Help!

Debbiesmith99

Hello all, and thank you for accepting me! 

I really need some help. I recently found out that we have a lot more debt than I thought. My husband deals with all our finances, he always has done. I knew we had quite a bit of credit card debt and a car loan, and a loan he’d got out in an attempt to control our CC debt. 

We have £30k in unsecured loans, and £40 in credit card debt. I am now worried sick and I can’t sleep. 

We have a house with around £120k collateral, as well as a flat, that we bought with an inheritance a while back that has about £20k in. The flat is currently up for sale.  My husband earns a little over £60k a year, I have just opened a small work from home business and it’s a bit soon to really have an idea of what it’s bringing in. 

He has contacted Stepchange with the view to do a DMP. He is leaning towards this but I’m worried. It will take 28 years to pay off and my fear is that if there is an emergency, say the boiler breaks down or we need a care fixing, we won’t have any means to pay for this. As we will have no spare income. But, I think we probably have any other options. 

He’s only missed one bill so far, but we are having to put all our food shopping and petrol on credit cards, so we can pay our bills. But this is only making the debt worse. 

I’m in absolute panic and any words of wisdom would be greatly appreciated. 

I can’t believe we are in this mess. 

Thank you. 

born_again

I take it you mean £40K on credit cards.

have asked for this to be moved to debt section. As that is best placed to give impartial & non judgemental advice. 👍

Main thing is to focus on secured debt (mortgage etc) The rest can wait. 

Debbiesmith99

Thank you. 

Mark_d

Your husband earns a reasonable income and you have two properties.  Selling the flat is most likely a good idea.  It might be worth remortgaging the house to borrow more money, which could then be used to pay off your unsecured debt.  But the best plan for you would need to account for your savings, your risks, the insurance policies you have in place etc.

How did you manage to build up so much credit card debt?  Even with a loan to manage your CC debt you're now in £30k CC debt.  Is this a case of living beyond your means? You need to understand what's going wrong otherwise you will end up in a similar situation again.

Debbiesmith99

Thank you. 

I think it’s definitely living beyond our means! We also had some issue with the flat that had to be sorted, some car problems etc. I didn’t realise it was this bad though. 

badmemory

Do not take out a secured loan to clear debts.  However running 2 properties when you seem to be struggling to pay for one does seem a little less than a good idea.

kazwookie

You need to do a SOA tosee where all the money is going, what rate the CC interest is, how much the household bills are inc the 2nd property.

Brie

I'm glad you are talking to each other about this.  It's nigh on impossible to do this sort of thing by oneself when the debt belongs to a couple.  

I agree with the others - sell the flat - if nothing else that will make things less complicated.  And may buy some breathing space.

Also DON'T remortgage to pay the debts.  If you continue to struggle then your house would be in jeopardy.  You don't want that to happen.

So yes - pay the priority debts - these are all the ones that keep a roof over your head, mortgage, council tax, utilities, water.  And food of course.  Pay the car loan (if you have one) if it's required to get to work. 

Consider how any of these expenses can be decreased.  Smaller car, remortgage (interest only??), best tariff for gas & electric.  Food - well there's food banks if you're really struggling but also lots of community fridges and Olio where stores and individuals make food available that might otherwise go to waste.  I expect there's a lot of allotment users that are trying to get rid of too many squashes or tomatoes right now.    

Then look at the non priority things - phone contracts, broadband, any subscriptions that can be stopped. Can you get car or home insurance cheaper by paying in full rather than monthly.  

If you fill in the SOA on the debt free board and post it back there they lovely people who hang around that part of this site will have lots of suggestions on where things might be trimmed to make life a bit easier and help you set aside some spare ££ for the "just in cases" you're worried about.

Brie

Here's the SOA - Statement of Affairs (SOA) link: https://www.lemonfool.co.uk/financecalculators/soa.php

And here's the board that someone has said they've asked this to be moved to - Debt-free wannabe — MoneySavingExpert Forum

Martico

Brie said:

Here's the SOA - Statement of Affairs (SOA) link: https://www.lemonfool.co.uk/financecalculators/soa.php

And here's the board that someone has said they've asked this to be moved to - Debt-free wannabe — MoneySavingExpert Forum

Yes. And within that subforum there's a very useful "First steps" thread that it would be worth your while reading through.

And to reiterate (quashing the one piece of bad advice so far) -- please don't consider remortgaging to move your debt from unsecured to secured.

Debbiesmith99

Thank you everything. I’ll get al the details from my husband ans fill in the forms. 

The flat has been up for sail since August and I have lowered the price, but there doesn’t seem to be much interest at the moment. 

I’m going to have a look through and see where we can save. 

I’m so worried. I just don’t know what to do. My husband is convinced the DMP is the way forward.