140k Unsecured debt - advice

fatbelly

ldn83 said:

Thanks for the input everyone, I will get a comprehensive SOA together when I get a bit of time. 

I agree that this is definitely a budgeting issue as well as all the huge financial strains we have experienced due to the house, covid, cost of living and then pregnancy and childcare. Prior to buying the house and then becoming parents we always had good disposable income so budgeting wasn’t really a focus, and of course now we need to adapt and change our ways. We can definitely shave something off of our expenditure but the main issue we have is the crippling childcare bill for another 12-24 months. The debt would be near manageable without the almost £1900 a month in childcare. Saving or trying to pay down debt with this kind of outgoing is impossible which has pushed me/us into the red by some distance.

The 5k gas & electric bill (BG) last year is from the peak energy prices, we have a fairly large 4 bed Victorian semi which is expensive to heat and power. We have bought more energy efficient bulbs and heaters this year and with the prices moving down in the oil market it’s going to be around 3.2k this year. Our first year in the house the bill was around 2.3k as a comparison to the scale of the cost of living crisis we all experienced/experiencing.

Can I just ask, wouldn’t an IVA be suited to our situation as we could reduce our debt payments by 80%, then once childcare is out of the way we can hammer down the balances or what’s left of them. Also once the IVA is complete, how long does it stay on record? For example if we get a windfall or a big career progression where we can pay down the debt in 3 years how long would the IVA show after the debt is repaid?

Very uneasy about simply cancelling the DDs and getting CCJs.

Thanks 

I've been in this game (Citizens Advice debt adviser) for over 20 years and I've seen a fair few court claims.

Defended quite a few but that's not my point.

The point is they are a very small proportion of the debts I've seen. I explained the process in my first post.

Don' t base your strategy on an irrational fear of court action.

ladyholly

 I may be wrong and you may earn too much but I understand there is help with child care and the rules are changing  this year. It may be worth looking into if you are not claiming. I am sorry to be so vague but I am long past needing child care I just think I read something recently.

sourcrates

Just some basic facts to mull over.

With an IVA you would repay the full amount of your outstanding debt, plus fee`s and other associated costs, there would be no write off due to your large income, and you would also have to release equity in year 5, of a 6 or 7 year arrangement.

With debt management you can make that income work for you by obtaining settlement deals at various points in the process, and by employing the snowball method as well, you can be debt free a lot sooner.

Consolidation is a terrible idea, which could potentially be terminal, you should forget that idea.

ldn83

Floss said:

ldn83 said:

.... We can definitely shave something off of our expenditure but the main issue we have is the crippling childcare bill for another 12-24 months. The debt would be near manageable without the almost £1900 a month in childcare. Saving or trying to pay down debt with this kind of outgoing is impossible which has pushed me/us into the red by some distance.
......

.....Very uneasy about simply cancelling the DDs and getting CCJs.
 

By demonising the childcare costs, you are turning your daughter into an issue which is resented. That is not good parenting. Childcare is a bill as valid as your mortgage, and as pointed out, you could save that cost by dropping to a 1-income family & one of you staying at home to parent her. However, you are choosing to both work hence you have the childcare bill.

Perhaps you need to rephrase it as "daughter's preschool care & education" rather than "crippling childcare"

Let’s just be crystal clear here, there is no demonising or resenting of our daughter, she’s the best thing that’s happened to us, if there’s any resentment it is aimed squarely at the system that penalises hard working families with excessive childcare costs. Parents shouldn’t have to leave their careers that they’ve spent decades building simply because there’s almost no provision for childcare for children aged between 1 & 3. Not everyone has family nearby that can help out. I’ve always thought the 30 hours free should start at 1 years old and thankfully the tories have seen sense and bringing it in for future parents in 2025. 15 hours free starting this April, which will help us somewhat.

Also someone else saying that we chose to have a child and stop complaining. Let’s not get into personal matters on a forum designed to be non judgemental and about finance. Whether we chose it or not is not a topic for discussion here.

Aside from this, some really helpful answers so far, thank you. 

ldn83

SOA (sorry don’t have the APR% on hand)

Statement of Affairs & Personal Balance Sheet

Summary

Monthly Budget Summary	Amount(£)
Total monthly income	7,800
Monthly expenses (incl. HP & secured loans)	5,366.75
Available for debt repayments	2,433.25
UNsecured debt repayments	4,194
Amount short for making debt repayments	-1,760.75

Personal Balance Sheet Summary	Amount(£)
Total Assets (things you own)	524,500
Total Secured & HP Debt	-294,500
Total Unsecured Debt	-174,900
Net Assets	55,100

Household Information

Number of adults in household	2
Number of children in household	1
Number of cars owned	1

Income, Expense, Debt & Asset Details

Income	Amount(£)
Monthly income after tax	4100
Partners monthly income	3500
Benefits	0
Other income	200
Total monthly income	7800

