Action is the antidote to Anxiety...

NotMyStrongPoint

...at least that is what I am hoping.  I am going round and round (and round!) in circles and getting nowhere.  I have just stumbled on this form and thought I would post to see if anyone has any bright ideas (which will be gratefully received).

46 yo self-employed mum of two, married but deal with all finances separately to my husband because his income fluctuates so it is easier for everything to be in my name.

Although self-employed, my income is steady at £3k net pcm.  Due to husband's fluctuating income and covid struggles (now all behind us) I racked up substantial debt keeping us afloat (and making a few house renovation decisions before I realised we were in financial trouble).  When things really started to bite, I stupidly, then amassed HMRC debt too and I now have a payment plan dealing with this to add to my woes.

The ins and outs are: My £3k monthly income goes almost entirely on debt repayments (£1,400) and household expenditure (£1,200). Nothing is in arrears/has defaulted but the stress we face juggling the repayments is horrific and our quality of life is without doubt suffering (although I appreciate this is still a first world problem!). 

The added complication: My mortgage fixed term comes to an end in June and so does my car finance. I doubt a mortgage lender will think my current situation is viable and I cannot afford a hike in my mortgage (this is likely to double) so I feel as though the situation is about to implode :-( 

As for the car - the 'balloon payment' is £5600 (which I obviously do not have) - I doubt anyone will refinance this but the car is worth £10k so I really do not want to just hand it back and lose out. I have to have a car so going without is not an option.

I have £385k equity in my house so I did look at a consolidation loan but they would not agree this with HMRC debt.  I then sought debt advice and a DMP was mentioned but I need to understand if this really is my ONLY option because it is obviously quite a serious one. 

If you got this far then I am sincerely grateful and welcome any advice.  Thank you, very much.

EssexHebridean

First and most relevant question relates to this

Due to husband's fluctuating income and covid struggles (now all behind us) I racked up substantial debt keeping us afloat (and making a few house renovation decisions before I realised we were in financial trouble). 

So the debt was a "household" debt - yes? And the HRC debt too - did that relate to the fact that you were "borrowing" money that was set aside to pay your tax and NI to cover household expenditure and then couldn't pay yourself back? If the answer to either or both of those is "yes" then you need to stop taking sole responsibility for the debt here - it should be tackled as a family situation as that was how it was accrued. 

It may not feel like it now, but being refused consolidation is a great thing - it rarely makes things any better. that you were looking to secure that consolidation on the roof over your head is also not a great idea - as converting what was in the most part unsecured consumer debt - where the worst that will happen is a few nasty letters, some phone calls - to a secured is also almost never a good plan - you miss payments there and all of a sudden your family's home is at risk! 

The mortgage is an easy one - see what deals your current lender is offering, choose a decent looking one, and you should be able to lock in to that now, most allow you to do this 6 months ahead. 

I'd suggest that your first step ought to be putting together your SOA - Statement of Affairs - and I would also suggest that as much as you can, this should cover both you & your husband's incomes and expenditures. If in doubt use the lowest figure that his income is likely to be in any given month to work on. 

NotMyStrongPoint

Thank you for your comment, I will do a MSE SOA (I have my own budget that I scrutinize regularly!)

I did not know that the mortgage situation was easy in terms of simply locking in with my current provider - I will look at this straight away, thank you.  I did read elsewhere that your current lender would not credit check if you have decent equity and stick with them so hopefully this will be true!

ManyWays

A SOA will be a great help.

Who is your mortgage lender? What is your current rate? 

PCP cars are often more of a problem for a DMP than mortgages are. Any chance a family member would be able to loan you the money? What is your husband's credit score like, does he have any chance of borrowing this money? 

NotMyStrongPoint

My husband can't but approaching family to purchase the car is a possible option; even if it means selling the car to pay them back and purchasing a 'banger' for the remaining cash afterwards.  I have put feelers out for this.

I have now completed an SOE - it makes for sorry reading as on paper I cannot stay afloat! 

I have done a mortgage calculator and I could borrow an extra £20k (on paper, in theory) to clear the vast quantity of my debt but I just don't know if I even attempt this or whether I would just be laughed at by lenders due to my woeful situation.  I really am in an anxious mess.  I really appreciate the comments.  When you are in a mire, it is so tough to see the wood through the trees and I assure you, this debt has not been undertaken lightly or frivolously :-(

NotMyStrongPoint

Sorry, I have not answered your questions - my current lender is Santander and my rate is a lovely 1.74!

ManyWays

Post that SoA here, it really helps to get more specific answers. 

