Debts, Assets, and feeling scared

searchingforlight

Hi,
A friend of mine suggested I visit this site after I confided in her about the debts my husband and I have and the situation we find ourselves in. In many ways it is re-assuring to know we aren't alone, although of course it feels pretty awful right now. We have contacted CCCS and have an appt. with them in a couple of weeks. We have not been able to open even a basic bank account (we tried with the Halifax but they refused) but I have an old one I have revived in my name, so that's something...

Basically our debts (unsecured) are £56k on credit cards (10 different ones) and £25k on loans (5 different ones), plus we have a £1500 overdraft with our current bank which is up to the limit and for the last two months has been over the limit as they charge us £35 every time a direct debit is bounced. Our outgoings exceed income by £1300 per month and for months I've been juggling things (well robbing peter to pay paul I guess) to try to keep up the minimum payments on everything but now we simply can not pay even that. We have prioritised debts such as the mortgage and are currently up to date with that (just).

We think we have found a holding position (mainly by a member of the family lending us some money on the basis we pay it back when the house gets sold) until our appointment with CCCS on 12th October and then I am guessing we are looking at a DMP arrangement (we have put our house up for sale as it has equity in it which will clear 3/4 of the debts). They said to write to our creditors in the meantime offering whatever we could, but I am very fearful about this, particularly after reading some of the posts here. For example, our debts are with the likes of Capital One, MBNA, Egg, Lombard, Morgan Stanley, Abbey etc. and it sounds like some of these instigate some real bullying tactics to get their money. I'm assuming that the minute we tell them about our communication with CCCS they will issue defaults, and as CCCS have said, they can not guarantee that it won't go all the way to CCJ's even with a DMP with them.

I've said all of the above so you have some idea of our situation, and some of the questions whirring around in my head in the middle of the night are things like "can these creditors put a charge on our house even though the debts are unsecured?" "will they make me sell my car?" (I am self employed and do a lot of travelling). I guess I'm also trying to understand just how nasty this is going to get (so I can try to prepare myself emotionally, although I feel pretty wrecked even right now) and how quickly the creditors will respond with defaults, ccj's, threats etc.

I'm not shirking responsibility for any of this. I know how and why we are in the mess we are in and we won't ever be going there again, and I have to take a large amount of the responsibility for this. Any advice and guidance anyone can give me right now would be really appreciated. Is there anything else I need to be doing (my business isn't doing so well so if I don't secure the contract I need next week I will be getting a part-time job)? Can you answer the questions about our assets (house and car) and who will have a claim on these? Are CCCS generally recognised by most creditors or is the reality that we will have up to 13 CCJ's against us?

Sorry for such a long post and so many questions. I can't seem to find a way of switching off from any of this so hoping some responses here might help... thanks again.

Bestthingsinlifearefree

Hi Searching for light,

welcome to the forum. You have come to the right place for free, experienced advice and support.

You will get through this. I am sure more experinced memebers will be along soon to advise you.

Maybe post here a statement of affairs ie all debts, interest rates,length of loan etc.

All out goings and income. It is a good starting point so others can assess your current situation and suggest the way forward.

Good Luck and stay positive.

The Best Things In Life Are Free.

mountainofdebt

Searching,

I really don't know the answer to your questions - having said that though there are some wise guys on here and I'm sure someone will post an answer for you.

What I have picked up on by being on these boards is that you have taken the first step in the right direction in sorting out your sitution....perhaps not much comfort I know. I've also learnt that CCCS are one of the organisations that are generally recommended for people in your situation. It seems to be the general feeling as well that if the creditors do start getting 'heavy' with you, be strong tell them you will only deal with them by post or even via CCCS and put the phone down....easier said then done I know but it should get easier the more times you do it!

