Debt Advice

Fellalis89

Hi,
I was wondering if someone could help guide me in the right direction please. I have racked up roughly £21k's worth of debt and it has got to a point whereby I cannot manage anymore. Monthly I have minimal money left over and it has affected my mental health more and more every day (as I'm sure it has to everyone). I spoke with a friend who offered me £8k to reduce some of my debt, however when I do the calculations, paying them back doesn't make me better off, I would have shifted the debt and will remain with very little.
I am due for a remortgage and I am trying to get £12k (cannot achieve the full amount needed) to pay off some of my debts to then accept the offer from a friend of £8k and then I would only have them to pay back. However yesterday the mortgage advisor said the first AIP has failed. It isn't a complete no as they are still looking however, I am very skeptical anyone is going to offer to loan the £12k I am after due to the amount of debt vs my income.

I feel I am left with two options - a DMP or accept the £8k and continue to struggle for another 5 years.

With regards to the DMP I am looking at remortgaging as normal but taking it over a 10 year period to avoid issues when remortgaging with debts and defaults, the other option is 5 years but with default periods and the length of time they are registered, I don't feel it wouldn't be enough. I was wondering if anyone can offer me advice? What type of offers people have received when remortgaging with defaults and debts? I have noticed people have said payments are higher but I wasn't sure what to expect? I'm exploring all options available to understand my best course of action, and the reason I question 5 years is to not tie myself into a 10 year fixed deal, or would this be better? 

Any additional advice and guidance would be amazing, I have not been able to stop thinking about this and cannot work out the best way to action it all. I am so confused right now.

My debts are:
Admiral Loan £9479
Lloyds Loan £2710
Capital One Card £800
MBNA Card £4572
Virgin Card £2933

Thank you x

Karonher

Sorry not to be able to help regarding the mortgage I will comment on the loan. Unless your friend can wait until you are debt-free to get their money back, you are not going to be much better off. 

fatbelly

Don't remortgage with a view to consolidating non-priority debts, which is what all those are.

If you cannot get a remortgage at the end of a fixed period  at a favourable rate it reverts to the standard variable rate. In that scenario if you were to stop paying the non-priority debts, could you afford the mortgage and how much surplus would you have?

A statement of affairs (link is to a calculator) would help us to understand your position.

I would think a dmp is the way forward for you but an IVA is an outside possibility.

RosaBernicia

Hello, sorry to hear you are stressed.  Hopefully we can help point you towards solutions. 

One of the obvious things to take into account is what money you have coming in, and where your money is currently going.  Could you fill in an SOA (statement of affairs), as in the sticky posts at the top of the board?  That will help people understand your situation better and see what options might work for you. 

Fellalis89

Hi all,

Thank you for your response. Below is taken from an excel table I created of my current outgoings and what my new expected wages are to be. I am starting a new job this month and won't get a true reflection of my monthly wages until June, therefore using the government tax calculator I have added a rough estimate of what I expect it to be. Also, my petrol is currently set high due to travelling 1.5 hours to work and back 3 days a week, at the current inflation, with extra on top to cover the five-week months. Again this is a rough estimate covering my back until I understand how much I will actually be spending per month. I have reduced as many of my bills as I can, and will reduce others when they are up for renewal.

If you need me to complete a SOA I will do, just thought this might be easier as I have already created it.

My remaining mortgage is £77,729, my renewal quote for 10 years fixed currently stands at £281.06 per month at 3.4%, 5 years fixed would be £281.04 3.7%.

If you need any further information, I will be more than happy. Thank you all so much!

Billing	Amount	End Date	Debt	Annual Rate
TV Licence	£13.37
Water	£28.78
Gym	£39.00	Jul-22
Gas and Electric	£137.00
Council Tax	£96.00
Loan Admiral	£321.22		£9,479	13.09%
Mortgage	£342.18
Account Fee	£17.00
DWP	£10.00		£139
Loan Lloyds	£152.95		£2,710	22.30%
Capital One CC	£50.00		£800	0%
Virgin Media	£36.30
Pet Insurance	£14.25
Amazon	£7.99
Car Finance	£140.59		£6,467	7.90%
Sofa Finance	£42.52	Sep-22	£255
Virgin CC	£87.52		£2,933	23.29%
Phone Bill	£10.00
MBNA CC	£50.00		£4,572	20.93%
Petrol	£400.00
Outgoings	£1,996.67		£26,978
Wages	£2,231.99
Left	£235.32
Car Insurance	£37.50
Home Insurance	£10.00
Car Maintenance	£16.60

Fellalis89

I have completed an SOA too, below are the totals they have calculated.


Summary of Monthly Income, expense and surplus

Total monthly income: £2230

Expenses (incl. HP & secured debts): £1360.13

Available for debt repayments: £869.87

Unsecured debt repayments: £663

Surplus (shortfall if negative) £206.87

Personal Balance Sheet Summary

Assets: £126,000

Secured & HP Debt £83,729

Unsecured Debt £20,494

Net Assets £21,777

RosaBernicia

Wow you are already very organised!

