First Steps

enthusiasticsaver

You are right in that you definitely do have a problem if that soa is correct.  Obviously paying the debt is beyond your income so I am not sure if a DMP is a possibility as you do not appear to have any spare income at all but you also are living beyond your means even without the debt repayments so it is not hard to see how the debt has occurred.  To start with I would ask if your wife knows the situation as that soa only shows one income.  Is that yours and hers together or just one of you?  If your wife is self employed but not contributing to bills then this needs to change and you both need to work together to sort your finances out. 

What is the £160 child expenses for? The groceries can be cut back and things like cable tv can be cancelled but really the only way you will be able to sort this is by increasing income as even with defaulting on the cards etc you are still short of covering essential expenses.  The easiest way to sort it though is to discuss a budget together and make a  plan.  

longtimelurker2020

@bon007 really sorry to read about the stress you’re going through with the debt. I know how it can weigh on one and become all consuming, but try not to crumble under the weight of it all; stand firm and in control and continue to try to find a way to sort this out. 

I’m no debt-busting expert but thought I’d chime in on the point @enthusiasticsaver made about increasing your income. 

From your SoA it looks like you’d need an income of around £3,000 to cover your everyday spend and have some surplus to tackle that level of debt effectively. 

Can you or your partner take on a second job to earn that extra £600 a month, whether as a delivery driver or at a supermarket on weekends or in the evenings? Those two fields have boomed all through the pandemic. 

Or, depending on your circumstances and occupation, perhaps consider bankruptcy if that option is open to you. 

Money is important, but not enough to sacrifice one’s mental health over. And from reading your posts I can tell that you’re struggling mentally. Good luck with everything 

katsu

How realistic is your SOA? You stopped paying your debt 3 months ago. Is your debt increasing each month by the overspend of several hundred pounds?

I think you need to tell your wife and talk her through this SOA.

Very practically:


£185 G&E per month - look at how you can reduce that. 

£60 mobiles. Any out of contact you can reduce?

What are the £160 child expenses? 

Cancel satellite TV etc. Just keep broadband. 

Can you and your wife reduce groceries? 

You currently can't pay any money off your debts as you are spending too much money on living during the month. You've got to get that negative dealt with first. 

Can you get child benefit?

I think some of the money your wife earns needs to be spent on family costs to balance out the budget. 

Good luck. There's lots of great help here. You can do this! 

bon007

Hi Thank you so much for all your replies . I worked the SOA on my basic wage without over time or taking in to account my wife’s money that she transfers over because as stated her business being self employed is very hit and Miss due to the pandemic . I currently get £500 off my wife each month but I did not include her on the SOA due to the inconsistency of her wages but she does receive the child benefit as well .

I would not consider bankruptcy due to not wanting to lose the house . In relation to the child expenses this covers clubs and a teacher for both of the children each week to help them progress in which I could scale down . I also earn an extra £300 in overtime . Should I amend the soa to include this ?

enthusiasticsaver

Ok well if you get £500 off your wife and get overtime that does make a difference but you need a plan for when you don’t get this extra income. I would adjust the soa with this extra income because as it stands I cannot see how you can offer a payment towards a DMP with a £330 shortfall just on expenses. The children’s expenses need to be cut back as do the groceries and I would cancel the cable TV/mobiles and go to Sim only. I would ask again though if your wife knows the situation as your mental health is suffering because you are carrying this alone and the debt is down to both of you as her erratic or low earnings are part of the reason why you are in debt presumably? 

You can sort this but it helps if you are both on the on the same page. If she thinks everything is fine with your finances she won’t cut back on expenditure the way you both need to in order to get rid of the debt. Talk to her and you will feel better too. 

enthusiasticsaver

If you have two cars and they are only worth £700 you definitely need more than £18 a month car maintenance. You need to be saving that each month especially as you won’t have access to credit. Same goes for emergencies.

i would make a start by writing to your  creditors and asking for time to sort this out. Don’t make any more payments. Your wife’s record will be affected too as you are financially linked.

bon007

Hi hi Thank you for your advice and support and I will look to reduce these costs for sure . I have been dealing with everything by working overtime to cover this situation . It was the pandemic which caused the problem and the debt  over doubled. My wife is aware of the situation and her business is causing her a great deal of stress and she has enough to cope with and I think that would be the tipping point adding this as well . The second car is a new car which is linked to the business . 

I am determined to get out of this awful situation if I have to work every hour in the day .

I have not paid the payments for three months so they are in the arrears currently . 

bon007

I would like to thank you for your comments as the advice from you all I will follow . Feeling overwhelmed today with this all but I am now tackling this head on. I know there will be lots of tough times a head.

I have been sent a letter today from Barclaycard and it reads

Default Notice Served Under Section 87(1) of the Consumer Act 1974

Then it goes on stating You must make the full payment by 23/01 or they will take action and gives 3 options 

1 Account will be closed
2 We will send a formal demand letter
3 We will pass your account to a third party .

I take it this is a Default .

Would you  respond to them now.

I am currently going through everything following your advice and guidance . Going in to a self managed DMP where would I start once I have adjusted all my living expenses .

I am so thankful of your kindness and help and joining this forum has life changing and I only wish I had signed up sooner,

kimwp

I think with a DMP, you would want to be submitting expenses which give you a little breathing room and afterwards cut right back to continue saving up some funds for emergencies, probably children's tuition (I can't see a credit card company being happy that you pay for that rather than them) and possibly full and final offers - but I'm not an expert, just what I've gleaned off here. Worth asking the question in a stand-alone thread if you don't get a more expert answer on this thread.

You definitely want to be cutting back on gas and electricity spend - it sounds like it's potentially a big house from the size of the council tax, but if you have to turn the heating down in some rooms and live in the other rooms during the winter with warm jumpers for a bit, it's not the worst thing to have to do. If finances are causing you stress, that's the time to cut back on presents and think creatively about gifts of time or experiences.

You can do this.

enthusiasticsaver

Barclaycard have defaulted you which is actually positive. I would not rush to make arrangements yet.

Save up for emergencies initially. 
Wait for defaults before setting payments. 
Make sure your soa covers everything and look for places to cut back. 
Check out the DMP thread for advice.