In the short term can you face posting your budget, all your outgoings and incomings? If you can post the balances, aprs and limits of your credit cards....you never know.

jen_jen_2

first - dont panic,

are you selling the house to clear debts? do you want to sell the house or would rather keep it? you need to think about this because you are making decisions that will affect your life and you might as well do what you want not what you feel you have to do.

if you are going to sell it, you can tell creditors this, they are less likely to go for CCJ, however if they do go for CCJ so what your selling the house anyway and they will get their money then, no district judge will order you sell the house when you already have it on the market - that would be a waste of everyones time.

if you are selling the house and can clear 2/3 of the debt consider an IVA this is a way of agreeing with the creditors that you pay off less than you owe out of the equity, all over in one go.

if you dont want to sell, tell CCCS this. offer what you can afford to the creditors and yes creditors may get a Charging Order, this means the debt becomes secured on the house and continues to accure interest. again a judge is only likely to make you sell it if you are refusing to pay the creditor and its costing you alot of money to remain there eg if would cost you same to rent courts unlikely to make you sell. creditors dont really want to force sale in general they are happy to sit on the money, from their point of view will get money when house sold plus interest - its a good earner.

the car, if you need the car for work it is considered a necessity, however if a v expensive car and you only need a cheap one you may have to justify it to creditors, they cant make you sell it (in an IVA you could be forced to sell it if expensive one)

it is also worth putting your income and expenditure details on here, there will be lots of cost cutting tips out there.

hope this has aleviated your fears somewhat, get reading the other threads and talk to CCCS about IVA - note of caution, make sure you dont pay up front for it, the costs should come out of the lump sum you have.

searchingforlight

Thank you so much for the quick responses. I have been checking every hour or so just feeling so anxious and it is so helpful to hear what you have to say. I am working my way through other threads too as suggested.

Re. selling the house, well we had decided we would sell sometime anyway, so it's not a huge 'emotional' issue for us in that sense. The car is worth around £12k and I need a reliable, safe car for the amount of travelling I do so I guess that may not be considered excessive.

Income and Expenditure - well I guess there is nothing to lose by posting it here and hoping there may be some tips etc. but I should say it makes depressing (well for me) reading so that's the health warning...

Income: £1600 per month regular (employed husband), £500 from my business (this will increase with my p/t work)

Expenditure:
Priority debts (mortgage, council tax, utilities etc.) amount to £1226 (the mortgage is high at £790 as we had to re-mortgage a couple of years ago due to a previous business debt). This doesn't include anything for food or petrol (we are running out of both).

Creditors (credit cards):
MINT £94 per month, balance £4194, limit £4200
Morgan Stanley £76 per month, balance £3765, limit £3800
Monument £68 per month, balance £3376, limit £3500
Tesco £103 per month, balance £3435, limit £3500
Abbey £96 per month, balance £5041, limit £5000
Capital One £380 per month, balance £13211, limit £13700
Virgin (MBNA) £180 per month, balance £8158, limit £8400
Marbles £218 per month, balance £10826, limit £11000
Morgan Stanley (2) £90 per month, balance £4450, limit £5200
Egg £35 per month, balance £1778, limit £2000

Creditors (loans):
Lombard £107.28 £5k/60 months APR10.9% - 5years left
All/Leicester £133.62 £7.5k/48 months APR5.9% - 40 months left
Nationwide £156.44 £8k/72 months APR6.7% - 60 months left
Egg £280 balance £13.2k - 5 years remaining

Creditors (HP):
Car Loan £160.36 per month APR9.2%/48 months 35 months left

Plus overdraft of £1500 at Alliance and Leicester (current account) - currently running at £1440 overdrawn.

