Unable to meet debt repayments - help needed.
SusieT78
Posts: 56 Forumite
Hi all,
I have been very stupid and got myself into a terrible mess and I can't see any way out of it. I don't expect any sympathy as it's all my own fault, but I'm hoping somebody may be able to offer advice
I used to be quite good with managing my money until I had children. Since having children I have constantly battled depression, stress and anxiety.
This has resulted in me leaving work last year to be a stay at home mum, whilst my partner works full time in a minimum wage job and does as much overtime as possible. I was the higher wage earner and I've always worked up until last year.
Pre-children I took out several credit cards, it was never a problem and if I couldn't clear them in full at the end of the month I would transfer the balance at 0% onto another card until I could clear it.
However, since the depression hit several years ago I stopped budgeting and managing my finances properly. When I'd feel really low I'd book us a holiday as being away from everything perked me up. The credit card companies kept upping the limits on my cards.
I'd keep transferring the funds to stay at 0% but was no longer clearing any debt and since having the kids actually started spending more each month than the money coming in.
I have no excuses, it is entirely my own fault and I'm so ashamed I've acted so irresponsibly and just buried my head in the sand.
I do shop around for the cheapest insurances and deals wherever possible, we don't have cable TV or any subscription services (we do have internet), mobile phones are PAYG.
Fast forward to today and I now have just under £45k debt across 5 credit cards and 1 overdraft with nothing to show for it. I also owe a relative £1k.
My partner is not aware of the extent of my debts (although is aware I have some debt) and I would like it to stay that way, as when I've tried to discuss it previously it has caused arguments.
We live in a house which I bought prior to meeting my partner. The mortgage and house are in my name only. We have 1 car which is also mine but we have shared use of as he works in a remote location with no public transport, so needs it to get to work.
House value: £65-75,000 (based on for sale prices locally for similar properties, it's in England)
Remaining Mortgage: £39,000 (13 years left)
Car value: £900
My monthly income:
Housekeeping from partner: £900
Child benefit: £149 (£137 every 4 weeks)
Child/working tax credits: £537 (£495 every 4 weeks)
Total income: £1586.00
Based on budget figures stripped back as far as reasonably possible (no luxuries just essential living expenses, which I've shopped around to get cheapest quotes on if possible, and the food budget is much lower than I manage currently but I'll have to stick to it, we haven't put money for socialising or days out in the budget as if it's not free we won't be doing it)
The total of all household spending in a 'calendar month' including payments to any 'secured' debts and all priority household bills.
Monthly outgoings: £ 1,556
This leaves me with just £30 a month to pay back the all the credit cards overdraft and relative.
My understanding is that if I tried to do a DMP through Stepchange they would prorata the payment of £30 according to how much is owed, excluding the relative who would get nothing.
But the problem is one of the CCs has about £22.5k on it, so they'd get £15 and then he lowest credit card has £1.5k so they would only get £1.
What I was thinking of doing was trying to self-manage a DMP (as I've seen posts on here saying people have done this) and offering the 5 credit cards and overdraft £5 per month each for the time being.
Has anybody ever done this and did the creditors accept this?
My partner keeps a little bit of his wages for his own credit card / mobile phone, but can the creditors demand he gives me all his wages to go towards debt repayments? Is he liable for my debts as we have children together?
I pay all the household bills/food/petrol/car out of my account as everything is in my name, but he pays for his own phone and credit card which are in his name.
If my partner does overtime then possibly he might be able to give me a bit more occasionally, but overtime is not guaranteed. When he has done overtime I can give something to the relative I owe that month.
I suppose my question is, has anybody been in a similar position and what happened? Am I going to lose my house? (Have never missed a mortgage payment). Can the creditors force a sale of the house as there is some equity?
I cannot get a remortgage as I looked into and I wouldn't qualify, so that's not an option. No relatives could buy a portion of the equity.
My eldest child has a medical condition which means they struggle with change, moving house could be problematic as they are very attached to this house, even on days out they ask when they can go home to the house, so I would prefer not to have to move if possible.
I have been making minimum payments up until this month, however in the next few weeks I'm not going to be able to do that any more, any savings I did have are gone now.
I want to avoid bankruptcy if possible as I would like to pay the debt back one day. My youngest child will start school in September 2018 so hopefully I can get a job to fit in with school hours. My partner works shifts with no set pattern and sometimes only finds out what he's working the week before so that combined with my current mental health issues is making it hard to find a job without incurring childcare costs for the youngest which would take all my wages anyway.
When the mortgage is paid off in 13 years I will have an extra £400 a month to pay the creditors in addition to any extra wages from me working.
So, it's not impossible that I'll be able to start paying the debt back one day, it just won't be anytime soon.
I'm confident my SOA/budget is as tight as it could be it's more the debt side I need help with.
