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Drowning in debt
sussman
Posts: 21 Forumite
Hi, I have got myself into a nightmare of debt and I don't think I can pay my way out of it.
The reasons for it are a combination of being self employed until last year, lack of money coming into the business and my own recklessness with probably a bit of depression to add.
I ceased trading last year and now am employed, take home is about 1800 per month.
Current debts are -
MBNA CC 1765
MBNA Loan 8397
Capital One CC 3267
Virgin CC 6170
Barclaycard 3919
Novuna Loan 24000
Seriously thinking about defaulting as I'm missing payments every month and costing me more.
I think I already know the answer but just wanted some opinions.
The reasons for it are a combination of being self employed until last year, lack of money coming into the business and my own recklessness with probably a bit of depression to add.
I ceased trading last year and now am employed, take home is about 1800 per month.
Current debts are -
MBNA CC 1765
MBNA Loan 8397
Capital One CC 3267
Virgin CC 6170
Barclaycard 3919
Novuna Loan 24000
Seriously thinking about defaulting as I'm missing payments every month and costing me more.
I think I already know the answer but just wanted some opinions.
0
Comments
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If you can't afford the minimum payments then that does seem to be the way forward.
In order for us to see the whole picture a statement of affairs would be useful
https://www.lemonfool.co.uk/financecalculators/soa.php
1 -
[font=courier new][b]Statement of Affairs and Personal Balance Sheet[/b][b]Household Information[/b]Number of adults in household........... 2Number of children in household.........Number of cars owned.................... 1[b]Monthly Income Details[/b]Monthly income after tax................ 1800Partners monthly income after tax....... 1200Benefits................................ 0Other income............................ 0[b]Total monthly income.................... 3000[/b][b]Monthly Expense Details[/b]Mortgage................................ 440Secured/HP loan repayments.............. 0Rent.................................... 0Management charge (leasehold property).. 0Council tax............................. 130Electricity............................. 100Gas..................................... 0Oil..................................... 80Water rates............................. 50Telephone (land line)................... 0Mobile phone............................ 12TV Licence.............................. 13Satellite/Cable TV...................... 0Internet Services....................... 26Groceries etc. ......................... 520Clothing................................ 30Petrol/diesel........................... 100Road tax................................ 15Car Insurance........................... 12Car maintenance (including MOT)......... 10Car parking............................. 0Other travel............................ 0Childcare/nursery....................... 0Other child related expenses............ 0Medical (prescriptions, dentist etc).... 50Pet insurance/vet bills................. 60Buildings insurance..................... 10Contents insurance...................... 10Life assurance ......................... 0Other insurance......................... 0Presents (birthday, christmas etc)...... 0Haircuts................................ 30Entertainment........................... 60Holiday................................. 65Emergency fund.......................... 0[b]Total monthly expenses.................. 1823[/b][b]Assets[/b]Cash.................................... 0House value (Gross)..................... 290000Shares and bonds........................ 0Car(s).................................. 4000Other assets............................ 0[b]Total Assets............................ 294000[/b][b]Secured & HP Debts[/b]Description....................Debt......Monthly...APRMortgage...................... 89000....(440)......1.49[b]Total secured & HP debts...... 89000.....-.........- [/b][b]Unsecured Debts[/b]Description....................Debt......Monthly...APRMBNA...........................1765......90........23.9MBNA LOAN......................8397......230.......5.74CAPITAL ONE....................3267......220.......27.5NOVUNA LOAN....................24000.....335.......6.1BARCLAYCARD....................3919......130.......25.5VIRGIN ........................6170......188.......21.66[b]Total unsecured debts..........47518.....1193......- [/b][b]Monthly Budget Summary[/b]Total monthly income.................... 3,000Expenses (including HP & secured debts). 1,823Available for debt repayments........... 1,177Monthly UNsecured debt repayments....... 1,193[b]Amount short for making debt repayments. -16[/b][b]Personal Balance Sheet Summary[/b]Total assets (things you own)........... 294,000Total HP & Secured debt................. -89,000Total Unsecured debt.................... -47,518[b]Net Assets.............................. 157,482[/b][i]Created using the SOA calculator at www.LemonFool.co.uk.Reproduced on Moneysavingexpert with permission, using other browser.[/i][/font]0
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That looks like a realistic soa to me. And I can see why things are tight.
You have a nice lot of equity in the house and a good amount of surplus income, just not enough to pay the debts.
A dmp is the way forward. You start by defaulting and saving an Emergency Fund.1 -
Only thing I can see that needs trimming is the food expenditure...£520 a month for two adults?!!!¡1
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I agree the food is high for 2 adults. The car maintenance looks low though and you have no emergency savings or leeway to save.
