My situation, any advice appreciated

zAndy1

Hi folks,
I haven't really got my own thread describing my situation, kind of hijacked others really so I figured it would be a good idea to put down my situation and hopefully get some useful advice. I'll list our debts first:-

Cahoot Loan £13500 Apr 8.9% variable £230 pm varies according to balance
Tesco Loan £19000 approx settlement figure, apr 6.9% fixed £330pm
Tesco Credit card £4500 approx £130 pm min payment
Barclaycard £8500 balance, approx £250pm min payment , I'd say £3000 of this is at 5.9% for life of balance
Mint credit card £7300 balance approx £160pm min payment
Goldfish Credit card £8500 balance approx £250pm min payment
Amex blue £750 balance approx £20 min payment
Virgin credit card £2600 balance approx £60pm min payment
Citibank credit card £1100 balance approx £30pm min payment
Wife O/D HSBC £1300 approx, limit is £1000
My O/D Natwest £1200 appox but I am hoping to get into the black with this account as I am not currently paying the mortgage (see below) and have been told not to pay my creditors (just make token payments). If I keep this account I'll be able to keep my debit card & cheque book which I know might sound daft considering but honestly having no debit card would be a major pain in the !!!!!!! We have opened a joint account with nationwide (flexaccount) but that only comes with a cash card, no debit card or cheque book. My wife will pay her income into the new account as soon as it's available (next week hopefully) so at least she has access to all her income!

Income is £2500 per month including child benefit and childrens tax credit (me £1750, wife £600, benefits £150).

Mortgage is (usually) £640 pm base mortgage + £140pm flexible advance + £220 pm secured loan = £1000pm approx. I say usually as we are just coming to the end of a 6 month mortgage payment holiday which meant we haven't been paying the £640pm base mortgage element, the last month that applies is next month. Mortgage outstanding is £108000 base, £16000 flexible advance, £24000 secured loan = £148000 total. House is worth approx £180000 , well it was, in the current market we probably wouldn't get much more than £170000 for it being realistic

On top of the mortgage our monthly outgoings are:-

Council tax £130
Shopping £280 (allowing £70 pw)
Phone £12 BT + £20 homecall usually but I'm signing up with 18866.com and hoping to get phone call charges down to a bare minimum! £15pm should cover this
Mobiles £30 , my contract is £6 (I threatened to leave as I was out of contract and they gave me a good deal, 75mins x network + 100 texts per month for £6!). Rest is for my wifes mobile and it's in contract for another 16 months
Petrol approx £160
Gas/elec/water £80
Broadband Internet access £20
Kids school dinners £30
Clothes allowing £30
Glasses/Prescriptions £30 (I have a regular prescription and so does my wife)
Car Insurance £40 (2 cars)
Car tax £25
TV Licence £9
Kids cluds (majorettes/swimming) £20
Car maintenance £30
Contingency £50

So that's where we're at. In terms of assets we have 2 cars that aren't financed, one worth approx £4000 and one approx £3000. I need a car for work and my wife really needs one for work and cos she's ferrying kids about a lot and she's looking for other jobs that pay more and doing volunteer teaching assistant jobs to get a foot in that door.

I've spoken to CCCS who recommended an IVA with debt free direct. I've got the pack from debt free direct and am in the process of getting all the info together. I've also had an appointment with payplan and am waiting for their assessment which should hopefully be in the next couple of days.

Sorry for the long post, hope it helps show the pretty dire situation we find ourselves in, any advice much appreciated!

debtbuster2K5

Hi,

Have you explored the risks you might be taking by going down the route of an Iva, as these are generally quite expensive to set up. (Somewhere in the region of £1000-£3000) and it may not always get accepted by the required 75% of your creditors, leaving you with a charge of the said £1000-£3000 and no better off.(Also, dont believe it, if a company says they can do your Iva for free, as generally they will get their fee via your monthly payment).
I am not saying do not do the Iva, just research it thoroughly and make you own decisions with your eyes wide open.

In terms of your outgoings, I guess you need to do your level best to reduce these as much as possible. Well done for signing up with call18866.co.uk, thats a good start.

How many in the household, as your shopping bill looks quite heavy, plus you are paying out for school dinners on top. For a family of four, we seem to manage on £45 per week.(Including nappies, formula milk, wipes etc)

Where does your contingency money go to every month?

Broadband access could be slightly cheaper. Some providers charge £14.99 for unlimited access.

Glasses/ Prescriptions. Could you explain this cost a little more. Is this for disposable contact lenses?

