Pickle of note!

Saslove

Hi - have read so many posts on here and can relate so much - especially to the feelings of being ashamed and kicking myself for letting things get this far,  
I’d love thoughts on my situation…
- debts 47k
- all my name only and currently meeting all the payments
- husband is retired and not in good health.  He is aware of situation but little he can do to help.  I have a stable job.  2 children under 16.
- increasingly drowning trying to make ends meet and doing the SOA has made me feel really scared and the realisation that this is not sustainable.

went through Step Change who recommended a DMP.

The other bit of information is that I will be able to cash in a pension pot next Sept (Sept 26) for about 40k which I’m happy to do to be out of this nightmare and I have other pension / retirement options to rely on.
But I need a plan to get me through to that point. 

So questions 
1.  Do I do a dmp but look to maybe pay back as much as I can in Sept 26 and close the plan as soon as I can?
2.  Should I rather consider a secured loan (credit score not good enough for personal one).  With a view to also paying that loan back in Sept 26.
3.  Or is there another way to make an interim plan that would allow me to manage things before I can get this straight.  

Any thoughts really welcome.  

Thanks for reading this far

Saslove

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

Monthly Income Details[/b]

Monthly income after tax................ 3629

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

Benefits................................ 558

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

Total monthly income.................... 4187[/b][b]

Monthly Expense Details[/b]

Mortgage................................ 1233

Secured/HP loan repayments.............. 319.98

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

Management charge (leasehold property).. 0

Council tax............................. 299.97

Electricity............................. 270

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

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

Water rates............................. 69

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

Mobile phone............................ 140

TV Licence.............................. 14.54

Satellite/Cable TV...................... 9.99

Internet Services....................... 40

Groceries etc. ......................... 775

Clothing................................ 50

Petrol/diesel........................... 50

Road tax................................ 2.5

Car Insurance........................... 29

Car maintenance (including MOT)......... 25

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

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

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

Other child related expenses............ 46

Medical (prescriptions, dentist etc).... 9.54

Pet insurance/vet bills................. 25

Buildings insurance..................... 27

Contents insurance...................... 0

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

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

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

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

Entertainment........................... 150

Holiday................................. 150

Emergency fund.......................... 50

Window cleaner ......................... 18

Dentist ................................ 12

Printer paper ink....................... 9[b]

Total monthly expenses.................. 3924.52[/b]

[b]

Assets[/b]

Cash.................................... 2260

House value (Gross)..................... 495000

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

Car(s).................................. 5000

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

Total Assets............................ 502260[/b]

[b]

Secured & HP Debts[/b]

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

Mortgage...................... 208703...(1233).....0

Secured Debt.................. 26011....(168)......0

Hire Purchase (HP) debt ...... 1700.....(26.98)....0<

Help to buy....................77000....(125)......0[b]

Total secured & HP debts...... 313414....-.........-   [/b]

[b]Unsecured Debts[/b]

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

Loan 1 - nationwide............6063......220.......NaN

Loan 2 - tesco.................7886......565.......10.12

Barclaycard 1..................14841.....450.......NaN

Tesco credit card..............8994......360.......32.9

Overdraft 2 Barclays ..........2500......57........0

Overdraft 1 bsrclays...........4500......77........0

Very bnpl......................204.......15........56.9

Simply be......................1403......60........68.9

Next...........................550.......50........58.9

Barclaycard 2..................0.........0.........29.9[b]

Total unsecured debts..........46941.....1854......-  [/b]

[b]

Monthly Budget Summary[/b]

Total monthly income.................... 4,187

Expenses (including HP & secured debts). 3,924.52

Available for debt repayments........... 262.48

Monthly UNsecured debt repayments....... 1,854[b]

Amount short for making debt repayments. -1,591.52[/b]

[b]Personal Balance Sheet Summary[/b]

Total assets (things you own)........... 502,260

Total HP & Secured debt................. -313,414

Total Unsecured debt.................... -46,941[b]

Net Assets.............................. 141,905[/b]

[i]Created using the SOA calculator at www.stoozing.com. 

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

rachmac3

I'll leave someone more knowledgeable than me to give you advice, I just wanted to say well done for facing up to it all and getting it all written down. It's not easy! 

RAS

Hi

Please do not secure debt on your home or cash in pensions. This won't "clear your debt", it just renders you extremely vulnerable to future financial penury. On that point, what is your age and that of your children?

I note that your husband is retired but you've not mentioned his pension income? What's the situation with that?

A number of lines in your SOA are high given your financial situation and need reducing going forward.