I think you either have to cut back and just plod on or default and enter a DMP.I’m a Forum Ambassador and I support the Forum Team on the Debt free Wannabe, Budgeting and Banking and Savings and Investment boards. If you need any help on these boards, do let me know. Please note that Ambassadors are not moderators. Any posts you spot in breach of the Forum Rules should be reported via the report button, or by emailing forumteam@moneysavingexpert.com. All views are my own and not the official line of MoneySavingExpert.
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Comments on the SOA in bold above...sussman said:[font=courier new][b]Statement of Affairs and Personal Balance Sheet[/b][b]Household Information[/b]Number of adults in household........... 2Number of children in household.........Number of cars owned.................... 1[b]Monthly Income Details[/b]Monthly income after tax................ 1800Partners monthly income after tax....... 1200Benefits................................ 0Other income............................ 0[b]Total monthly income.................... 3000[/b][b]Monthly Expense Details[/b]Mortgage................................ 440Secured/HP loan repayments.............. 0Rent.................................... 0Management charge (leasehold property).. 0Council tax............................. 130Electricity............................. 100 Check that these payments are correct, and that billing is using accurate meter readings.Gas..................................... 0Oil..................................... 80Water rates............................. 50 Switching to a meter might well save you here - we're 2 adults also and our metered payments are currently £20 a month.Telephone (land line)................... 0Mobile phone............................ 12TV Licence.............................. 13Satellite/Cable TV...................... 0Internet Services....................... 26Groceries etc. ......................... 520 As already mentioned this really is pretty high. You should easily be able to knock it down by £200, and probably more with a bit more effort. I assume there are pet food costs in there as well - hence the assumption that a higher than rock-bottom "2 adults" spend is likely to be needed here.Clothing................................ 30Petrol/diesel........................... 100Road tax................................ 15Car Insurance........................... 12 This seems really low - £120 a year for car insurance is a lower figure than I have heard anyone disclose for a very long while. Are you certain this is correct? Either way - costs are increasing, so assume that it will go up quite steeply when you renew.Car maintenance (including MOT)......... 10 I'm not sure how this would cover MoT test, servicing, tyres when needed, screenwash, cleaning and a contingency amount for any repairs that are needed? I think you need to work through your real annual spend and then divide it out and get a more realistic monthly figure here.Car parking............................. 0Other travel............................ 0 You never get a bus or a cab because you're having a drink? Never get a train because driving to somewhere isn't a good option?Childcare/nursery....................... 0Other child related expenses............ 0Medical (prescriptions, dentist etc).... 50 If any of this is prescription costs then look into a pre-paid certificate - if you get more than a single prescription in a month (or more than 4 across 3 months) then it works out better value.Pet insurance/vet bills................. 60Buildings insurance..................... 10Contents insurance...................... 10Life assurance ......................... 0Other insurance......................... 0Presents (birthday, christmas etc)...... 0 You never buy any presents for anyone? Not each other, your parents, siblings, best mate?Haircuts................................ 30Entertainment........................... 60Holiday................................. 65 Is this definitely being saved as you show zero in cash assets?Emergency fund.......................... 0 You need to start saving something here - currently you are in a poor situation if you need a new boiler or a roof repair, for example. [b]Total monthly expenses.................. 1823[/b][b]Assets[/b]Cash.................................... 0House value (Gross)..................... 290000Shares and bonds........................ 0Car(s).................................. 4000Other assets............................ 0[b]Total Assets............................ 294000[/b][b]Secured & HP Debts[/b]Description....................Debt......Monthly...APRMortgage...................... 89000....(440)......1.49 When is this deal due to end? You need to prepare for a big increase on that interest rate, I'm afraid. [b]Total secured & HP debts...... 89000.....-.........- [/b][b]Unsecured Debts[/b]Description....................Debt......Monthly...APRMBNA...........................1765......90........23.9MBNA LOAN......................8397......230.......5.74CAPITAL ONE....................3267......220.......27.5NOVUNA LOAN....................24000.....335.......6.1BARCLAYCARD....................3919......130.......25.5VIRGIN ........................6170......188.......21.66[b]Total unsecured debts..........47518.....1193......- [/b][b]Monthly Budget Summary[/b]Total monthly income.................... 3,000Expenses (including HP & secured debts). 1,823Available for debt repayments........... 1,177Monthly UNsecured debt repayments....... 1,193[b]Amount short for making debt repayments. -16[/b][b]Personal Balance Sheet Summary[/b]Total assets (things you own)........... 294,000Total HP & Secured debt................. -89,000Total Unsecured debt.................... -47,518[b]Net Assets.............................. 157,482[/b][i]Created using the SOA calculator at www.LemonFool.co.uk.Reproduced on Moneysavingexpert with permission, using other browser.[/i][/font]
Allowing for the possible large saving on groceries, even once that is spread out over the categories that are currently a bit light you can probably achieve a break-even.
