Struggling with debt and trying to find a way out.

Chaplin1234

Hi

After losing my business from a mixture of both Covid and IR35 reform I have been struggling for a long time and it has taken a serious toll on both my marriage, which has failed leading to seperation. I've been in a dark place but after reading through this forum it feels like I might have found a way out. I've been struggling to pay my debts off and run up personal debt both from living expenses while I wasn't working and trying to pay minimum payments.

My business is currently going through liquidation and that is hopefully one weight off my shoulders but I am left with around 50k of personal debt on credit cards and loans.

It has got to the point where I have stopped paying and being hounded by phonecalls which I am ignoring as I just can't deal with it. After reading many threads on here I am going to go with a self managed DMP, wait for my creditors to default me and then offer to pay what I can afford.

Hopefully in time I can make some F&F settlements and in 6 years my defaults will drop off. It is not ideal I know but here I am and to be honest I just want to be able to sleep at night.

I think I am ok with the process but one debt in particular I do not know how to handle. I had a business overdraft which both me and my then wife signed a personal gaurantee for. She resigned as a director a couple of years before the business failed, we have since split but she is still down as a gaurantor. The have contacted us both demanding payment and obviously she isn't happy about it. I'm not sure how this would work in regards to the default. Can a default be filed as the original agreement was with the business. If so will they or would they go for a CCJ? They have asked us both to fill out an income and expenditure form, should we send them this? I want to follw the self managed DMP plan but having my ex as a gaurantor complicates matters. Would I be best to come to an arrangement with them rather than ignoring them and waiting for a default? 

My wife has even less ability to pay this than I do as she is claiming benefit.

Chaplin1234

Household Information[/b]

Number of adults in household........... 1

Number of children in household......... 0

Number of cars owned.................... 0[b]

Monthly Income Details[/b]

Monthly income after tax................ 3250

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

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

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

Total monthly income.................... 3250[/b][b]

Monthly Expense Details[/b]

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

Secured/HP loan repayments.............. 330

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

Management charge (leasehold property).. 0

Council tax............................. 145

Electricity............................. 75

Gas..................................... 75

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

Water rates............................. 70

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

Mobile phone............................ 75

TV Licence.............................. 22

Satellite/Cable TV...................... 0

Internet Services....................... 35

Groceries etc. ......................... 200

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

Petrol/diesel........................... 150

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

Car Insurance........................... 48

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

Car parking............................. 10

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

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

Other child related expenses............ 0

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

Pet insurance/vet bills................. 22

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

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

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

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

Presents (birthday, christmas etc)...... 20

Haircuts................................ 22

Entertainment........................... 100

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

Emergency fund.......................... 300[b]

Total monthly expenses.................. 2974[/b]

[b]

Assets[/b]

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

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

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

Car(s).................................. 1

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

Total Assets............................ 1[/b]

[b]

Secured & HP Debts[/b]

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

Mortgage...................... 0........(0)........0

Hire Purchase (HP) debt ...... 2640.....(330)......0[b]

Total secured & HP debts...... 2640......-.........-   [/b]

[b]Unsecured Debts[/b]

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

Natwest Loan...................8377......475.......10

Natwest Credit Card............8547......220.......24.9

Virgin Credit Card.............11702.....325.......24.9

PG Biz Overdraft...............4500......0.........0

Water..........................650.......0.........0

Paypal.........................2196......120.......25

HSBC CC........................1637......45........22

Vanquis........................3000......105.......28

Barclaycard....................7799......270.......24.9

MBNA CC........................7366......270.......24.9[b]

Total unsecured debts..........55774.....1830......-  [/b]

[b]

Monthly Budget Summary[/b]

Total monthly income.................... 3,250

Expenses (including HP & secured debts). 2,974

Available for debt repayments........... 276

Monthly UNsecured debt repayments....... 1,830[b]

Amount short for making debt repayments. -1,554[/b]

[b]Personal Balance Sheet Summary[/b]

Total assets (things you own)........... 1

Total HP & Secured debt................. -2,640

Total Unsecured debt.................... -55,774[b]

Net Assets.............................. -58,413[/b]

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

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

ManyWays

The HP debt is on a car? Is this HP so you own it at the end, or PCP? 

Emergency fund.......................... 300
Any reason for that huge amount?

Emmia

£75 on a phone seems very high - is this a contract including the handset? 