Well, that's it. Thanks for encouraging me to post it. I guess the more times I have to write it out and deal with it then the more I can remove the emotional stuff and try to deal with it head on. If there is anything we should be doing/could be doing in advance of our session with CCCS on 12th do please advise. Thank you all again.

tattooed_lady

Hi Searchingforlight,

I just wanted to wish you all the best and to agree with everyone else about the CCCS. We cleared a debt with them and they were fantastic. :T

jen_jen_2

your income and expenditure, you have only put the creditor expenditure, you have to think about it in a different way. forget the crediors and write down all your essentail expenditure eg, morg, gas, electric, council tax, food (yes essential) petrol etc etc.

from your incomings can you afford all these (forget all credit cards and unsecured loans)

if no you will have to start cutting back, if yes then whatever is left over goes to the creditors with details of when you expect to sell your house and amount of equity

you will have to default on your creditors sooner or later so dont prolong the process or get further into debt, stop paying them now. you also need a new bank account to put your money in without it being swallowed by overdraft.

the car - i dont think youll keep a 12K car with a £160 per month loan on it and only £500 from your business. you can get a good reliable car (new) for £5 -6 K and a second hand one for about 3K unless you can improve the income and show that the 12K car gets that income then i doubt you can keep it. one good point which may work is that its only 160 a month, you dont have to tell creditors on a dmp what its worth (you will on an iva)

please post your essential expenses, as you are aware this needs to be done for CCCS so why not

Thefunkygibbons

Echo what was said about living expenses

In addition, can you add the APRs on your above post, so that it is clear what order you need to clear debts in, obviously, the most expensive should be cleared first

bluezone

Hello there searchingforlight,
Just to let you know you are not alone and admitting the problem on here will ease things for. My hubby and I are over £100K in debt and I didn't know where to turn. We are far from being debt free but instead of drowning we are treading water. I was the one who took the bull by its horns as it were when hubby account was frozen. I took all the bills he had been hiding and sat down, sorted them and typed them all into a spreadsheet. Credit card balances and %apr on one and a monthly spreadsheet which includes all the necessary outgoings and incomings.
There is a website called https://www.whatsthecost.com which is good. You go to the snowballing section and list all your debts with their % apr and it calculates which ones to pay of first and helps you calculate you debt free date.
All the MSE's on here are fabulous and have helped us. Hubby now knows about me coming on here and even takes a peek when he thinks i cant see him doing so.
Sorry if I have not been much help to you cry for help but wanted to let you know that there is light at the end of the tunnel although the tunnel can be a long one!

Xbigman

I'm against selling houses to clear unsecured debt in principal. It only works out if you can rent cheaper than the cost of your mortgage. If you can then fine, if not then don't do it. Also, what was the point of paying a higher APR for a debt being unsecured and then selling anyway? (just a rhetorical question, no criticism intended). You also need to consider the sale will not clear your debts outright. If you do sell you will need to try for full and final settlements to clear as much as possible. But thats a long way off.

The way forward right now is to cut back on expences as much as possible and arrange reduced payments. You seem to have a good income so there will be enough money left over for CCCS to work with in sorting out some payments. You ask if you will be harrassed by creditors? The answer is yes. With 13 creditors and some of them names well known for being heavy handed, you can guarantee a !!!!!! load of phone calls and letters. My top piece of advice today is to cancel your mobile contract and landline and just have a PAYG mobile. This will give you a much more peacefull life.
Tell all creditors you will only deal with them in writing, tell them you are contacting CCCS and send them a token payment. Try one tenth the normal amount. Cancel all your direct debits and standing orders except for the mortgage, council tax and TV licence. Then switch to your alternate bank account by having all income paid into it and transfering the direcr debits above.

What can you expect in future? Lots of letters that ask you to phone your creditors (don't). Lots of letters saying you haven't contacted them (even though you have). Lots of threats of CCJ's (no bad thing actually) and threats of charging orders (an pretty empty threat if you honour the CCJ's). Just try to stay calm and tough it out. Your situation is survivable.

One thing. Is your car sellable for 12k? If it is then sell it and replace with a cheaper one. There are plenty of reliable cars out there for 2k and that 10k really needs to go to creditors.
Regards




X

IN_LIKE_EVERYONE_ELSE!

How much equity is in your house?
How much is your relative giving you?