Although I suspect a DMP is still favourite - in part because of the level of debt compared to your income - it might be worth looking into whether you are eligible for any 0% balance transfer deals - if you were this would then stop the interest on anything you could transfer over which in turn would allow you to make more of an impact on clearing those debts. The Capital One would be the first to target getting shifted.🎉 MORTGAGE FREE (First time!) 30/09/2016 🎉 And now we go again…New mortgage taken 01/09/23 🏡
Balance as at 01/09/23 = £115,000.00 Balance as at 31/12/23 = £112,000.00
Balance as at 31/08/24 = £105,400.00 Balance as at 31/12/24 = £102,500.00
£100k barrier broken 1/4/25SOA CALCULATOR (for DFW newbies): SOA Calculatorshe/her1 -
Thanks everyone for all the input. Ill try and address some of the points.
Just had a smart meter fitted so electric should be more accurate now. The water I perhaps being slightly over the top but that's for drinking water and waste water, two separate companies and bills.
£100 of the groceries is probably alcohol, and we do tend to eat well.
Never use public transport and I had forgotten the presents, we only buy for each other so maybe £17 a month.
Kind of estimating the holiday cost, we have not been away since before covid, chances are I would have used a CC to pay for it.
Car maintenance I don't get involved in as its her car but maybe more like £20 a month? We always use the same local garage, they are pretty cheap and the car has been very reliable...also pretty low maintenance.
The mortgage deal with Santander ends Feb 2026, I'm hoping that I can just renew with them, I'm aware that it will be higher than now, id like to get myself in a better position before then.
0% BT not an option as I think I've used them all up, Virgin have just written to me to tell me they will not be sending me another card due to my payment history.
I'm literally just choosing at random who not to pay every month, then pick another the following month and so on.
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Yeah. That's not a good strategy. Default on all of them and get your ducks in a row for a dmp.0
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Car maintenance:
Cost of annual service - maybe allow £200 ish allowing that some are "major" and will be more, and some are "minor" and might be a bit less.
MoT Test - £50-ish I think?
Tyres - a full set fitted would be around £280 for MrEH's car, £320-ish for mine.
Screenwash & sundries - I'm guessing that if we were buying for just one car then this would total around £20 a year on average? Cleaning can be done at home but obviously still carries a cost of car shampoo and polish if you wish to use it.
Personally I like to make sure that we also include a bit in there for contingencies - cars do have a habit of being expensive when you least want them to! Based on the above - and assuming that all 4 tyres in a year would be unlikely, but 2 would not (one puncture, and one just straight wear and tear for example) I would be budgeting about £35 a month as a bare minimum now. Ours is done differently as it also includes insurance, as well as being for 2 cars - currently we budget £145 per month for ours and this usually runs at a bit of a (deliberate) surplus as that helps with saving towards replacement vehicles when needed.
On the Balance Transfers - check via the MSE eligibility calculator if there might be anything you stand a chance of getting. Even a slim chance is worth a go - you won't be any worse off! Allowing for your feedback from Virgin though it may well be that you already have AP markers on your file in which case this might indeed be a no. You won't know until you check though.
🎉 MORTGAGE FREE (First time!) 30/09/2016 🎉 And now we go again…New mortgage taken 01/09/23 🏡
Balance as at 01/09/23 = £115,000.00 Balance as at 31/12/23 = £112,000.00
Balance as at 31/08/24 = £105,400.00 Balance as at 31/12/24 = £102,500.00
£100k barrier broken 1/4/25SOA CALCULATOR (for DFW newbies): SOA Calculatorshe/her0 -
If you have already missed payments you may as well default on them all now and do a DMP.I’m a Forum Ambassador and I support the Forum Team on the Debt free Wannabe, Budgeting and Banking and Savings and Investment boards. If you need any help on these boards, do let me know. Please note that Ambassadors are not moderators. Any posts you spot in breach of the Forum Rules should be reported via the report button, or by emailing forumteam@moneysavingexpert.com. All views are my own and not the official line of MoneySavingExpert.
The 365 Day 1p Challenge 2025 #1 £667.95/£72.60
Save £12k in 2025 #1 £12000/£40000
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