91k in Debt and don’t know where to turn

Hooley22

Hi all, hope you are all well. I have found this forum and have been reading some stuff which have helped me a little bit. As you can see from the title I am in huge debt 7 credit cards practically maxed out ( 42k ish)5 loans and two overdrafts. I have a house worth 250k with £168k left on the mortgage. It was a build up from Covid/living on ccs etc getting loans to pay off then getting back into cc debt by overspending massively. I have a healthy credit score but big utilisation so no one will touch me for a balance transfer etc. I got a job 3 years which means working away from my family in another country which took a lot of money to get to and from home to work for flights/trains every weekend and to get set up with accommodation. Z

Finally after 3 years I have just got a promotion and start my job in march on 99k a year with my overtime and expenses finally paid. My wife only knows about 38k of the debt which is making me absolutely ill, I feel like and absolute failure, a bad husband, a bad dad etc. I have thought a few times would it just be easier if i wasn’t here 😢 but id never ever do anything like that after seeing the aftermath of something similar to my cousins family. I know she will probably up and leave when/if she finds out and that’s what’s breaking me. I’ve been so stupid. 

My question is what should I do? I have stopped using all forms of credit. And have been in contact with Payplan and they have offered me a DMP 1900 per month x4 years. Obviously I know my credit would be wrecked but I was wondering if I should ask all of my creditors for a 2-3 month payment holiday to get an emergency fund together and pay off all my low debts in this time then attack the debt when I start my new position. 

Apologies for the long explanation but I don’t know where to turn at the moment. 

RAS

Thanks for the concise explanation.

The situation is horrid but you are facing debt roughly equivalent to your new salary, which isn't as bad as it might have been. But obviously you have lots of additional costs working away from home.

Even if your wife doesn't know the details, she has to learn that your debt is unsustainable, or she's going to be spending like crazy when you need to save like mad. She'll also need to know that you will have to re-mortgage with your current provider rather than chasing the market deals. And there's a chance that she's going to find getting credit harder because of your link via the mortgage.

We'd really need a Statement of Affairs, with your costs and income and basic family circumstances, does your wife work? Do you have kids? How are they with money?

Don't rush thing as often DMP providers don't let you save for an emergency fund before starting a DMP and that leads to continual unnecessary crises. 

Hooley22

Thanks for your Reply it’s much appreciated. 

I will organise a SOA tomorrow and post. 

Luckily now the expenses working away from home are fully covered. Flights, trains food and accommodation. 

I have just remortgaged on a 5 year fix and it’s only me that’s on the mortgage so we are not linked in any way. We have 2 kids 6 and 9. 

Rob5342

When starting a DMP we normally recommend that you stop paying the debts and wait for them to default before starting the DMP. It's completely counter intuitive but if you ask your creditors for help they actually treat you worse than if you just stop paying. Creditors will either mark the debt as defaulted, which drops off your credit report six years after it was put on, or arrangement to pay, which stays for 6 years after the debt has been paid off, potentially much longer. If you just stop paying they are more likely to default you which is get better in the long run. It you ask for help they are more in likely to.mark.it as arrangement to pay which could drag the whole thing out for far longer. The other advantage is that once defaulted, the debt is more likely to be sold to a debt collector, who are much more likely to accept a reduced settlement offer.

enthusiasticsaver

You have a large salary so that is good.  You have already spoken to stepchange and not unexpectedly they have come up with a DMP and it seems you have a large monthly payment available to throw at it.  Take a read of this thread In Debt and Wannabe Debt Free? First Steps! - Page 2 — MoneySavingExpert Forum

We would absolutely advise you save an emergency fund.  You want the debts to default before you start on the DMP so make sure that happens first.  Don't rush to set up the DMP before the cards and loans have defaulted and in the meantime any spare money you have save into an emergency fund.  Make sure your savings are with a bank you do not owe money to. Your creditors will take whatever you are in a position to pay them and I urge you not to get into payment arrangements as these markers stay on your credit file longer than defaults.  The defaults come off after 6 years.  The AP markers only come off 6 years after the debt is repaid. 

I would urge you to tell your wife as it will be easier if she is on board.  

Rob5342

I'd urge you to tell her too. I was in a similar position with my wife not knowing and I eventually told her. It was a difficult conversation but it was only once I had her help that we got anywhere with it.

BadDebtor

Hooley22 said:

Hi all, hope you are all well. I have found this forum and have been reading some stuff which have helped me a little bit. As you can see from the title I am in huge debt 7 credit cards practically maxed out ( 42k ish)5 loans and two overdrafts. I have a house worth 250k with £168k left on the mortgage. It was a build up from Covid/living on ccs etc getting loans to pay off then getting back into cc debt by overspending massively. I have a healthy credit score but big utilisation so no one will touch me for a balance transfer etc. I got a job 3 years which means working away from my family in another country which took a lot of money to get to and from home to work for flights/trains every weekend and to get set up with accommodation. Z

Finally after 3 years I have just got a promotion and start my job in march on 99k a year with my overtime and expenses finally paid. My wife only knows about 38k of the debt which is making me absolutely ill, I feel like and absolute failure, a bad husband, a bad dad etc. I have thought a few times would it just be easier if i wasn’t here 😢 but id never ever do anything like that after seeing the aftermath of something similar to my cousins family. I know she will probably up and leave when/if she finds out and that’s what’s breaking me. I’ve been so stupid. 

My question is what should I do? I have stopped using all forms of credit. And have been in contact with Payplan and they have offered me a DMP 1900 per month x4 years. Obviously I know my credit would be wrecked but I was wondering if I should ask all of my creditors for a 2-3 month payment holiday to get an emergency fund together and pay off all my low debts in this time then attack the debt when I start my new position. 

