone who knows more than I do will be along with good ideas shortly I’m sure - you are in the right place, and it can be sorted. 

Imogen_trucker

EssexHebridean said:

Oh goodness haven’t you been through it, I’m not surprised you’re at the end of your tether, the only surprise is you didn’t pass it long ago. I’m so sorry you’ve had so much to contend with, and I hope you see an improvement in your Dad very soon. 

Allowing that you’re not concerned about your credit file right now, I see no logical reason in theory why you don’t just stop paying the cards (NOT the DV debt though) at the moment while you decide what to do next. You do look like a good candidate for bankruptcy on the face of it, but I have a feeling that car may be an issue. Is the secured finance for the car? If so have you reached the point where you could simply hand it back and walk away?

I’m by no means sure, but what’s occurring to me is whether you can stop the card payments for a few months, set that money aside (and a saving on your SOA made by getting the grocery bill under control, as that’s quite high) in order to in a few months time by a “runaround” car that falls below the value level that’s relevant for bankruptcy but that will do you for a few years, AND save an emergency fund ahead of a more drastic debt solution like - as you say - bankruptcy. 

Someone who knows more than I do will be along with good ideas shortly I’m sure - you are in the right place, and it can be sorted. 

Thank you for replying, I really do appreciate it. To be honest, I've been in quite a dark place for the last few months, I'm really hoping a solution to this will help with that.

I think I may have misunderstood what type of debt my car is - secured, unsecured or hire purchase - I pay a finance company each month, similar to a loan. I think I may have thought it was hire purchase? It's through Close Brothers.

What circumstances do they let you keep your car? Although according to Parkers, it's worth £5200 (that's the lowest figure it gave me) it does currently need £1800 worth of repairs.

It's quite a scary thought, just not paying my credit cards, it will feel so wrong but I think you're right, it will help me initially. 

Yes my grocery bill is quite high, I do have 2 growing teenage boys, they eat so much I do shop quite well, I only use Aldi & Asda etc. I have tried to reduce the amount I spend though.

Thank you for the reassurance, it means a lot.

fatbelly

I agree with all of that.

All your debts are qualifying debts in bankruptcy providing there was no fraud involved in the benefit debts. i.e.

• not found guilty at court
• not admitted fraud in an interview under caution
• not accepted an administrative penalty

We need to explore the car a bit more. You can keep one worth up to 2k providing it is needed.

You will get an income payment order/agreement to pay your surplus income for 3 years. So I question what the point is of a 60/70 hour week is while this is going on.

The idea of stopping payment to the non-priorities while you save also answers the question of where the £680 fee is coming from.

EssexHebridean

I’m trying to work if that level of working hours with your income means that you’re actually below the minimum wage? 

Yep - car sounds like an HP type agreement to me - I simply used the word “secured” because that’s how it shows on the SOA form - it’s secured on itself, if you like. If you stopped paying, I presume your understanding is that they would be along pretty sharpish to collect your car? (Hence NOT suggesting you stop paying that one….yet!)

@fatbelly might my thinking about saving for a replacement sub-£2k car then handing back the existing one work for the OP or would they be seen as having done it with the bankruptcy in mind, and would that cause a problem? Similarly, would the repairs needed to the existing one cause a problem or would that include in the bankruptcy do you think? 

OP - there’s work to do but I hope you feel a bit calmer about things now? Sometimes just saying “help” and knowing advice is out there can improve things. 

Imogen_trucker

fatbelly said:

I agree with all of that.

All your debts are qualifying debts in bankruptcy providing there was no fraud involved in the benefit debts. i.e.

• not found guilty at court
• not admitted fraud in an interview under caution
• not accepted an administrative penalty

We need to explore the car a bit more. You can keep one worth up to 2k providing it is needed.

You will get an income payment order/agreement to pay your surplus income for 3 years. So I question what the point is of a 60/70 hour week is while this is going on.

The idea of stopping payment to the non-priorities while you save also answers the question of where the £680 fee is coming from.

Thank you for your reply.

This is where it gets complicated. I was initially accused of committing benefit fraud, and recommended to the CPS for prosecution by the DWP. It went to court, I denied the accusation (rightly so) and put my side of things to them. It couldn't be proven I had deliberately neglected to inform them of a change in my circumstances.
During the initial interview under caution with the DWP, my solicitor advised me to answer all questions with 'no comment', which I did. I have never admitted to anything as I would be lying if I did.
The only conclusion to the whole thing was that I had to pay all the money back.

The car issue does confuse me. There's £4543.77 left to pay on the loan. I did ask the finance company for a settlement figure this week, which they gave me of £3696.05. It does need £1500 - £1800 worth of repairs (fuel pump replacement (I've got the pump) and water leak issue - however I do think I may be being ripped off with that repair quote). So would selling the car for £4500 be an idea? The buyer would be getting it for about £1000 less than the lowest price given by Parkers, and I would be able to pay the settlement figure and have enough left over to buy a runabout.