I am however really mindful that you are already carrying the financial load and may be not getting much practical support. What can your husband do to take over day to day management of micro budgeting, bulk cooking etc?

tigergambit

Saslove said:

Hi - have read so many posts on here and can relate so much - especially to the feelings of being ashamed and kicking myself for letting things get this far,  
I’d love thoughts on my situation…
- debts 47k
- all my name only and currently meeting all the payments
- husband is retired and not in good health.  He is aware of situation but little he can do to help.  I have a stable job.  2 children under 16.
- increasingly drowning trying to make ends meet and doing the SOA has made me feel really scared and the realisation that this is not sustainable.

went through Step Change who recommended a DMP.

The other bit of information is that I will be able to cash in a pension pot next Sept (Sept 26) for about 40k which I’m happy to do to be out of this nightmare and I have other pension / retirement options to rely on.
But I need a plan to get me through to that point. 

So questions 
1.  Do I do a dmp but look to maybe pay back as much as I can in Sept 26 and close the plan as soon as I can?
2.  Should I rather consider a secured loan (credit score not good enough for personal one).  With a view to also paying that loan back in Sept 26.
3.  Or is there another way to make an interim plan that would allow me to manage things before I can get this straight.  

Any thoughts really welcome.  

Thanks for reading this far

Hi Saslove,

Well done on recognising your debt problem and realising that you need to do something.

In answer to your questions:
1. NO! You shouldn't be planning to use your retirement fund in this way. Taking a drawdown from it so early would have a massive negative effect on your retirement. By law you will need to take professional advice if withdrawing over £30k (I think). I would suggest that you get that advice now from your IFA - this will help clarify your options but I'd be very surprised if this is one of them. Much better to deal with the debts inside a DMP. 

2. NO! Never exchange unsecured debt for secured debt. Drawdown as above.

3. You need to make a plan, but at 54 you need to be planning for more than just the unsecured debt. What is your plan for retirement? What is your intention regarding your (large) mortgage? How long does it have to run, both at your current deal and until it is paid off? Will you need to support your children at University? I don't think you need an interim plan, rather one for the next 10 years.

I'll leave it for others to pick through your SOA but the obvious questions are: What is your family situation? Your husband does not appear to contribute towards any domestic bills? Why? How have you built up this debt? What do you need to change to prevent further debt buildup?

You do have options and you will be able to sort this. Your situation is not so dissimilar to the one I was in 5 years ago, but you do need to look at the whole picture. To me your mortgage is a far greater concern than your unsecured debts (which can be addressed via a DMP).

DankVielen

Saslove said:

Hi - have read so many posts on here and can relate so much - especially to the feelings of being ashamed and kicking myself for letting things get this far,  
I’d love thoughts on my situation…
- debts 47k
- all my name only and currently meeting all the payments
- husband is retired and not in good health.  He is aware of situation but little he can do to help.  I have a stable job.  2 children under 16.
- increasingly drowning trying to make ends meet and doing the SOA has made me feel really scared and the realisation that this is not sustainable.

went through Step Change who recommended a DMP.

The other bit of information is that I will be able to cash in a pension pot next Sept (Sept 26) for about 40k which I’m happy to do to be out of this nightmare and I have other pension / retirement options to rely on.
But I need a plan to get me through to that point. 

So questions 
1.  Do I do a dmp but look to maybe pay back as much as I can in Sept 26 and close the plan as soon as I can?
2.  Should I rather consider a secured loan (credit score not good enough for personal one).  With a view to also paying that loan back in Sept 26.
3.  Or is there another way to make an interim plan that would allow me to manage things before I can get this straight.  

Any thoughts really welcome.  

Thanks for reading this far

Saslove said:

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

Total monthly income.................... 4187[/b][b]

Electricity............................. 270 seems very high look into energy saving, lots of good advice on this site.

Water rates............................. 69 Seems high, can you get a water meter.

Mobile phone............................ 140 this seems extremely high, I pay £3 a month so assume you are buying new phones, that needs to stop, get sim only contracts and make your phone last at least 5 years.

TV Licence.............................. 14.54 Consider dumping the BBC, do not watch live tv will end this.

Satellite/Cable TV...................... 9.99 If this is netflix then maybe a small luxury bit if not really needed then dump it.  You do not show income for your husband which suggests you are carrying all the weight.  I appreciate he is on a pension but perhaps he could carry subs for things like sport if he is the only one using it.

Internet Services....................... 40 this can be cut to under £25, £22 if you have virgin in your area. see latest tips newsletter

Groceries etc. ......................... 775 It is always possible to cut back on food costs, either by changing supermarkets, make more meals and batch cooking.

Clothing................................ 50 This can go straight to emergency fund,

Other child related expenses............ 46  You are all in this together, so are these really needed?

