Last chance saloon before insolvency.

Harrysplan

Hi everyone,

I have been a very long time Lurker on this forum, and have used it for guidance and advice when I have had previous half-hearted attempts at sorting out our debt problems.

today, for the first time ever I have sat down and I’ve completed an SOA. It doesn’t make for pleasant reading but I keep reminding myself that this task wasn’t necessary evil if we have any chance whatsoever of sorting out the absolutely horrendous mess that we have created.

I have used our spending from last month to construct the SOA. I figured that there was no point in creating something aspirational, however when you look at it you will see very clearly the areas that we had massively messed up on.

why am I doing this now? Well, I feel that we are at a point where if we don’t do something drastic we are going to end up bankrupt, and losing our home. The amount of money that we owe is I watering and sickening. Our eldest child is just about to finish university, and this means that the money that we have been using to support her can be diverted towards the debts. We absolutely have to do this now.

my wife works full-time however due to some complex health problems she also receives a PIP. We are very aware that recent media coverage suggests that this could change at some point soon. We really need to get into a better position so that we could deal with this loss of income if necessary.

whilst we are both very aware that we are massively in debt, I haven’t shared the SOA with my wife yet. I fully intend to do this however I want to get the working plan in place before I show her the cold hard figures. The last time we spoke about the debt we discussed that it was around 85k. I am ashamed to say that today was the first time that I’ve ever really added it up as part of the SOA.

we are both very keen to change the way things are. We both turned 43 recently and we agreed that we cannot be in this debt at 50.

So, here it is. I have seen a lot of SOA is as part of my lurking on this forum, however I’m pretty ashamed that this one belongs to me.

Household Information[/b]

Number of adults in household........... 2

Number of children in household......... 2

Number of cars owned.................... 1[b]

Monthly Income Details[/b]

Monthly income after tax................ 4180

Partners monthly income after tax....... 1550

Benefits................................ 549

Other income............................ 750[b]

Total monthly income.................... 7029[/b][b]

Monthly Expense Details[/b]

Mortgage................................ 624

Secured/HP loan repayments.............. 0

Rent.................................... 0

Management charge (leasehold property).. 0

Council tax............................. 142

Electricity............................. 94

Gas..................................... 45

Oil..................................... 0

Water rates............................. 35

Telephone (land line)................... 0

Mobile phone............................ 46

TV Licence.............................. 13.25

Satellite/Cable TV...................... 49

Internet Services....................... 26

Groceries etc. ......................... 768

Clothing................................ 250

Petrol/diesel........................... 120

Road tax................................ 0

Car Insurance........................... 0

Car maintenance (including MOT)......... 0

Car parking............................. 0

Other travel............................ 0

Childcare/nursery....................... 40

Other child related expenses............ 0

Medical (prescriptions, dentist etc).... 18

Pet insurance/vet bills................. 52

Buildings insurance..................... 21

Contents insurance...................... 18

Life assurance ......................... 33.29

Other insurance......................... 0

Presents (birthday, christmas etc)...... 300

Haircuts................................ 50

Entertainment........................... 500

Holiday................................. 400

Emergency fund.......................... 0[b]

Total monthly expenses.................. 3644.54[/b]

[b]

Assets[/b]

Cash.................................... 2700

House value (Gross)..................... 315000

Shares and bonds........................ 0

Car(s).................................. 0

Other assets............................ 0[b]

Total Assets............................ 317700[/b]

[b]

Secured & HP Debts[/b]

Description....................Debt......Monthly...APR

Mortgage...................... 74501....(624)......4.11[b]

Total secured & HP debts...... 74501.....-.........-   [/b]

[b]Unsecured Debts[/b]

Description....................Debt......Monthly...APR

Barclaycard....................12800.....259.......6.9

Barclaycard....................5400......111.......6.9

MBNA...........................8752......287.......26

Mum loan 2.....................10000.....0.........0

Zopa...........................1200......75........29.9

Elfin Market...................1900......111.......38.8

JD Williams....................1800......85........49

Creation CC....................4500......101.......24

HSBC CC........................2874......86........16.9

Barclaycard 3..................8500......248.......24.2

Loan 3.........................8500......210.......19.5

Cosolidation loan 2............8000......132.......8.8

Consolidation loan.............14000.....361.......18.9

Loan from mum..................4500......90........0

Natwest........................9875......99........0[b]

Total unsecured debts..........102601....2255......-  [/b]

[b]

Monthly Budget Summary[/b]

Total monthly income.................... 7,029

Expenses (including HP & secured debts). 3,644.54

Available for debt repayments........... 3,384.46

Monthly UNsecured debt repayments....... 2,255[b]

Amount left after debt repayments....... 1,129.46[/b]

[b]Personal Balance Sheet Summary[/b]

Total assets (things you own)........... 317,700

Total HP & Secured debt................. -74,501

Total Unsecured debt.................... -102,601[b]

Net Assets.............................. 140,598[/b]

RAS

Well you know where you need to find money from your budget. Obviously you need your wife (and children) need to understand that having lived beyond your means for years, it's going to take a decade to clear up the situation and the treats are going to stop.

You could clear the JD Williams, Elfin Market and Zopa accounts in three months if you wanted. 