I'm only working so many hours a week to be able to keep my head above water, I can work a lot less, I just don't have the option at the minute. The thought of working less hours a week is one of the things keeping me going.

Imogen_trucker

EssexHebridean said:

I’m trying to work if that level of working hours with your income means that you’re actually below the minimum wage? 

Yep - car sounds like an HP type agreement to me - I simply used the word “secured” because that’s how it shows on the SOA form - it’s secured on itself, if you like. If you stopped paying, I presume your understanding is that they would be along pretty sharpish to collect your car? (Hence NOT suggesting you stop paying that one….yet!)

@fatbelly might my thinking about saving for a replacement sub-£2k car then handing back the existing one work for the OP or would they be seen as having done it with the bankruptcy in mind, and would that cause a problem? Similarly, would the repairs needed to the existing one cause a problem or would that include in the bankruptcy do you think? 

OP - there’s work to do but I hope you feel a bit calmer about things now? Sometimes just saying “help” and knowing advice is out there can improve things. 

Yes my working hours are an issue at the minute, I am salaried but my contract doesn't specify a set number of hours. There are a few weeks where I work less, but it's generally never less that 55 hours.

I've just checked my paperwork for the car and it does say that if I fail to pay I will 'not be entitled to retain the goods', so yes the car would be taken from me, so I will definitely keep paying that for now.

I do already feel like I can breathe knowing that I do have options, thank you - I'm trying to keep the image of a future where I might one day be able to afford to fulfil my Mum's wishes of spreading her ashes abroad.

fatbelly

I am impressed that you were well advised by your solicitor. That rarely happens in benefit fraud cases and I regularly see people bullied into an admission that affects how their debts can be dealt with in future.

Can you check your paperwork on the car finance? Is it a loan, or hire purchase or something else? 

Imogen_trucker

fatbelly said:

I am impressed that you were well advised by your solicitor. That rarely happens in benefit fraud cases and I regularly see people bullied into an admission that affects how their debts can be dealt with in future.

Can you check your paperwork on the car finance? Is it a loan, or hire purchase or something else? 

To be honest, that time of my life is such a blur. I won't bore you with the details, but I was not myself and very much a rabbit in headlights. I've never so much as stolen a penny sweet, so to be faced with that situation was traumatic. I couldn't have admitted fraud as I would have been admitting to something I genuinely didn't do, so I wonder if the solicitor realised that also and so advised me what he did.

Although the amount I was ordered to pay back was also very daunting, it was true that I shouldn't have received the money I did and I was in agreement (with myself) that it should be paid back.

I have checked, it is a Motor Finance Agreement.

fatbelly

Sounds like HP, not a loan. If you've paid more than a third, they need a court order to repossess. 

Not yours to sell - and the hpi marker should put off any prospective purchaser.

You're going to need one that you own, and is worth less than 2k

Any monies owed to the finance company are covered by the bankruptcy.

EssexHebridean

All of the below is subject to agreement from someone like fatbelly who knows the legal implications around bankruptcy more than I do. 

A quick tot up and it looks to me like there is around £470 of payments to cards/store accounts that you can cancel the DD’s for. The laptop, I would be inclined to consider just clearing off with the saving from not paying the cards in month one - as I assume the laptop is needed by the family? I mean realistically the likelihood anyone coming to take it away is probably slim, but still, for peace of mind I would get it gone. 

Are the rent arrears for the property where you are living now? Assuming yes, then personally I’d also be wanting to get those paid - assuming you plan to stay there and would like to stay on good terms with your landlord. That advice may be questionable though - I’m just mindful of how a landlord might feel/react to being told a tenant owes them arrears but is now bankrupt. 😬

You need to keep paying the DV Debt, the utility arrears, and - for now anyway - the car finance, I think. 

You also need to start working to get your budget absolutely on point. You’re already aware what a slippery slope using credit can become when your circumstances conspire to turn a situation to an extreme - going forward that safety net simply won’t be there so you HAVE to know your budget is watertight.  

On the SOA:
 you have nothing in the sections for mobile phone, landline or internet. Do you not have these things, or are they bundled elsewhere?

Are you putting aside the money shown for car maintenance? If not, you need to start - the same goes for the “presents” money too - if you budget it on paper you MUST also budget it in cash terms too. For context - if you think you are putting aside £55 a month across those two categories, but in fact you’re not, that’s £660 a year you are literally losing. 
Insurance - both car and contents are high - is there a reason why do you know? Have you followed the MSE method for getting the best price? (Car will be higher for you as ai assume it’s just you on the policy - crazily this often makes things more expensive.
Have you checked that you are getting every single penny of benefits you should? 

Is the “medical” spend anything that could be reduced by using, for example, a prescription pre-payment? 

Lots to be working on, but rest assured you are now taking constructive steps, and above all YOU have control of this situation - I suspect you’ve not been able to feel that for a while.