EssexHebridean

NotMyStrongPoint said:

My husband can't but approaching family to purchase the car is a possible option; even if it means selling the car to pay them back and purchasing a 'banger' for the remaining cash afterwards.  I have put feelers out for this.

I have now completed an SOE - it makes for sorry reading as on paper I cannot stay afloat! 

I have done a mortgage calculator and I could borrow an extra £20k (on paper, in theory) to clear the vast quantity of my debt but I just don't know if I even attempt this or whether I would just be laughed at by lenders due to my woeful situation.  I really am in an anxious mess.  I really appreciate the comments.  When you are in a mire, it is so tough to see the wood through the trees and I assure you, this debt has not been undertaken lightly or frivolously :-(

See again my comments above about converting ("safe") unsecured debt to "dangerous" secure debt. not a good plan in probably 99% of cases - and the likelihood of you being in the 1% is honestly tiny. 

Spoiler alert - if you can't keep afloat on paper, then you aren't actually keeping afloat - you're probably digging yourself further in to the hole. Best bet is to get that SOA posted as ManyWays suggests, and then we can see what's going on, and hopefully be able to point you in the right direction for some sustainable changes to start getting things turned round. 

Do a We Buy Any Car or similar quote to see what sort of money you might get back on the car, but on the face of it, that's a decent sounding plan. You'll get something that will do "for the time being" for a couple of £k. 

NotMyStrongPoint

[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.................... [b]

Monthly Income Details[/b]

Monthly income after tax................ 3000

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

Benefits................................ 147

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

Total monthly income.................... 3147[/b][b]

Monthly Expense Details[/b]

Mortgage................................ 445

Secured/HP loan repayments.............. 139

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

Management charge (leasehold property).. 0

Council tax............................. 215

Electricity............................. 179

Gas..................................... 0

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

Water rates............................. 81

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

Mobile phone............................ 47

TV Licence.............................. 15

Satellite/Cable TV...................... 44

Internet Services....................... 0

Groceries etc. ......................... 520

Clothing................................ 40

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

Road tax................................ 17

Car Insurance........................... 53

Car maintenance (including MOT)......... 75

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

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

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

Other child related expenses............ 120

Medical (prescriptions, dentist etc).... 22

Pet insurance/vet bills................. 75

Buildings insurance..................... 23

Contents insurance...................... 25

Life assurance ......................... 65

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

Presents (birthday, christmas etc)...... 50

Haircuts................................ 0

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

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

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

Total monthly expenses.................. 2370[/b]

[b]

Assets[/b]

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

House value (Gross)..................... 420000

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

Car(s).................................. 10000

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

Total Assets............................ 430000[/b]

[b]

Secured & HP Debts[/b]

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

Mortgage...................... 117000...(445)......1.74

Hire Purchase (HP) debt ...... 786......(139)......0[b]

Total secured & HP debts...... 117786....-.........-   [/b]

[b]Unsecured Debts[/b]

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

HMRC...........................10118.....250.......0

HSBC CC........................3800......98........0

Tesco CC.......................1800......65........0

By Now Pay Later...............2900......99........0

Personal Loan..................5200......202.......0

MNMBA CC.......................1200......60........0

Sainsburys CC..................800.......25........0

Car Finance....................6400......247.......0

Car Finance....................1300......102.......0[b]

Total unsecured debts..........33518.....1148......-  [/b]

[b]

Monthly Budget Summary[/b]

Total monthly income.................... 3,147

Expenses (including HP & secured debts). 2,370

Available for debt repayments........... 777

Monthly UNsecured debt repayments....... 1,148[b]

Amount short for making debt repayments. -371[/b]

[b]Personal Balance Sheet Summary[/b]

Total assets (things you own)........... 430,000

Total HP & Secured debt................. -117,786

Total Unsecured debt.................... -33,518[b]

Net Assets.............................. 278,696[/b]

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

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

NotMyStrongPoint

EssexHebridean said:

See again my comments above about converting ("safe") unsecured debt to "dangerous" secure debt. not a good plan in probably 99% of cases - and the likelihood of you being in the 1% is honestly tiny. 

I am suddenly very relieved!  It all sounds lovely when someone says they can save you £700 per month!! Thank you :-) SOA finally posted - sorry, took me a moment to figure out how - doh!

ManyWays

my current lender is Santander and my rate is a lovely 1.74
So the rate is going to more than double in June, so use a mortgage calculator https://www.moneysavingexpert.com/mortgages/mortgage-rate-calculator/ and see how much more you will be paying if the rate is 4% or 4.5%.  If you are struggling now, this is likely to push you over the edge