£55K debt

PanAction25

[font=courier new][b]Statement of Affairs and Personal Balance Sheet[/b][b]

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................ 0

Partners monthly income after tax....... 0

Benefits................................ 0

Other income............................ 0[b]

Total monthly income.................... 0[/b][b]

Monthly Expense Details[/b]

Mortgage................................ 1390

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

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

Management charge (leasehold property).. 30

Council tax............................. 230

Electricity............................. 114

Gas..................................... 128

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

Water rates............................. 110

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

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

TV Licence.............................. 0

Satellite/Cable TV...................... 62

Internet Services....................... 29

Groceries etc. ......................... 450

Clothing................................ 0

Petrol/diesel........................... 210

Road tax................................ 15

Car Insurance........................... 127

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

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

Other travel............................ 200

Childcare/nursery....................... 0

Other child related expenses............ 200

Medical (prescriptions, dentist etc).... 0

Pet insurance/vet bills................. 0

Buildings insurance..................... 45

Contents insurance...................... 39

Life assurance ......................... 35

Other insurance......................... 12

Presents (birthday, christmas etc)...... 75

Haircuts................................ 40

Entertainment........................... 0

Holiday................................. 0

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

Total monthly expenses.................. 3587[/b]

[b]

Assets[/b]

Cash.................................... 0

House value (Gross)..................... 475000

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

Car(s).................................. 15000

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

Total Assets............................ 490000[/b]

[b]

Secured & HP Debts[/b]

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

Mortgage...................... 342000...(1390).....2.49[b]

Total secured & HP debts...... 342000....-.........-   [/b]

[b]Unsecured Debts[/b]

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

HSBC loan .....................18516.....514.......7.9

HSBC loan .....................4930......352.......6.4

HSBC CC .......................6800......200.......24.9

Lloyds CC .....................1800......50........0

MBNA  CC.......................9652......414.......29.99

PayPal Credit .................5900......230.......23.9

Amex American Exp CC...........7750......368.......35[b]

Total unsecured debts..........55348.....2128......-  [/b]

[b]

Monthly Budget Summary[/b]

Total monthly income.................... 0

Expenses (including HP & secured debts). 3,587

Available for debt repayments........... -3,587

Monthly UNsecured debt repayments....... 2,128[b]

Amount short for making debt repayments. -5,715[/b]

[b]Personal Balance Sheet Summary[/b]

Total assets (things you own)........... 490,000

Total HP & Secured debt................. -342,000

Total Unsecured debt.................... -55,348[b]

Net Assets.............................. 92,652[/b]

[i]Created using the SOA calculator at www.LemonFool.co.uk.

Reproduced on Moneysavingexpert with permission, using other browser.[/i][/font]



At the beginning of the year I took a serious look at my finances, decided to reform spending habit and started to put plan together to pay down my debts.

(1) Avalanche v snowball method - I tried this method in the course of 2024 but always ended up using credit to pay for daily purchases because there was nothing left after paying my monthly debts. Total minimum monthly payment towards the debt is around 1.9K (including interest). 

Monthly interest cost:
HSBC loan - £52 (est)
HSBC loan - £74 (est) 
Amex CC - £178
MBNA - £197
PayPal  credit - £102
HSBC CC - £130

Total of interest cost: £733 
1900 - 733 =1,167.

(2) Debt consolidation - I’ve tried this before but I ended up being in more debt than before (so this is not an option - although I have pre- approved of 15K but at 12%.

(3) DMP - I’ve spoken to StepChange and completed the income and expenditure. With StepChange I could pay £281 a month but that would take 15years and 11 months. 

(4) I’ve the discussion on this forum and elsewhere and it appears self- DMP would be a better approach to deal with this.


The mortgage is jointly owned and we have joint account of about £4000 with HSBC. The fixed term for the mortgage is due in 2027.

I would be grateful if I could be assisted with answers to these questions:

(A) I will finish paying of the £4900 HSBC loan in March 2026 (next year) and the £18000 HSBC loan would be paid off in 3yrs.   If I default on the Amex (£368), MBNA(£414) and PayPal credits (£230) that could save me a  combined minimum  payment  of £1,012  per month.

 When I finish paying other £4.9K  HSBC loan next year, I could save that monthly payment elsewhere and use it to settle those credits. 

- Is it a good option to default these three debts while I continue to pay the loan off?  Or it is better to default on all debt? 

- should I close my HSBC joint account or I should leave it open even if I decide to default on the HSBC bank loans? 

(B)  Mortgage fixed interest rate is ending in May 2027, will default on my credit report impact or make it difficult to get good interest rate with the same lender or another lender? 

(C) will defaulting affect one’s employment (for example, working in the bank or with the civil service or other future job prospect? 

When it is all over - I’m done with credit cards- can’t afford don’t buy- don’t need don’t buy. I’m in my 40s and want to seriously save towards pension.  

Thank y’all in advance for your help.  

CCDarkside

A - if you're intending to default, then you might as well default on everything.  If you're going to default on the HSBC loans they'll close your account for you, you should arrange a new bank account with someone not affiliated right now just in case.
B - A same lender wouldn't consult your credit record
C - Simple answer, yes, depending on profession.

ManyWays

Could you repost the SoA with your income in it please, without that its impossible to say much. 
Who is your mortgage lender?

PanAction25

@ManyWays
Please how can I report the SOA? I tried going back to the SOA but the link is broken.  If this helps - the monthly income is £3900. 

RAS

Does your partner work? Any benefits?

PanAction25

@RAS -  Yes my partner works. No benefits. 

sourcrates

PanAction25 said:

@ManyWays
Please how can I report the SOA? I tried going back to the SOA but the link is broken.  If this helps - the monthly income is £3900. 

Just edit your original post.

PanAction25

@ManyWays - The mortgage is with TSB. 

Nomunnofun1

sourcrates said:

PanAction25 said:

@ManyWays
Please how can I report the SOA? I tried going back to the SOA but the link is broken.  If this helps - the monthly income is £3900. 

Just edit your original post.

The op doesn’t have enough posts yet to enable editing I believe.

ManyWays

I suggest you redo the SoA with your income, luckily its quicker to do a second time!

Also you either have to include your partners income, in which case you also need to include their expenses and debts 9that gives a full picture of the household) or when you post it here you need to add a note beside any expenses lines where your partner is paying half or all. (Its up to you two how you split things, but unless we can see what is happening we will be saying things like you need a lot for clothes if your partner pays for theirs and all the children's clothes)

A TSM mortgage will not be a problem for getting a new fix no matter how mad your credit score is, assuming you dont have mortgage arrears. 

PanAction25

@ManyWays - Thanks a lot, I will redo the SOA and repost as suggested.

Also I spoke to my previous mortgage advisor to understand if default  could increase the mortgage  interest rate when it’s due for renewal in 2027. The Advisor’s  suggestion was that I should  ask TSB if they would be willing to add the credit card debts onto the mortgage. The advisor advised that I completely stop using credit card so that I could savings from the credit cards to gradually pay TSB as long as the payment is not more than 10% annually. Alternatively, if TSB doesn’t agree, then I could consider a second mortgage.  

Any thoughts on those options?