Expenses	Amount(£)
Mortgage	1125
Secured/HP loan payments	222
Rent	0
Management charge (leasehold property)	0
Council tax	188
Electricity	160
Gas	160
Oil	0
Water Rates	33
Telephone (land line)	0
Mobile phone	120
TV Licence	13.25
Satellite/Cable TV	40
Internet services	40.5
Groceries etc.	700
Clothing	40
Petrol/diesel	150
Road tax	13
Car Insurance	83
Car maintenance (including MOT)	70
Car Parking	0
Other travel	0
Childcare/nursery	1700
Other child related expenses	60
Medical (prescriptions, dentists, opticians etc.)	20
Pet Insurance/Vet bills	21
Buildings Insurance	20
Contents Insurance	20
Life Assurance	0
Other Insurance	0
Presents (birthday, christmas etc.)	75
Haircuts	60
Entertainment	100
Holiday	83
Emergency Fund	50
Total monthly expenses	5366.75

Secured & HP Debt Description	Debt(£)	Monthly(£)	APR(%)
Mortgage	286000	(1125)	2.9
Hire Purchase (HP) Debt	8500	(222)	3.9
Secured & HP Debt totals	294500	-	-

Unsecured Debt Description	Debt(£)	Monthly(£)	APR(%)
Lloyds Loan	15500	355	0
Admiral Loan	23000	416	0
Novuna Loan	8000	167	0
HSBC Loan (wife)	8000	200	0
Virgin CC (wife)	6100	180	0
Lloyds CC (wife)	11000	330	0
MBNA CC (wife)	8700	260	0
Tesco CC (wife)	1450	34	0
Virgin CC	3200	85	0
MBNA CC	5250	200	0
Lloyds CC	14000	280	0
AA Loans	28000	441	0
Zopa Loan	22000	611	0
Updraft 2 Loan	11000	333	0
Updraft Loan	9700	302	0
Unsecured Debt totals	174900	4194	-

Asset Description	Value (£)
Cash	8000
House Value (Gross)	490000
Shares and bonds	0
Car(s)	16500
Other assets (e.g. endowments, jewellery etc)	10000
Total Assets	524500

Sea_Shell

One thing's that jumps out at me is no Life Insurance?

Is that correct?

You have a mortgage and a child, so can you afford NOT to have any?

Don't the mortgage company insist on it any more?

jackieblack

ldn83 said:

Floss said:

ldn83 said:

.... We can definitely shave something off of our expenditure but the main issue we have is the crippling childcare bill for another 12-24 months. The debt would be near manageable without the almost £1900 a month in childcare. Saving or trying to pay down debt with this kind of outgoing is impossible which has pushed me/us into the red by some distance.
......

.....Very uneasy about simply cancelling the DDs and getting CCJs.
 

By demonising the childcare costs, you are turning your daughter into an issue which is resented. That is not good parenting. Childcare is a bill as valid as your mortgage, and as pointed out, you could save that cost by dropping to a 1-income family & one of you staying at home to parent her. However, you are choosing to both work hence you have the childcare bill.

Perhaps you need to rephrase it as "daughter's preschool care & education" rather than "crippling childcare"

Let’s just be crystal clear here, there is no demonising or resenting of our daughter, she’s the best thing that’s happened to us, if there’s any resentment it is aimed squarely at the system that penalises hard working families with excessive childcare costs. Parents shouldn’t have to leave their careers that they’ve spent decades building simply because there’s almost no provision for childcare for children aged between 1 & 3. Not everyone has family nearby that can help out. I’ve always thought the 30 hours free should start at 1 years old and thankfully the tories have seen sense and bringing it in for future parents in 2025. 15 hours free starting this April, which will help us somewhat.

Also someone else saying that we chose to have a child and stop complaining. Let’s not get into personal matters on a forum designed to be non judgemental and about finance. Whether we chose it or not is not a topic for discussion here.

Aside from this, some really helpful answers so far, thank you. 

No-one said stop complaining about having a child. I said please stop complaining about having to pay for your child to be looked after at nursery, which is necessary because you’ve both chosen to work full time. 

ldn83

Sea_Shell said:

One thing's that jumps out at me is no Life Insurance?

Is that correct?

You have a mortgage and a child, so can you afford NOT to have any?

Don't the mortgage company insist on it any more?

Life insurance for both of us and accident at work insurance is a benefit of my wife’s job.

ldn83

sourcrates said:

Just some basic facts to mull over.

With an IVA you would repay the full amount of your outstanding debt, plus fee`s and other associated costs, there would be no write off due to your large income, and you would also have to release equity in year 5, of a 6 or 7 year arrangement.

With debt management you can make that income work for you by obtaining settlement deals at various points in the process, and by employing the snowball method as well, you can be debt free a lot sooner.

Consolidation is a terrible idea, which could potentially be terminal, you should forget that idea.

Not sure I understand this right, if we were to repay the debt in full within 6 years what would be the difference in just repaying the debt normally? The longest term debt we have is 6 years. Surely an IVA is an insolvency arrangement where the creditors agree to a part settlement within a time frame. 

ldn83

One key takeaway so far is that secured consolidation is a bad idea so that’s out of the running, thank you.