Apologies for the long explanation but I don’t know where to turn at the moment. 

The very first person you should turn to is your wife and to come clean, explain how you have a plan and need her moral support to get through this and some cutting back of spending for a while.

I have had debts of that level that I serviced for years before bad things happened, I lived off cards in a desperate attempt to trade my way out of trouble, finally I accepted I could never pay it off.

For where you are now I think you can regain your credit worthiness and pay off the debts in order of highest interest rate.  If you have anything earning less interest then liquidate it and pay off the debt because it will be like getting 39.9% interest on your savings.

If you whack serious numbers against the debts your percentage of credit limit used will improve and your credit record with it, once you have restored your credit score you can look to transfer as much as they will take to a new zero percent card, as long as you do not ask for more credit than you are transferring you should be OK.

The key to this is cutting your cost, eliminate all of your subscriptions, take away food, shopping at Waitrose (go to AldiLidl), I mean it, you need to be ruthless.  Don't look for cheap, look for FREE, I do not have any monthly subscriptions except £6 for mobile phone SIM and I am changing that to under £4 this week. I don't have any TV subs, no TV License as I do not watch live TV, no internet service as I use hotspots and mobile frugally.

It is horrible to have to cut to the bone but it is not forever, use this website and forum and work with your wife so you are in this together and will come out the other side.

stu12345_2

why would she up and leave.
remember the vows for richer or for  poorer 

explain to her there are solutions for debt repayments

and what most folk  new to debt is they don't know  is that  you never normally pay back all your debt cos a few years, even only  2 years down the line the creditors settle on cheap offers, such as up to 50 % discount if you settle early.

you build up a fund by paying say 70% of what you could max afford to pay  back creditors monthly and bank the rest in a savings account 
 a dmp is so informal, that you decide your monthly outgoings, no one sees your expenses etc, so you make the numbers work for you, not for  paylan, stepchange etc

so you build up that full and final settlement fund.

your 91k debt could result in only £45 k debt!!

yes, you also need to state your wife's wages, if she works, her debts, if she has any

your wages are huge, many folk on here are more stressed earning £19 k with debts of £25k!

you have large debts, but a massive shovel to dig yourself out 
if you go to YouTube watch some of Dave Ramsey shows, phone ins.
many have huge wages, but debts 3 times their wages, mostly university debts , 2 new cars debts, big mortgages eg live in big expensive cities etc

his famous answer is of course, you are going to have to work 7 days a week, you won't see the inside of a restaurant for years, unless you're the dishwasher and you are going to love beans and rice ,  you will only own a car if it's old and paid in cash, but you will pay those debts off mega fast.

EssexHebridean

I'd hope that your fears about your wife just upping and leaving would be completely unfounded - ask yourself, would that be YOUR reaction if the positions were reversed? I'm going to guess not - and in that case, it's pretty unlikely that your wife would. She will be upset, completely - but a good measure of that will likely be that she'll be cross at herself for not having realised that the sums just didn't add up. Take a breath, sit her down, talk her through the situation - tell her that you are sorry beyond measure to not have come clean with her sooner, as that may well be the worst of it for her - she will feel that you didn't trust her. 

Some good advice from others relating to not entering payment arrangements, asking for payment holidays etc if you are planning on taking the DMP route - yes it's counter-intuitive but it does make for a far "cleaner" result. 

stu12345_2

first things first, tell your wife the debt size, tell her you have researched advice from reputable sources, eg payplan

I wouldnt show her your initial comment  you posted here, that's if  you wanted to show her the  advice and replies, you get on this forum thread, as it's very personal too personal for her to read imo.

by all means show her the stickies a the top of each section though 

you are not a failure , you have a great well paid job, bought house, and I'm sure youre an intelligent guy 

wife just has to get used to knuckling down now,  with you as a team. No new cars, exotic foreign holidays, no spending on credit cards, etc

you don't have to do the Dave Ramsey beans and rice. I suggest you watch his videos on YouTube, wow, you will see your situation isn't as bad as some of his callers.
but his show gives a lot of motivation 

Emmia

stu12345_2 said:

why would she up and leave.
remember the vows for richer or for  poorer 

explain to her there are solutions for debt repayments

and what most folk  new to debt is they don't know  is that  you never normally pay back all your debt cos a few years, even only  2 years down the line the creditors settle on cheap offers, such as up to 50 % discount if you settle early.

you build up a fund by paying say 70% of what you could max afford to pay  back creditors monthly and bank the rest in a savings account 
 a dmp is so informal, that you decide your monthly outgoings, no one sees your expenses etc, so you make the numbers work for you, not for  paylan, stepchange etc

so you build up that full and final settlement fund.

your 91k debt could result in only £45 k debt!!

yes, you also need to state your wife's wages, if she works, her debts, if she has any

your wages are huge, many folk on here are more stressed earning £19 k with debts of £25k!

you have large debts, but a massive shovel to dig yourself out 
if you go to YouTube watch some of Dave Ramsey shows, phone ins.
many have huge wages, but debts 3 times their wages, mostly university debts , 2 new cars debts, big mortgages eg live in big expensive cities etc

his famous answer is of course, you are going to have to work 7 days a week, you won't see the inside of a restaurant for years, unless you're the dishwasher and you are going to love beans and rice ,  you will only own a car if it's old and paid in cash, but you will pay those debts off mega fast.

I think whether she'd up and leave would depend on the overall health of the marriage, whether she's suspected debt, had it denied - lying... And how she feels about debt / her own financial position as an individual 

I don't think anyone can say she'll definitely stay, or definitely go...

I suggest though that the OP is completely honest about the amount of debt, and has a good plan to tackle it when he sits down to discuss it with her.