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Debts & Defaults

keepon_keepingon
keepon_keepingon Posts: 4 Newbie
First Post
in Debt-free wannabe
Hi All,

First time poster but long time lurker. I've been trying to sort out my debts for a long time but keep making excuses and burying my head in the sand, so posting on here now have some accountability.

'Luckily' all my debts are unsecured, except my mortgage which I am managing to keep up repayments on.

Unsecured debts as follows:

NatWest Credit Card (now sold to Moorcroft) - £4,490.00
MBNA Credit Card (now sold to PSA) - £7,841.00
Santander Credit Card - £4,680.00
Barclaycard - £4,530.00
Vanquis - £1,200.00
NatWest Loan 1 - £9,250.00
NatWest Loan 2 - £15,295.00
Lendable Loan - £1,970.00

My income isn't enough to cover all monthly repayments on these, so I stopped making all repayments. Is this the correct course of action in my situation?

As per the above, the NatWest & MBNA credit card debts have defaulted and been sold, and I'm now being chased numerous times a week by Moorcroft & PSA. Should I start affordable nominal payments to these companies, or shall I continue to ignore? What will happen if I continue to ignore?

I am awaiting the remaining debts to default, Santander is due to this month I think, so I expect further debt collection communication regarding that.

Any advise, tips, guidance, support etc greatly appreciated, I just feel a bit lost and ashamed of the whole situation :(

Comments

  • Grumpelstiltskin
    Grumpelstiltskin Posts: 5,722 Forumite
    Part of the Furniture 1,000 Posts Name Dropper
    OK please read this. In Debt and Wannabe Debt Free? first Steps to take are here, please read, then ask questions. — MoneySavingExpert Forum

     You have come to the right place.

    Before we can give you the best advice we need to see your full details.

    Complete a honest SOA  then we can see what the best thing to do is in your circumstances.




    If you go down to the woods today you better not go alone.
  • keepon_keepingon
    keepon_keepingon Posts: 4 Newbie
    First Post
    Thanks Grumpelstiltskin, SOA below:

    [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................ 3235
    Partners monthly income after tax....... 0
    Benefits................................ 0
    Other income............................ 0[b]
    Total monthly income.................... 3235[/b][b]

    Monthly Expense Details[/b]
    Mortgage................................ 1025
    Secured/HP loan repayments.............. 0
    Rent.................................... 0
    Management charge (leasehold property).. 0
    Council tax............................. 187
    Electricity............................. 72.5
    Gas..................................... 72.5
    Oil..................................... 0
    Water rates............................. 89
    Telephone (land line)................... 0
    Mobile phone............................ 65
    TV Licence.............................. 14.95
    Satellite/Cable TV...................... 100
    Internet Services....................... 40
    Groceries etc. ......................... 600
    Clothing................................ 50
    Petrol/diesel........................... 160
    Road tax................................ 33
    Car Insurance........................... 65
    Car maintenance (including MOT)......... 0
    Car parking............................. 0
    Other travel............................ 40
    Childcare/nursery....................... 0
    Other child related expenses............ 50
    Medical (prescriptions, dentist etc).... 0
    Pet insurance/vet bills................. 55
    Buildings insurance..................... 20
    Contents insurance...................... 17
    Life assurance ......................... 100
    Other insurance......................... 0
    Presents (birthday, christmas etc)...... 25
    Haircuts................................ 0
    Entertainment........................... 100
    Holiday................................. 50
    Emergency fund.......................... 0[b]
    Total monthly expenses.................. 3030.95[/b]
    [b]

    Assets[/b]
    Cash.................................... 0
    House value (Gross)..................... 429000
    Shares and bonds........................ 0
    Car(s).................................. 5000
    Other assets............................ 0[b]
    Total Assets............................ 434000[/b]
    [b]

    Secured & HP Debts[/b]
    Description....................Debt......Monthly...APR
    Mortgage...................... 238990...(1025).....0[b]
    Total secured & HP debts...... 238990....-.........-   [/b]

    [b]Unsecured Debts[/b]
    Description....................Debt......Monthly...APR
    Santander Credit Card..........4680......0.........0
    Moorcroft......................4490......0.........0
    Barclaycard....................4500......0.........0
    MBNA...........................7841......0.........0
    Lendable Loan..................2000......0.........0
    Vanquis Credit Card............1200......0.........0
    Natwest Loan 2.................15295.....0.........0
    NatWest Loan 1.................9250......0.........0[b]
    Total unsecured debts..........49256.....0.........-  [/b]

    [b]
    Monthly Budget Summary[/b]
    Total monthly income.................... 3,235
    Expenses (including HP & secured debts). 3,030.95
    Available for debt repayments........... 204.05
    Monthly UNsecured debt repayments....... 0[b]
    Amount left after debt repayments....... 204.05[/b]

    [b]Personal Balance Sheet Summary[/b]
    Total assets (things you own)........... 434,000
    Total HP & Secured debt................. -238,990
    Total Unsecured debt.................... -49,256[b]
    Net Assets.............................. 145,754[/b]

  • Grumpelstiltskin
    Grumpelstiltskin Posts: 5,722 Forumite
    Part of the Furniture 1,000 Posts Name Dropper
    OK The other adult, your partner?

    No income? No child benefit?
    If you go down to the woods today you better not go alone.
  • keepon_keepingon
    keepon_keepingon Posts: 4 Newbie
    First Post
    Sorry, yes child benefit of £173 per month. All debts are in my name so have only included my income and expenditure.
  • Grumpelstiltskin
    Grumpelstiltskin Posts: 5,722 Forumite
    Part of the Furniture 1,000 Posts Name Dropper
    edited Today at 3:08PM
    OK but you are showing the full amounts of household expenses, so does your partner contribute to these items?
    If not why not?