First question that comes to mind is, do you feel that you really have the £206 left at the end of the month that this suggests?  Or is it disappearing on something that isn't yet captured in your list?  Understanding that will help determine your way forward.  If you do have it, then for example you could get rid of your smallest debt, the Capital One, in just four months, and free up that money to also focus on the next debt (this is called snowballing, you might like to look at online calculators that will help show you how it can work).  If in reality there isn't that money left at the end of the month, then you will need to figure out where it's going. 

As Fatbelly says, it isn't generally the best solution to shift debts to your mortgage because that ultimately puts your home at risk.  Are the quotes you have given for just your current remaining mortgage, or do those reflect the additional borrowing that you were seeking?  And do you know what your current mortgage would revert to when you get past the fixed rate period? 

fatbelly

As above we need to dig into why you write ' I cannot manage anymore. Monthly I have minimal money left over and it has affected my mental health more and more every day '

Yet your spreadsheet shows 'Surplus £206.87'

You might need to post the full soa 

Fellalis89

RosaBernicia said:

Wow you are already very organised!

First question that comes to mind is, do you feel that you really have the £206 left at the end of the month that this suggests?  Or is it disappearing on something that isn't yet captured in your list?  Understanding that will help determine your way forward.  If you do have it, then for example you could get rid of your smallest debt, the Capital One, in just four months, and free up that money to also focus on the next debt (this is called snowballing, you might like to look at online calculators that will help show you how it can work).  If in reality there isn't that money left at the end of the month, then you will need to figure out where it's going. 

As Fatbelly says, it isn't generally the best solution to shift debts to your mortgage because that ultimately puts your home at risk.  Are the quotes you have given for just your current remaining mortgage, or do those reflect the additional borrowing that you were seeking?  And do you know what your current mortgage would revert to when you get past the fixed rate period? 

Thank you  

Sorry if I haven't been clear. The SOA created is where I am hoping to be. I start my new job next week, therefore this month will be a mixture of old wages and new wages, so I cannot provide you with a true reflection of what my monthly wages are going to be until May's payday. I didn't think it was necessary to seek advice using my old wages as that won't be the case going forward.

What isn't included in the new SOA and my expected wage is student finance that will be taken each month, plus any pension costs and changes to current tax and income tax figures, meaning I believe the surplus will be slightly lower than the £206 shows. Next, this calculation doesn't reflect my monthly food/household bill which I try and budget for £80-£100 per month. One of the reasons I am here is also that I have struggled to manage my money efficiently and it spirals, hence the debt. So I was seeking guidance and advice on how to manage money more efficiently with any help I could get.

With regards to my mortgage, I am currently on a variable (I thought this ended May 2022, however it ended May 2021). My letter states that the 1st of May's payment will be £353.82 and the interest rate is 4.24%. 

The mortgage quote I mentioned previously does not reflect the additional I was asking to borrow (a broker was looking into the additional for me), just my remaining amount. I didn't think to ask them would the rate would be after the fixed-rate period however this is something I will definitely ask, thank you!

Fellalis89

fatbelly said:

As above we need to dig into why you write ' I cannot manage anymore. Monthly I have minimal money left over and it has affected my mental health more and more every day '

Yet your spreadsheet shows 'Surplus £206.87'

You might need to post the full soa 

The reason I said that can be shown below in last month's outgoings and wages. As you can see I had a surplus of £78.83 and I still had to get a month's shopping and petrol from this. And this was a good month. There have been months where I have only had a £20 surplus, so I've had to use my credit cards to pay for basics. It didn't need quoting about how it has affected me, a comment to say your spreadsheet reflects a surplus would have been sufficient.  

As I have mentioned to RosaBernicia, the SOA is where I am heading and I am trying to reflect my new salary, as my old will no longer be relevant, as well as seek advice and guidance on my next steps.

Billing	Amount
TV Licence	£13.37
Water	£28.78
Gym	£39.00
Gas and Electric	£91.00
Council Tax	£92.00
Loan Admiral	£321.22
Mortgage	£324.29
Account Fee	£17.00
DWP	£10.00
Loan Lloyds	£152.95
Money Owed	£20.00
Virgin Media	£36.30
Car Finance	£140.59
Pet Insurance	£12.73
Sofa Finance	£42.52
Virgin CC	£89.96
Phone Bill	£40.54
Apple Music	£9.99
MBNA CC	£100.61
Amazon	£7.99
Outgoings	£1,587.30
WAGES	£1,666.13
TOTAL REMAINING	£78.83

NeverendingDMP

I think a soa or adapting your excel sheet to include your food, clothes, prescriptions, tyres, car repairs gifts etc will give you an idea where the spare will go. 
On the plus side your new original mortgage quote is less, the furniture will be paid off by Sept and cutting the gym and poss going to a basic bank account for a bit could save you a bit too. Might also be worth paying less on your capital one that's at 0% for a bit to direct the money elsewhere.