In over my head

jelly_legs_88

Hi all,

I have been over my head for a while and have been burying my head further and further into the sand. The reason for my debts are years of consolidation, on top of a house move where we had to pay for 2 homes for 3 months (long story) and then essentially getting carried away and living a lifestyle we cannot afford. I suspect a degree of this is also down to undiagnosed ADHD for both of us as well as a few spells of depression for me.
 I filled out my information on Step Change and they advised either an IVA or Bankruptcy. They said I am not eligible for a DMP or DRO although I'm not sure I understand why this is, especially as I don't have any assets....Anyway, this has lead to days and days of me scouring this forum and I'm pretty sure I now understand the process for a self managed DMP.........
I have completed my SOA which I will include below. Please note, this has been completed more as a going forward budget than how things have been.
I'd be really grateful for any support or advice that could be offered by anyone please.

[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................(this is what the £200 in "other travel" is for as I am currently doing driving lessons and savings for a car so that I can look at working more hours therefore increasing my income).... [b]

Monthly Income Details[/b]

Monthly income after tax................ 925

Partners monthly income after tax....... 1907

Benefits................................ 1032.36 (this is a monthly average)

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

Total monthly income.................... 3864.36[/b][b]

Monthly Expense Details[/b]

Mortgage................................ 0

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

Rent.................................... 1200

Management charge (leasehold property).. 0

Council tax............................. 197.22

Electricity............................. 40.3 (dual fuel total 80.60 so just split between both categories)

Gas..................................... 40.3 (dual fuel total 80.60 so just split between both categories)

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

Water rates............................. 60 (on a meter but have only received one bill since we have been here so this may well reduce at some point)

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

Mobile phone............................ 36.99 (this is for both of us)

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

Satellite/Cable TV...................... 61.87 (confident we can reduce this a bit)
Internet Services....................... 24

Groceries etc. ......................... 650 (both children have allergies hence higher budget, also includes pet food for x2 pets, toiletries etc)

Clothing................................ 100 (includes school uniforms)

Petrol/diesel........................... 0

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

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

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

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

Other travel............................ 200 (currently have driving lessons/saving for car)

Childcare/nursery....................... 460

Other child related expenses............ 36 (piano/swimming)

Medical (prescriptions, dentist etc).... 161.34 (prepayment certs plus private prescriptions which I'm hoping to end in a few months)

Pet insurance/vet bills................. 42

Buildings insurance..................... 0

Contents insurance...................... 8.98

Life assurance ......................... 0

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

Presents (birthday, christmas etc)...... 100

Haircuts................................ 30

Entertainment........................... 75

Holiday................................. 60

Emergency fund.......................... 100

Partner debts............................... 80 (DMP with step change, CC and utilities)

(Unnamed monthly expense)............... 0[b]

Total monthly expenses.................. 3779[/b]

[b]

Assets[/b]

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

House value (Gross)..................... 0

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

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

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

Total Assets............................ 0[/b]

[b]

No Secured nor Hire Purchase Debts[/b]

[b]Unsecured Debts[/b]

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

Natwest Loan...................9299.21...198.2.....6.4

Natwest CC.....................367.22....12.67.....0

Natwest CC.....................7607.31...75.69.....0

Monzo OD.......................1114.84...0.........39

Barclaycard....................7369.39...73.96.....0

Natwest OD.....................277.......0.........39.49[b]

For the overdrafts I didn't know what to put as the monthly payments. Also please note that the £367 Natwest CC the 0% runs out in a couple of days and goes to 22.4%

I'm thinking that I default on everything.

Move my £1000 unused Natwest OD to Monzo to pay back the Monzo OD and then use the Monzo account as my main account going forward (currently main account is with Natwest).

Then as the default offer £10 a month to each which will leave me with enough to put aside for each of the categories on the SOA so that all bases are covered. I've possibly over estimated on some of these categories but at the end of the day anything not being used can go toward final payment offers when I get there. The only issue being as we get a top up from UC, we cannot have savings over £6000 without our payment from them being reduced.

What do you all think?

Thanks xx

fatbelly

You could do with talking to a real adviser. The reason why you were told (was it AI?) that you did not qualify for a DRO is that you are showing £75.36 surplus and the limit is £75.

If you want to explore a DRO, maybe talk to Money Wellness. Stepchange don't do them so have little interest in them, whereas they get a rake-back from dmps and iva.

Brie

I don't like to criticise StepChange but wow!!  I think they made a booboo this time.  

My guess would be that bankruptcy is completely inappropriate for you - no assets and a relatively low level of debt.  And I have been told that IVAs aren't appropriate for anyone on benefits either.  Others may disagree.  

And the fact they said you couldn't have a DRO, well my first thought was that you must own your own home.  But you don't have a mortgage so....  You also say you don't have a car and the debts are well under the limit of £50k.  Of course if you plan on buying a car that might change things but if you can't afford one that's not an issue at this time.  The only other issue is if you have been making drastically preferential payments to one creditor over another.  

Anyone can do a DMP - some creditors won't like it and it may not actually be the best thing for you if it's going to take the next 50 years to clear the debt.  

You state your OH's got a DMP.  Is there any joint debts?  Is there a reason your OH has a DMP rather than a DRO?

down to your numbers.....

these are (in my opinion) all optional.  If you have debts should you be saving £1200 a year for presents?  You've got £335 a month here so I'm wondering if you actually have this tucked away given you also say you say you have no assets.

presents (birthday, christmas etc)...... 100

Entertainment........................... 75

Holiday................................. 60

Emergency fund.......................... 100

You've got £335 a month here so I'm wondering if you actually have this tucked away given you also say you say you have no assets.  Maybe this is what StepChange spotted to say no DRO as that would allow you a max of £75 a month excess to your budget.  