As you say, your situation is pretty dire, however you have come to the right place and are making good progress to dealing with your situation.

Good luck and keep posting.

thaylock

Ouch !

cgnao

Hi,

I am afraid you have blown it. Your only way out is selling the house, pay off as much debt as possible, eat humble pie and start over again.

If you wait for longer, you'll get deeper into debt, the house price will fall further you'll not be able to keep up mortgage repayments and your house will eventually be repossessed. If that happens it's going to cost you a lot more in price drops and fees so get out while you still can.

Hope this helps...

zAndy1

Hi,
Appreciate the advice but why hasn't anybody I've spoken to so far (CCCS, payplan, debt free direct, national debt helpline) said that's my only option? The problem is we don't have the luxury of the time it will take to sell the house, are you saying we should just see if we can come to some arrangement with our creditors and explain we're selling the house and any equity released from the sale will go towards paying our debts? Houses on our estate have been up for sale for months with no sign of one being sold, unless we price ours such that we make little or no profit I'd be surprised if ours sells in the near future. Why do you not think an IVA is even an option, surely it's a way out of the situation is it not?

zAndy1

First time I've seen an 'ouch' in reply to someone's situation, guess things must be bad lol. Good job I'm keeping my sense of humour, I know things are very bad but at the end of the day it's only money, I've got my wife and kids and that's the main thing...

debtbuster2K5

zAndy1 wrote:

Hi,
Why do you not think an IVA is even an option, surely it's a way out of the situation is it not?

Hi
I dont think I ever said that an IVA is not an option for you. I suggested that you do the research, and make your own mind up. I was merely pointing out the pitfalls of them. Your post, if I have read it correctly was asking for advice, I was just giving you my opinion.

As I said before good luck and keep us posted

zAndy1

No you didn't but cgnao pretty much did. Sorry don't want to come across as though I don't appreciate any or all advice I get here but to say selling our house is the only option we have is not really true is it. It's probably the sensible thing to do but we've put a lot of money into this house and I doubt we'd get something similar again if we sold. Having said that £1000 pm mortgage is too much for what it is considering we could rent somewhere identical for approx £600-£650 pm (this is a 4 bed detached house we're talking about here).

cgnao

Debt free direct and the like take a percentage on your repayments and have a vested interest in arranging IVAs.

If you sold your house and repaid your debt they would get nothing. That is why they will never suggest it as a viable option.

If house prices fall further (and it looks like they will), you'll end up in negative equity - remember if the house gets repossessed then you will still owe the difference.

You owe so much that I can't honestly see any chance of you being able to keep the house. So you are better off selling now than being repossessed later.

DrStep

zAndy1 wrote:

Hi,
Appreciate the advice but why hasn't anybody I've spoken to so far (CCCS, payplan, debt free direct, national debt helpline) said that's my only option? The problem is we don't have the luxury of the time it will take to sell the house, are you saying we should just see if we can come to some arrangement with our creditors and explain we're selling the house and any equity released from the sale will go towards paying our debts? Houses on our estate have been up for sale for months with no sign of one being sold, unless we price ours such that we make little or no profit I'd be surprised if ours sells in the near future. Why do you not think an IVA is even an option, surely it's a way out of the situation is it not?

There are a growing number companies in the paper (or ask an estate agent-they should have contacts) who will buy your property straight away for about 15-25% less of what your house is worth in the current market climate. Have a chat with them, its just another option to consider. Down sizing is a emotional affair but after all its just a material object.....can you live some where smaller thats just as good? Good luck

zAndy1

To be honest if we could get £165000 for our house (with no chain it might be attractive to buyers) which would give us a £20k profit approx I could live with that. The question is whether our creditors will be nice and let us make reduced token payments in the period up until we sell (which might be months) because if they won't then we don't really have the option to sell anyway and an IVA would seem to be about our only option. Also if we did sell I'd ideally like to pay e.g. Barclaycard and Goldfish and Virgin credit cards off which would save us approx £600 per month, on top of the mortgage saving of £1000pm that's £1600pm better off straightaway. Or would we have to split the profit from the house sale pro rata between our creditors (which might not give us the greatest monthly saving). There's an identical house to ours on the same estate available to rent at £580pm. I'd definitely go for this option but it really depends how long it takes to sell and how cooperative our creditors are in the meantime. Our house is the same as this one currently on sale at £186500 (overpriced in current market IMHO) :-

http://212.50.188.108/cgi-win/vebra.cgi?details1?src=vebra&PropertyCode=1183003/RIVER/10166/3

Thanks for the advice so far folks.. will keep you updated