Debt and Job loss

dprovan

Hi,
Please no judgment, I am exhausted with worry and really dont need to be told how wrong I have been.

Long story short- I have a senior job which pays well. Things have gone wrong in work and I think there is a real chance that I may well lose my job. Not a misconduct issue but more a performance issue in the business which people will want a 'head' for - and as the senior person it will be me.

My wife and I have debts, my wife's are much lower and she can manage this and clear this with savings that she has.

I would get other work, but there is no way I could pay the debts at the current levels. Currently paying 1500 a month to pay them down (all credit cards on my name). My plan is to pay as much to these as possible (my plan had been to pay them down over the next 22 months) and clear any balance with a lump sum I get from pension then. The plan was always to take the pension then and work part time in a much lower paid job then- but my hand may be forced earlier.

If the worst happens- I think I can cover everything that needs covered in a smaller paid job- just couldnt afford the cc payments. So my questions are 1. could I just stop paying and go on self managed DMP 2. Would this affect my wife in anyway- I am assuming not as hopefully she is not liable for my debt (all unsecured cc) 3. If I went DMP and paid the minimum after they default can I do that until I get my lump sum in 22 months and look to make settlements? Anything else I am missing or not thinking about?

I am exhausted with the worry and hope this is something I can be clearer on

Uriziel

There is no need for you to stress. A lot of people are in debt severely and are completely fine and live their lives. There is also no need to worry about being let go before it actually happens since they might just not do it. Prepare your CV in case you need to apply for jobs. If they do let you go you can ask if there is a lower paid role elsewhere in the company you could move to. They might like that since you have experience.

RAS

Please relax because stressing won't make your performance or your ability to manage the work situation better. 

The old serenity prayer, do what you can about what you have control over, accept you can do burger all about some stuff, and know the difference.

Do not use your pension to pay off your debts. Just don't. If things go pear-shaped, then you stop paying anything towards your consumer debt and build an emergency fund. And you make sure the essential bills are covered.

Once the debts default, depending on your new income, you make an affordable payment towards the debt. Mostly it will be sold at about 30% initially and later 10%. So there's lots of scope to pay off the debt at reduced rates, if need be.

Yes it'll damage your credit record for 6 years, but you can remortgage with your current provider without a credit check.

Much better than arrangements to pay that only come off your credit record 6 years after the debt is paid off.

Discuss with your wife, do an SOA covering essential spends only and start to bring in your horns. You might just have time to get some "savings", money for emergencies, before anything happens.

And you may not need them if the work situation resolves. But you do need them because you current debt is unsustainable.

Wishing you the best and will be rooting if SHTF.

Now sleep.

fatbelly

I agree with the above. Credit card debt is nonpriority debt. If you can't pay, then you don't. The debt gets sold to a third party debt buyer.

Cards are also sole-name so they cannot pursue your wife even if she is a second cardholder. Her credit file would only be affected by your defaults if you had a separate joint product like a current account or mortgage.

Finally if you have been employed more than two years, do not resign. If you are dismissed, claim Unfair Dismissal and make them work for it. Tribunal if necessary. Most cases are settled with a (sometimes substantial) lump sum. It's not a topic for this board but ACAS have guidance here

https://www.acas.org.uk/dismissals/unfair-dismissal

ManyWays

I hope the worst doesnt happen, but get your CV and linkedIn polished up in case it does.

In the meanwhile, start budgeting as though you have already lost the job, cutting back everywhere that is possible. If this may drag on for many months, consider stopping paying into your pension and diverting those funds to debt clearing. This is not usually a good idea, but it sounds as though your pension muct already be good so a few months off wont matter.

Are any of your cards not at 0%, or have a 0% running out very soon? This would be a good point to apply for any balance transfers. With debt at 0% you may be able to carry on making the minimum payments until you get another job? Defaulting on cards isnt the end of the world, but we know so little about your situation it isnt clear if it is necessary.

You havent mention a mortgage, when will that be cleared? Or car finance, do you have a car on PCP or lease that is ending soon?

MEM62

In your situation I would not be throwing much at the debts, if anything.  You are at risk of unemployment so you need to stash cash to survive any period where you do not have an income - a war chest if you like to cover the essential bills. (mortgage, council tax, utilities etc)  Once you know where you stand in the longer term you can look at your options.  Likely you will need a DMP.   

dprovan

thank you everyone for your kind comments and advice. It has helped greatly and I feel much better that I have a plan for income, dealing with the current work situation (controlling what I can and preparing for what may be out of my hands) and developing some contingencies. Thank you, I am always amazed and grateful that strangers can take time to be so kind. Thank you! 

enthusiasticsaver

Credit cards are non priority debts. The only thing they can do is to trash your credit record but as more borrowing is not the answer I would not worry about it. If you and your wife are financially linked through a joint account, savings, current or mortgage then defaulting on the debts which you should do may affect her. So she needs to know and maybe close the joint accounts if you can. Do you still hold a mortgage? 

dprovan

yes we still hold a joint mortgage ( 5 year left and approx. 55k) and a joint current account, we could look at separate current accounts if it comes to it. We are both open and agreed on the plan if the worst case comes. I have spent the past few day dealing with the 'now' and trying not to think too much about what might happen (difficult but I am getting better at it), as others have said all I have is today. I am glad there is a plan financially if worst comes to the worst (thank you everyone for all your help and clarity on that) and I have applied for a few jobs (Plan , they may bring similar challenges but the current culture is awful- I have been there 20+ years and first time ever I have felt this.

RAS

If you already own a lot of debt, it may not be a bad idea for your partner to have a separate current account into which their salary is paid. Not urgent, but think about it over the next few months.

Also when you are in the frying pan, be mindful of the fire. I did jump and it was a very good move until we got taken over. Proved OK in the long run but there were a few rocky years.

katsu

You say your wife can use savings to pay debts in her name. I wouldn't rush into that incase you need the money for household expenditure if you do lose your job. 

You can both explore options for dealing with your debts by posting more info here or contacting a debt help charity and discussing it off line.