The medical costs seem high - is there any exemption due to being on benefits?  Or is there some serious issues that are costing you?

And a tiddly one - do you need a TV license?  If you're not watching live TV or using iPlayer you don't.  Of course kids possibly like CBBC so may you need to nuke the satellite stuff instead - it's good you're already reviewing this.

Good luck with your debt journey.  One foot in front of the other!!!

Brie

fatbelly said:

You could do with talking to a real adviser. The reason why you were told (was it AI?) that you did not qualify for a DRO is that you are showing £75.36 surplus and the limit is £75.

If you want to explore a DRO, maybe talk to Money Wellness. Stepchange don't do them so have little interest in them, whereas they get a rake-back from dmps and iva.

fatbelly has a better eye for detail!  didn't spot the excess 36p!!!

If you prefer face to face assistance - you might try CMA (community money advice) or CAP (Christians against poverty).  They both assist with DROs and also can help set up self managed DMPs - all free of charge. Citizens Advice also have debt advisers.  

jelly_legs_88

@fatbelly - no it was just what the online thing said, I haven’t spoken to an actual human…With regards to a DRO, I don’t know if this is an option I should explore. I don’t really know what to do, but know I need to do something!

@Brie - yes I can see why a DMP may not be a good idea if it will take that long to clear, but after reading on here I thought that is the case for most people, but that once the debts are sold etc you can offer a reduced amount to clear them?

We have no joint debts no. He signed up to a DMP with StepChange years ago before we were together. 

The £1200 a year for presents includes Xmas, birthdays for us all, Mother’s Day, Father’s Day, Easter, plus any family we buy for. With the cost of everything I panicked that this wasn’t actually enough considering the cost of everything now. But I guess it is an area I can look at. 

The £335 is not something I have aside at the moment no, I have nothing at the moment saved away, this is the amount that I would like to be putting aside if I go ahead with the DMP. Or am I looking at this wrong? Those figures would be much higher if I look at how I have been spending, hence the amount of debt I have. 

Medical costs - both my partner and I have the pre payment certs. We do not qualify for help with prescriptions. I have a private prescription which should end within the next 6 months 

TV license I think is necessary at the moment, but some of the other costs I’ve included in satellite are for subscriptions that we can reduce/remove so can probably halve this. 

So do you guys think a self managed DMP isn’t the way forward here?

Grumpelstiltskin

It's OK doing driving lessons but where are you going to find the money to buy a car, pay road tax, insure it,  before even thinking about things like MOTs tyres etc.?

Unfortunately I think owning a car is a dream when you won't be using credit for 6years.

ManyWays

How much are your actual travel costs at the moment, minus driving lessons and saving for a car? I agree with @Grumpelstiltskin that owning a car doesnt look feasible for the foreseeable future.

Private prescriptions, such as what, Mounjaro? Are these really likely to end?  

When will your childcare costs start to drop?

Your husband's debts, is this £80 a month for a DMP including credit card and utility debts? Or for a DMP plus a credit card and some utility arrears? How large are the remaining debts in his DMP?

Your husband has a much bigger income than you, so have you looked at separate SoAs for each of you, with your husband paying 2/3s of the household bills. It would be interesting to see what surplus/deficit is shown for each of you. 

jelly_legs_88

@grumplestiltskins - the driving lessons are already paid for. The £200 is to put aside for a car which in 4-6 months with be enough to buy a car and tax/insure it if i get something cheap. This £200 would then become fuel/car maintenance etc and then by that time the private prescription wouldn’t be needed and would be tax/insurance instead. As soon as I’m on the road I’ll be in better position to then increase my earnings too. 

Maybe you’re right though. Maybe this is just a dream. Well a nightmare really. And I should just give up now. 

I thought I had this figured out and everyone was going to say my plan was ok but it seems I’ve been very naive, again. 

Grumpelstiltskin

Your car insurance as a new driver could be £1000 a year, if you think you could get a car for £200 believe you  me you will be looking at  least £2000  and then it could be a money pit.

jelly_legs_88

@ManyWays travel costs would be £30 we walk most places. I thought I had the car thing figured out, please see reply to grumple….but it appears I do not. 

Yes it is Mounjaro. I have various health conditions that make it difficult to loose weight and some health conditions that are exasperated because of weight. Once I have gotten to a healthy weight which should only take another 4 months, I intend to come off it completely. There’s no way I can afford to stay on it long term, and there is no way I will be putting weight back on after all of this hard work. 

Childcare costs will start to drop in September but this will also see a drop in UC as part of it is due to the childcare. 

He pays £50 to stepchange and then £12 to the CC and £16.63 to the utility dept. I’m not sure how much is left on each but can check this. 

No I haven’t looked at doing separate SOA’s as we have never managed (or unmanaged as the case may be) our money this way. All of our money goes into the pot, everything is paid out and whatever is left some went to savings and the rest split equally between us for “spending” money. Up until we moved house this worked and the level of debt was manable as well as having savings. But we both seemed to go a bit mad after that to be honest. So now there’s no savings and even more debt. 

Sat in tears as this all now seems so impossible and hopeless 

jelly_legs_88

@Grumpelstiltskin I was planning on spending about £1000 on a car and pay monthly for insurance (I know it works out a bit more expensive but would just be until I’m in a better position next year). Although maybe I’m not being as realistic as I thought.