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

Haircuts................................ 50  Men can use clippers but women probably spend at least this

Entertainment........................... 150 This can go straight to emergency fund,

Holiday................................. 150 This can go straight to emergency fund,

Emergency fund.......................... 50 increase by not spending on stuff you do not NEED

Window cleaner ......................... 18 I think you can do this yourself, more to emergency fund,

Printer paper ink....................... 9[b]  Cancel this, do not print anything, go to library to print or kids can print at school. 

Assets

Cash.................................... 2260 you could use these to eliminate all those high APR debts or just add it to the emergency fund, no need for special treatment.

Unsecured Debts

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

Loan 1 - nationwide............6063......220.......NaN?????

Overdraft 2 Barclays ..........2500......57........0

Overdraft 1 bsrclays...........4500......77........0

Barclaycard 1..................14841.....450.......NaN?????

Barclaycard 2..................0.........0.........29.9 DUMP

Loan 2 - tesco.................7886......565.......10.12

Tesco credit card..............8994......360.......32.9

High APR

Very bnpl......................204.......15........56.9

Simply be......................1403......60........68.9

Next...........................550.......50........58.9

Well done for taking action!  Remember this is not your fault, the lenders want to put you in a place where you can afford to service the debt but not clear it.  Then when they have you they pull the zero percent and you are stuck. It is irresponsible lending, simple as that.

How you deal with this really depends on whether you care about your credit record or will in future, a DMP of any sort will create some carnage which will not go off for 6 years, so maybe in for a penny in for a pound? 

I planned to wait for 60% offers but they took their sweet time and so I thought I might as well not pay a penny of it.  I had paid a lot of interest so they had got their fair share.  

We are all schooled to pay our debts and the credit record keeps us in line, but it is quite possible to survive without a credit record, it just takes an attitude adjustment.  

If you plan to move at some point then a new mortgage with a new lender might be a problem, only you can decide on that.

I think what changed my attitude was finding out that lenders just invent the money on their computers at a cost of around 3% to the central bank. They also sell the debt for just pennies in the pound, but the people they sell to are entitled to ASK for the full amount owing, although no more interest or charges.  It is possible that one lender or the Debt Consolidator they sell the debt to might take one debt to Court, but to do that they have to believe you will pay it back, so not showing you and your family on holiday abroad is a necessity.  No credit agreements or overdrafts as the searches for these show on your credit record and tell the creditor that something thinks you are worthy of lending to.

Therefore I decided not to pay any of them, I had no relationship with whoever owned it and I don't take well to threatening letters, especially when they have no power.

You might decide to wait for an offer of 30%, 40% of 60% off or you might just not engage with any of them and go off radar, you can even do this at your current address.

If you want to settle for a small discount you can do that, or you can wait it out, but either way it is important to save the money you would have paid each month and put it in a savings account as an emergency fund. 

You should also cut back on your lifestyle so you attack the debt from both ends, so pruning those costs will be essential, I made some notes above.

Living in Money Saving Mode is good for you and good for your kids, getting things from Freecycle can feed any bargain hunting desires and nothing beats free.

So the plan if  you want to DuMP your debt is

1. Change your email and phone number to online email and £1 sim on each debt portal

2. Open a new bank account but not with a bank that is affiliated to any of your current lenders, so Lloyds might be an option.

3. Move your income and benefits to the new account, do NOT use MSE switcher, do it manually. 

4. Move the direct debits for the secured debt, energy, council tax etc.

5. Write to each of the creditors of unsecured debt and inform them that you will not be making any more payments and cannot see that changing for the foreseeable future.

6. stop paying all the unsecured debts, cancel DD and wait for fan to get messy.

7. Get a lever arch file and put some dividers, then have a divided section for every debt. Put the default notice in first and leave it there, then as you get a demand for a debt put it in the right section with latest on top.

 My understanding is that your existing lender will likely put you on their standard variable rate and allow you to continue with the mortgage. Moving or getting cheaper mortgage with another bank may prove challenging.

The car finance is secured on the car, so assume you need that for work.

The money in your pension MUST remain there, it is your future, unlike the debt it is real money, you did not invent it on your computer you worked hard for it.

Moving forward you might have to drop down to 1 car and when the car finance runs out if you do not have the balloon payment to keep it then you buy second hand cars.

Do NOT make micro payments, these just reset the 6 year statute bar period, do not acknowledge the debts, do not provide budgets, in fact DO NOT ENGAGE at all.

You can then decide whether you are going to wait for a 60% discount or wait out the 6 years.  I had a lot of debt only one got a CCJ, they will go for a CCJ if they see signs of you spending money, borrowed or not.

ManyWays

Some information about your partners age and income would help, do they also have debts? Why do they need a car?

You should NOT butcher your pension to clear unsecured debt; a debt management plan through Stepchange or a DIY version if you fancy it is a much better way forward for you.