I'm scared that £5 a month each will not be acceptable due to level of the debt owed and I'll end up in court, with CCJ's and homeless.
Sorry this is all very waffly. The main point is I can pay the mortgage and bills but I only have £30 a month towards debt repayments (which are currently approx £1.3k per month as the 0% deals ran out so interest is being applied). Thanks for reading if you've got this far! Any help or advice would be appreciated.
I have been very stupid and got myself into a terrible mess and I can't see any way out of it. I don't expect any sympathy as it's all my own fault, but I'm hoping somebody may be able to offer advice
I used to be quite good with managing my money until I had children. Since having children I have constantly battled depression, stress and anxiety.
This has resulted in me leaving work last year to be a stay at home mum, whilst my partner works full time in a minimum wage job and does as much overtime as possible. I was the higher wage earner and I've always worked up until last year.
Pre-children I took out several credit cards, it was never a problem and if I couldn't clear them in full at the end of the month I would transfer the balance at 0% onto another card until I could clear it.
However, since the depression hit several years ago I stopped budgeting and managing my finances properly. When I'd feel really low I'd book us a holiday as being away from everything perked me up. The credit card companies kept upping the limits on my cards.
I'd keep transferring the funds to stay at 0% but was no longer clearing any debt and since having the kids actually started spending more each month than the money coming in.
I have no excuses, it is entirely my own fault and I'm so ashamed I've acted so irresponsibly and just buried my head in the sand.
I do shop around for the cheapest insurances and deals wherever possible, we don't have cable TV or any subscription services (we do have internet), mobile phones are PAYG.
Fast forward to today and I now have just under £45k debt across 5 credit cards and 1 overdraft with nothing to show for it. I also owe a relative £1k.
My partner is not aware of the extent of my debts (although is aware I have some debt) and I would like it to stay that way, as when I've tried to discuss it previously it has caused arguments.
We live in a house which I bought prior to meeting my partner. The mortgage and house are in my name only. We have 1 car which is also mine but we have shared use of as he works in a remote location with no public transport, so needs it to get to work.
House value: £65-75,000 (based on for sale prices locally for similar properties, it's in England)
Remaining Mortgage: £39,000 (13 years left)
Car value: £900
My monthly income:
Housekeeping from partner: £900
Child benefit: £149 (£137 every 4 weeks)
Child/working tax credits: £537 (£495 every 4 weeks)
Total income: £1586.00
Based on budget figures stripped back as far as reasonably possible (no luxuries just essential living expenses, which I've shopped around to get cheapest quotes on if possible, and the food budget is much lower than I manage currently but I'll have to stick to it, we haven't put money for socialising or days out in the budget as if it's not free we won't be doing it)
The total of all household spending in a 'calendar month' including payments to any 'secured' debts and all priority household bills.
Monthly outgoings: £ 1,556
This leaves me with just £30 a month to pay back the all the credit cards overdraft and relative.
My understanding is that if I tried to do a DMP through Stepchange they would prorata the payment of £30 according to how much is owed, excluding the relative who would get nothing.
But the problem is one of the CCs has about £22.5k on it, so they'd get £15 and then he lowest credit card has £1.5k so they would only get £1.
What I was thinking of doing was trying to self-manage a DMP (as I've seen posts on here saying people have done this) and offering the 5 credit cards and overdraft £5 per month each for the time being.
Has anybody ever done this and did the creditors accept this?
My partner keeps a little bit of his wages for his own credit card / mobile phone, but can the creditors demand he gives me all his wages to go towards debt repayments? Is he liable for my debts as we have children together?
I pay all the household bills/food/petrol/car out of my account as everything is in my name, but he pays for his own phone and credit card which are in his name.
If my partner does overtime then possibly he might be able to give me a bit more occasionally, but overtime is not guaranteed. When he has done overtime I can give something to the relative I owe that month.
I suppose my question is, has anybody been in a similar position and what happened? Am I going to lose my house? (Have never missed a mortgage payment). Can the creditors force a sale of the house as there is some equity?
I cannot get a remortgage as I looked into and I wouldn't qualify, so that's not an option. No relatives could buy a portion of the equity.
My eldest child has a medical condition which means they struggle with change, moving house could be problematic as they are very attached to this house, even on days out they ask when they can go home to the house, so I would prefer not to have to move if possible.
I have been making minimum payments up until this month, however in the next few weeks I'm not going to be able to do that any more, any savings I did have are gone now.
I want to avoid bankruptcy if possible as I would like to pay the debt back one day. My youngest child will start school in September 2018 so hopefully I can get a job to fit in with school hours. My partner works shifts with no set pattern and sometimes only finds out what he's working the week before so that combined with my current mental health issues is making it hard to find a job without incurring childcare costs for the youngest which would take all my wages anyway.