    You need to add the child benefit to the income and add  in monthly repayments and interest rates for each debt
    If you go down to the woods today you better not go alone.
  • RAS
    RAS Posts: 36,172 Forumite
    Part of the Furniture 10,000 Posts Name Dropper
    keepon_keepingon said:
    Sorry, yes child benefit of £173 per month. All debts are in my name so have only included my income and expenditure.
    It doesn't work like that. Even if the debt was wholly yours (gambling etc), a debt charity would allocate household costs in proportion to income.

    However if the debts are accumulated by funding family costs, then both your incomes and expenditure need including. There's no point you trying to pay down debts accrued from previous expensive holidays, for example, whilst your partner funds more expensive holidays, or gets into debt themselves trying to maintain the life style you've been used to as a family. 

    This requires you all, children included, to understand that the debt issues require all of you to adjust expectations and to all be fully on board. Albeit I'd expect the odd melt-down.

    You've been overspending by circa £400 per month for the last decade? Are the loans consolidation of previous debt?

    Your SOA includes some room for manoeuvre but misses other elements entirely. I doubt many families will need no prescriptions or dental treatment for the next 6 years? Clothing looks light even if you just buy from chazzers, with new shoes, undies and socks.
    If you've have not made a mistake, you've made nothing
  • keepon_keepingon
    keepon_keepingon Posts: 4 Newbie
    First Post
    Ok, here is an updated SOA including everything:

    [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................ 3525
    Partners monthly income after tax....... 1100
    Benefits................................ 173
    Other income............................ 0[b]
    Total monthly income.................... 4798[/b][b]

    Monthly Expense Details[/b]
    Mortgage................................ 1293
    Secured/HP loan repayments.............. 0
    Rent.................................... 0
    Management charge (leasehold property).. 0
    Council tax............................. 187
    Electricity............................. 72.5
    Gas..................................... 72.5
    Oil..................................... 0
    Water rates............................. 89
    Telephone (land line)................... 0
    Mobile phone............................ 90
    TV Licence.............................. 14.95
    Satellite/Cable TV...................... 100
    Internet Services....................... 40
    Groceries etc. ......................... 700
    Clothing................................ 150
    Petrol/diesel........................... 200
    Road tax................................ 33
    Car Insurance........................... 65
    Car maintenance (including MOT)......... 20
    Car parking............................. 15
    Other travel............................ 80
    Childcare/nursery....................... 0
    Other child related expenses............ 50
    Medical (prescriptions, dentist etc).... 100
    Pet insurance/vet bills................. 55
    Buildings insurance..................... 20
    Contents insurance...................... 17
    Life assurance ......................... 250
    Other insurance......................... 0
    Presents (birthday, christmas etc)...... 20
    Haircuts................................ 50
    Entertainment........................... 200
    Holiday................................. 100
    Emergency fund.......................... 0[b]
    Total monthly expenses.................. 4083.95[/b]
    [b]

    Assets[/b]
    Cash.................................... 0
    House value (Gross)..................... 439000
    Shares and bonds........................ 0
    Car(s).................................. 12000
    Other assets............................ 0[b]
    Total Assets............................ 451000[/b]
    [b]

    Secured & HP Debts[/b]
    Description....................Debt......Monthly...APR
    Mortgage...................... 238990...(1293).....0[b]
    Total secured & HP debts...... 238990....-.........-   [/b]

    [b]Unsecured Debts[/b]
    Description....................Debt......Monthly...APR
    Santander Credit Card..........4680......130.......0
    Moorcroft (Natwest)............4490......0.........0
    Barclaycard....................4500......150.......0
    NatWest Loan 2.................9249.64...327.......18.1
    NatWest Loan 1.................15295.....314.......15
    Vanquis Credit Card............1200......11........0
    Lendable Loan..................2000......77........41.98
    PRA (MBNA).....................7841......0.........0[b]
    Total unsecured debts..........49255.64..1009......-  [/b]

    [b]
    Monthly Budget Summary[/b]
    Total monthly income.................... 4,798
    Expenses (including HP & secured debts). 4,083.95
    Available for debt repayments........... 714.05
    Monthly UNsecured debt repayments....... 1,009[b]
    Amount short for making debt repayments. -294.95[/b]

    [b]Personal Balance Sheet Summary[/b]
    Total assets (things you own)........... 451,000
    Total HP & Secured debt................. -238,990
    Total Unsecured debt.................... -49,255.64[b]
    Net Assets.............................. 162,754.36[/b]


  • Smudgeismydog
    Smudgeismydog Posts: 418 Ambassador
    100 Posts Second Anniversary Photogenic Mortgage-free Glee!
    Well done for posting.

    A few things stand out from your SOA;

    - can your partner increase her income? Extra hours, side hustle or second job?
    - £300pm spend on entertainment and holidays is your current income deficit
    - life insurance at £250pm looks steep, what does this cover? Do you have life cover through work?
    - mobile phone at £90pm, how many phones is this for? are you in contract paying for a handset? SIM only at £10pm is the way to go
    - satellite at £100pm is high, can you cut back here?
    - clothing at £150pm also looks high (even for 2 adults and 2 kids, have you tried things like Vinted?
    - How long have you got left on the 0% credit cards?


    This absolutely looks doable, but I do think it’s really important to understand how you came to be in this position. Identifying where this money has been spent can really help to break habits and form a new relationship with budgeting and money awareness.
    I’m a Forum Ambassador and I support the Forum Team on the Pension, Debt Free Wanabee, and Over 50 Money Saving boards. If you need any help on these boards, do let me know. Please note that Ambassadors are not moderators. Any posts you spot in breach of the Forum Rules should be reported via the Report button, or by e-mailing forumteam@moneysavingexpert.com. All views are my own and not the official line of MoneySavingExpert.
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