£50 on clothing should be reduced to zero in the circumstances.

What does £100 on entertainment include?

If you're saving £300 a month into an emergency fund, why are there no savings in your "Assets"

Chaplin1234

The car is leased so I don't get the option to keep it and it goes back in 8 months.

The phone is 2 accounts, one for me and one for my son who is about to go to uni.

In terms of the emergency fund there are a couple of things. First, I do need a reliable car for work so I need to start saving for one so I have it when I need to hand the car back. Second, my landlord has indicated that he might try and sell the property when the lease is up in 10 months. I'm hoping he won't and it will just go onto a rolling tenancy but if he does, and I have multiple defaults then any letting agent is going to want a few months rent up front. I al least need to have a depostit and first months rent ready.

Regarding no savings in my assets I have only just stopped trying to pay my debts in the last couple of months. Moved out of the family home and into an unfurnished flat and had to pay out for deposits and furniture etc. This budget is pretty much starting this month.

£100 on entertainment is going to my local with a friend once a week. It's the only thing keeping me sane.

//i can remove the clothing allowance.

Emmia

Chaplin1234 said:

The car is leased so I don't get the option to keep it and it goes back in 8 months.

The phone is 2 accounts, one for me and one for my son who is about to go to uni.

In terms of the emergency fund there are a couple of things. First, I do need a reliable car for work so I need to start saving for one so I have it when I need to hand the car back. Second, my landlord has indicated that he might try and sell the property when the lease is up in 10 months. I'm hoping he won't and it will just go onto a rolling tenancy but if he does, and I have multiple defaults then any letting agent is going to want a few months rent up front. I al least need to have a deposit and first months rent ready.

Regarding no savings in my assets I have only just stopped trying to pay my debts in the last couple of months. Moved out of the family home and into an unfurnished flat and had to pay out for deposits and furniture etc. This budget is pretty much starting this month.

£100 on entertainment is going to my local with a friend once a week. It's the only thing keeping me sane.

//i can remove the clothing allowance.

Are you in the process of divorcing? Or have you separated/ ended the previous relationship (unmarried)? Will you get any money via a future financial settlement or property sale?

Or is the family home your parents?

Chaplin1234

Divorce will come but hasn't got that far yet. We were renting so no financial settlement and it will just be a clean break. It's fairly amicable or at least it was until she received letters about the personal gaurantee.

Emmia

Chaplin1234 said:

Divorce will come but hasn't got that far yet. We were renting so no financial settlement and it will just be a clean break. It's fairly amicable or at least it was until she received letters about the personal gaurantee.

You need a financial settlement, debts, pensions, and other assets all need to go into the pot for division /assessment as part of the process.

It's possible after the settlement you're in exactly the same position, but is unwise to divorce without one. If you (or her) got a large inheritance, lottery win... Then it's up for grabs post divorce if no financial settlement is in place.

I would also consider changing your will (if you have one) and death in service benefits (if any) now to exclude your ex

Chaplin1234

Thanks, I'll look into it but there are no assets really. 

I'm more concerned about how to handle this persanel gaurantee and if there is a way to get it just in my name and not hers. Also, as it was a company overdraft that became a persoanl debt after the company folded where do I stand in terms of CCA and getting it to default and go to a collector?

ManyWays

There is no way to get her out of the guarantee, you have to set up an acceptable payment arrangement to that one to avoid her being asked to pay.. 

The car, that is a good reason to save up a lot each month. If you ever redo the SOA I suggest putting that in as "Savings for a car" so people can see what its for. 

enthusiasticsaver

If there are no assets I cannot see why the bank holding the overdraft would go for a CCJ.  A personal guarantee is only as good as the finances backing them up so given both you and your wife are renting and do not hold property and your I and E substantiates you do not have enough income to cover your debts and are therefore having to do a DMP I think they will accept they need to be in the same position as your other debtors.  If your wife has no income or assets it will be the same. Is it that PG Biz overdraft? (£4500??) They won't go to court for that.  I personally would send the I and E details to them and point out you need the car for work and you may be homeless later on in the year so need to save up deposit and first months rent.  I would not prioritise them over the other debtors so you could include it in the DMP. What your wife does is up to her regarding sending them her income and expenditure details but personally again if she is not in a position to pay she should just tell them that. There is nothing to force either of you sending them details of your finances. I would prioritise  saving for now until you know the position with your flat as you only have £300 spare a month.