Is it all doom and gloom? Urgent Help Please......

mletters

Hi,

We are a married couple of 37 & 35yrs old. We've been married for nearly 10 years. I work full time. My Wife works part time.

We have always kept our finances separate (bank accounts, spending etc). We kind of had an agreement at the start of the marriage where I would pay the mortgage & my Wife would pay bills.

This was fine until my Wife had a horrible accident at work and had to leave work full time. It turned into a Court case, but was settled by the company just before they were due in Court.

Since then, my Wife and I had a Child who is now 5 years old. She has recently returned to part time work, with an income of around £130 per week.

Earlier on this year, I took out a large unsecured loan (£25k) to get out of horrible Credit Card and Loan accrued debt (which was accrued by me, but was due to home improvements, holidays, cost of living etc).
I worked every hour God sent over the last few months and also managed to pay off a £5.5k Bank overdraft. I've even changed the Mortgate from Repayment to Interest only (for 3.5 years) to allow me to double up on the £380 p/m loan payments to get out of debt quicker....

I just thought we were getting our heads above water, and my Wife breaks down this morning and (guess what's coming) .....Announces that she has accrued £26,000 worth of debt (credit cards & loans). This had been accrued since the birth of our Son, and in a period of 5 years where she didn't work. She had been making payments (credit card and loans) with Savings (which have now run out).

The time has come where we both need to sit down and have a serious chat about finances (whenever I've mentioned money in the past - or consolidating bank accounts etc), the subjet has always been avoided or brushed aside.

Now my Wife has no money to pay 4 Credit Cards and a Loan amounting to £26k.

I am able to re-pay the huge recent £25,000 loan I took out and Mortage, Gas Electricity etc., but cannot afford to lump another £26k worth of debt onto our finances. I also don't think one of these secured loans is the answer (excessive interest, more debt etc).

What would be the best solution (IVA, Bankrupcy etc.) as my Wife cannot meet the minumum payments this month.

If my Wife has to go for IVA's, will this affect my Credit rating as well (I know my Wife's will be up the swannee for 5 years or so?). I also heard something about equity in our house (Bought for £125k 8 years ago, now valued last year at £415,000 (I wont say its currently worth this, given the current housing climate!). We don't want to loose the roof over our head. We've never had any CCJ's and our credit has always been good (until now!).

Thankyou so much for listening, and sorry about the long post. ANY help and advice would be gratefully accepted.

Kind Regards,

Mike.

Horace

Hi and welcome, please can you list your SOA (statement of affairs) so we can get the full picture as it maybe that some of us will be able to offer advice on how to clear the debts.

Thanks.

dancingfairy

I think a joint SOA is the answer - you both need to know what the other is doing/spending /owing and then see if you can meet the repayments or not? Firstly you need to work out whether you can jointly afford the min payments this month I would have thought.
Although the people on here can give advice and opinions you may want to get help from one of the debt charities or CAB.

When we have a clear idea of the situation it would be easier to advise on possible solutions.

lucielle

Hi well done for posting. You need to post all your income and expenditure then we can see the financial side of things. You can also speak to one of the debt charities, like CCCS. I have used these and they were really helpful and not at all judgemental. Good Luck
L

affordmylife

just a thought.

whilst you wife was bringing up your child for the last five years apart from the child benefit of approximately £17 a week what money was she living on?

could that be why she has run up debts.

im only asking because my husband and i keep your money separate and sometimes i really struggle but although i know he would help me i am too proud to admit i cant manage.

rubydoiwannabee

mletters wrote: »

Hi, I've even changed the Mortgate from Repayment to Interest only (for 3.5 years) to allow me to double up on the £380 p/m loan payments to get out of debt quicker....

Hi, can I ask you a question about this? Have you organised additional life cover? The reason I ask is because my OH and I are really struggling at the moment with 26K debt and more going out each month than is coming in. If we moved our mortgage back to wholly interest only we could break even, but not have anything left for the additional cover needed.

I hope you don't mind me asking.

Poosmate

Hi and welcome to DFW on MSE.

I think first off if you could post your SOA using this link:-

http://www.makesenseofcards.com/soacalc.html

the wonderfull people on here will be able to see if there is anywhere that you can cut back on or change to better rates etc.

One thing that strikes me is the extra £380 you are paying on your unsecured loan. Could you, for the time being reduce this back to normal payments and use this to make the payments on your wife's secured debt at least? I know it's not ideal or planned for but then neither was your wife's £26k debt.

Although you pay the mortgage I am guessing your wife's name must be on it in order to get a secured loan so in that case you are financially linked with each other so it's kind of in your interest to make sure that secured loan is paid each month. Please somebody correct me if I'm wrong.

What I would also suggest is, now you are both out of the closet and know what a financial predicament you are both in, you could pool your resources and work together as a team (although it kind of sounds like you are intending to do that anyway).

There are things you can do to get yourselves out of this debt and everyone on here will be here to help and support you all the way.

Please post your SOA so we can try to help.