Then start paying back your mum at least £200 a month and pay debt with the highest APR.

Although I'm curious as to what you've been doing with the £1000 a month surplus?

Harrysplan

RAS said:

Well you know where you need to find money from your budget. Obviously you need your wife (and children) need to understand that having lived beyond your means for years, it's going to take a decade to clear up the situation and the treats are going to stop.

You could clear the JD Williams, Elfin Market and Zopa accounts in three months if you wanted. 

Then start paying back your mum at least £200 a month and pay debt with the highest APR.

Although I'm curious as to what you've been doing with the £1000 a month surplus?

Thanks for posting - my first responder!

We have to do it quicker than a decade. I can't take this debt into my fifties. 

A lot of the £1000 has been going to support out daughter at uni We contributed towards her rent and also food costs etc. We have also been guilty of frittering cash on miscellaneous items. Again, it all must stop now

fatbelly

As a homeowner the only form of insolvency you should considrer is an IVA

However, you would be required to contribute your surplus for possibly 72 months

By snowballing your debts (overpaying the highest interest debts first) it would still take many yezrs but you would avoid insolvency and the dangers that come with it



Can I just point out that you are declaring £2700 cash while some of your debt is at 49%apr

NeverendingDMP

Have you got a car..you've put petrol costs but not insurance, maintenance etc.
Also what sticks out to me is that it must be hard to keep track of all the payments and that in turn is making budgeting harder. Lots of payments to organise to different people. 
Lastly when is the holiday and after you have saved if you miss the next holiday, the loan from mum or creation for example  could be paid of in 12 months.
I'd say double check your soa and then list your debts in the order you want to try and pay them off. Low to high, high interest to low, mix and match on what's important to you. Debt payoff planner app or the website what's the cost.com are both very useful for this 

Harrysplan

fatbelly said:

As a homeowner the only form of insolvency you should considrer is an IVA

However, you would be required to contribute your surplus for possibly 72 months

By snowballing your debts (overpaying the highest interest debts first) it would still take many yezrs but you would avoid insolvency and the dangers that come with it

Hi, 

Thank you for posting. 

So with an IVA, they would take my fixed living costs and then use any surplus towards the debts? For me this means that I could potentially pay the £2200 that I already pay towards my debts, plus the £1000 that I have 'surpus' so £3200 per month. This is about 32 months of payments - is that how it would work??

Alternatively I could save cut the obvious area of overspend from my SOA and then combine that with the current debt payments and the surplus that I have, and snowball the debts?

What would you recommend in my situation.

Harrysplan

NeverendingDMP said:

Have you got a car..you've put petrol costs but not insurance, maintenance etc.
Also what sticks out to me is that it must be hard to keep track of all the payments and that in turn is making budgeting harder. Lots of payments to organise to different people. 
Lastly when is the holiday and after you have saved if you miss the next holiday loan from mum or creation for example  could be paid of in 12 months.
Od say double check your soa and then list your debts in the order you want to try and payment them off. Low to high, high interest to low, mix and match on what's important to you. Debt payoff planner app or the website what's the cost.com are both very useful for this 

Hi, 

Thank you for posting. We have a car through a salary sacrifice scheme at my work. Its not something I would do again, however I am tied in for a while and I can't afford the exit fees. All maintenance and MOT's are included. It's also electric so no petrol or diesel costs 

I am ashamed to say that we are going on a cruise this summer to celebrate a big birthday of a family member. This was booked well before we came to our senses and it will the last expensive holiday that we go on for a very long time! The balance is paid now so we will lost a lot of money if we cancel. It's all inclusive so we are just not going to spend any other money 

Everything if direct debit so I don't have to physically make the payments, however I agree that there is a lot to manage! 

RAS

You'd be paying back the full sum plus the IVA providers' fees, and have to declare the insolvency any time you were asked.

You'd be able to remortgage with your current provider but unlikely to be accepted for a remortgage elsewhere until the IVA clears your credit record. 

You could also pull your horns in drastically for a year or so and clear the expensive debts, then take a bit of time to chase 0% deals if possible and clear down the rest of the debt over the next few years

Harrysplan

RAS said:

You'd be paying back the full sum plus the IVA providers' fees, and have to declare the insolvency any time you were asked.

You'd be able to remortgage with your current provider but unlikely to be accepted for a remortgage elsewhere until the IVA clears your credit record. 

You could also pull your horns in drastically for a year or so and clear the expensive debts, then take a bit of time to chase 0% deals if possible and clear down the rest of the debt over the next few years

There is a lot for us to think about. Ideally I would like to avoid a formal debt solution such as an IVA however I also want to be realistic about our chances of clearing this without one. 

RAS

Read round here for a while. There are a few who've cleared £100k. Check out Keezings' recent thread about clearing their debt in 6 years.

In terms of family life, IVA budgets can be rather tight. You have more control with a self managed situation. But it is important the whole family supports the decision to clear this debt.

Grumpelstiltskin

If you want to be debt free before 50 you will have to take drastic decisions.

Mind you 3 things you could reduce very easily.

Entertainment £500, Presents £300 both could be cut drastically and Groceries £700 plus can easily be reduced.