Thanks

Poo

mletters

Statement of Affairs and Personal Balance Sheet

Monthly Income Details
Monthly income after tax................ 1680
Partners monthly income after tax....... 350
Benefits................................ 110
Other income............................ 0
Total monthly income.................... 2140

Monthly Expense Details
Mortgage................................ 620
Secured loan repayments................. 0
Rent.................................... 0
Management charge (leasehold property).. 0
Council tax............................. 138
Electricity............................. 75
Gas..................................... 40
Oil..................................... 0
Water rates............................. 30
Telephone (land line)................... 25
Mobile phone............................ 45
TV Licence.............................. 12
Satellite/Cable TV...................... 0
Internet Services....................... 0
Groceries etc. ......................... 60
Clothing................................ 0
Petrol/diesel........................... 140
Road tax................................ 32
Car Insurance........................... 40
Car maintenance (including MOT)......... 0
Car parking............................. 0
Other travel............................ 0
Childcare/nursery....................... 0
Other child related expenses............ 44
Medical (prescriptions, dentist etc).... 10
Pet insurance/vet bills................. 0
Buildings insurance..................... 14
Contents insurance...................... 14
Life assurance ......................... 0
Other insurance......................... 0
Presents (birthday, christmas etc)...... 0
Haircuts................................ 0
Entertainment........................... 0
Holiday................................. 0
Emergency fund.......................... 0
Total monthly expenses.................. 1339

Assets
Cash.................................... 0
House value (Gross)..................... 415000
Shares and bonds........................ 0
Car(s).................................. 10000
Other assets............................ 7000
Total Assets............................ 432000

Secured Debts
Description....................Debt......Monthly...APR
Mortgage...................... 131000...(620)......0
Total secured debts........... 131000....-.........-

Unsecured Debts
Description....................Debt......Monthly...APR
Intelligent Finance............25000.....381.......7.8
Capital One....................4691......136.......0
Marks and spencer..............4853......0.........0
EGG............................3500......70........0
ABBEY..........................2860......47........0
RBS............................4069......91........0
Barclaycard....................8010......180.......0
Total unsecured debts..........52983.....905.......-

Monthly Budget Summary
Total monthly income.................... 2,140
Expenses (including secured debts)....... 1,339
Available for debt repayments........... 801
Monthly UNsecured debt repayments....... 905
Surplus(deficit if negative)............ -104

Personal Balance Sheet Summary
Total assets (things you own)........... 432,000
Total Secured debt...................... -131,000
Total Unsecured debt.................... -52,983
Net Assets.............................. 248,017

mletters

When I look back at how we've managed to accrue debt of over £53,000 it makes me want to cry. This debt accrued with changing cars too often, keeping up with the jones external home improvements (converted garage to games room, then back to garage), widening drive to accomodate motorhome (which we no longer have!) and 3 holidays a year for approx 7-8 years. I used to have no value for money. I (sorry recently discovered that we) would spend money on credit cards like it was free money. I feel sick when I think, we could have had another house for what we've wasted. Still, life's important lesson is that you learn and move on (hopefully before it's too late this time?)

As you can see from S.O.R above, I can afford to comfortably pay all of the bills, mortage and my huge loan (I recently consolidated al of my CC's, Loans etc into £25k loan). My plan for doing this was to take the £25k loan over 7 years and reduce the mortgage from £860 p/m (repayment) to £620 interest only (and almost double up on the un-secured loan re-payment (by sticking the extra into a high interest bank account (Kaupthing edge 6.5%) for 3.5 years - then paying it directly off the loan, effectivly halfing the term to 3.5 years from 7 (Phew...hope that made sense - Anyone lost the will to live yet ? .....:-)

The problem is my Wife's debt (Err, sorry - OUR debt now....We are now sticking together, opening a bank account and sorting this out properly! I wish we had have done this 10 year ago!). Trouble was, it was too easy just to keep finances separate. My wife didn't know what I speant/earned and vice versa.

How do we go about paying my wifes accrued debt of nearly £27-28k? She only earns £460. I've already taken out a huge £25k un-secured loan, so the chances of getting another one like that is slim?

Do we re-mortage, go the IVA route, try various companies for another £25k un-secured loan (this could adversly affect our credit score - which is good by the way - no missed payments).

Sorry for such a long post, and I hope you've got the full picture now? Just to recap....

I got into a bit of a mess and recently reviewed all creadit/debt and consolidated into £25k loan which I can comfortably afford....Loan term 7 years, double up on payments by reducing mortage to interest only for 3-4 uears......

Thought it was problem solved, my Wife has racked up debts of nearly £28k which I have just recently found out about...

What do we do next?

Thanks so much for listening.

Mike.

MrsTinks

My brain is a little muddled tonight Mike but what are the chances of your wife upping her income? I promise I'll be back when my head can cope with it although I am sure in the mean time other people will have added even more good advice to what you've already got

(oh yeah and you say you're changed cars often... any chance of selling whay you have now and buying cheaper one(s) whilst would obviously help pay a chunk off on the debts?)

GeorgeUK

I take it your wife's debts are included in the SOA?

Council tax............................. 138
If you are paying this over 10 months, can you ask to pay it over 12?

Electricity............................. 75
Gas..................................... 40
Time to change provider methinks. Hopefully be able to at least get electric down - try https://www.moneysupermarket.com or https://www.uswitch.com

Internet Services....................... 0
No internet?

Nothing for haircuts, entertainment, clothes?

While you may not be able to get another loan, it may be possible to tackle the debts in another way. First it may be worth applying to the 3 credit reference agencies for a copy of your credit reports (£2 each). This should at least highlight any surprises that you have forgotten about and give you a n idea of the condition of your credit worth. I wouldn't bother paying to see your credit score - different companies use different criteria to work this out so not really worth it.
http://www.moneysavingexpert.com/banking/credit-rating-credit-score#check

See how many credit checks you've had recently. You can usually have 3 within a 6 month period before your score is affected, but you should also try to space the searches out a bit. I suggest, after getting an idea of where you are with the combined debts and making sure your wife is fully involved with this, that you look at promotional offers such as the Virgin Money 0% BT card. This allows any money you balance transfer (even to a current account) to have 0% interest applied to it for 15 months. There is a 2.98% transfer fee and 1st month is 3% minimum payment, but after that the min payment is £25. This should allow you to throw any other money at the higher APR's to reduce the debt quicker. Just make sure you never buy anything with a 0% card and that you don't miss a payment as this will terminate the 0% offer and the normal APR would apply.