When the mortgage is paid off in 13 years I will have an extra £400 a month to pay the creditors in addition to any extra wages from me working.
So, it's not impossible that I'll be able to start paying the debt back one day, it just won't be anytime soon.
I'm confident my SOA/budget is as tight as it could be it's more the debt side I need help with.
I'm scared that £5 a month each will not be acceptable due to level of the debt owed and I'll end up in court, with CCJ's and homeless.
Sorry this is all very waffly. The main point is I can pay the mortgage and bills but I only have £30 a month towards debt repayments (which are currently approx £1.3k per month as the 0% deals ran out so interest is being applied). Thanks for reading if you've got this far! Any help or advice would be appreciated.
0
Comments
-
You won't lose your house for defaulting on unsecured debt. Just make sure you prioritise the mortgage. You can either ring stepchange and let them manage a DMP or do it yourself. You would need to contact them telling them you cannot afford payments and asking them to stop interest being applied. You won't end up in court or homeless. Unsecured debtors have very little leverage. They may ask you to fill out an soa and provide proof of income but they do not usually go to court if they see proof you cannot afford to pay.I’m a Forum Ambassador and I support the Forum Team on the Debt free Wannabe, Budgeting and Banking and Savings and Investment 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 emailing forumteam@moneysavingexpert.com. All views are my own and not the official line of MoneySavingExpert.0
-
You have equity in your property. Don't go bankrupt. Don't sell your house, Don't try debt consolidation.
Keep paying the mortgage. Stop paying non-priority debts (when you're in a hole stop digging).
Your debt resolution will have to wait. Now you asked some questions in there.
can the creditors demand he gives me all his wages to go towards debt repayments? No
Is he liable for my debts as we have children together? No
Am I going to lose my house? (Have never missed a mortgage payment). No
Can the creditors force a sale of the house as there is some equity? No
Hope that helps0 -
Hi if your child with health problems is under 16 and has care/mobility problems have you considered applying for DLA? Also are you getting any help with your own mental health problems? Would it be possible to sell your house and then rent somewhere while you sort your many problems out?0
-
Sorry to hear you are struggling - it can so easily happen to anyone! Plus you've taken the first step by acknowledging it and reaching out.
I agree with above posters - prioritise your secured debt i.e. your mortgage. Contact your other lenders and explain to them that you're having difficulty - most would rather try to help than have to take you through the courts (because if they already know you are in diffs the likelihood is that court will just cost them more money).
Can you consolidate any of your debts?
5 credit cards = 5 minimum monthly payments. Shifting the balance even from a couple of them would at least help your monthly expenditure - in other words it's easier to make two or three minimum payments a month than five, even if it takes a bit longer to clear the debt.
Have you any "free" childcare that you could rely on even for a few hours a week from a relative or friend? If you could manage even 8hrs a week work then you'd be unlikely to be paying any tax or NI, so all the money would go into your pocket and the extra income would help!
I know you say that your budget is already the lowest it can be, and I don't want to patronise you - but if you don't already or haven't considered it, look online for low-cost recipe suggestions. Some take a bit more effort, but if you have the time, things like making your own bread or bulking out with tinned/frozen veg can really help stretch your budget that bit further.
Good luck!"The future belongs to those who believe in the beauty of their dreams."0 -
Thank you for the quick replies. That does sound reassuring with regards to not losing the house. I will use the templates from Stepchange to advise I am unable to pay the full amounts and make my £5 a month offer.
I'm surprised I won't end up in court though - is that because when I prove my income the court would also rule I can only pay £5 a month so the creditors would be wasting their time?
As I understand it a DMP isn't legally binding so there's nothing to stop them taking me to court.
My child has a health problem but it's not one that would be covered under DLA. My child sees a specialist at the local hospital but only once a year now. My child's school have been very helpful with my child's problems and although my child was academically developmentally delayed upon starting school is now hitting all academic targets, so other than the attachment to things and routine it's not something we could justify requiring extra income for.
I am going to go back to my doctor to get myself help, but have had medication and counseling in the past too, it's been an ongoing battle.
The other issue with selling the house and then renting is that the equity would not clear all the debts, and rents are higher than my mortgage payment, so I'd have to find another £150-200 per month to rent, but I only have £30 left over after essential bills at the moment so we'd actually be even worse off and back to spending more than our income again.0 -
nicmalauren wrote: »Sorry to hear you are struggling - it can so easily happen to anyone! Plus you've taken the first step by acknowledging it and reaching out.
I agree with above posters - prioritise your secured debt i.e. your mortgage. Contact your other lenders and explain to them that you're having difficulty - most would rather try to help than have to take you through the courts (because if they already know you are in diffs the likelihood is that court will just cost them more money).
Can you consolidate any of your debts?
5 credit cards = 5 minimum monthly payments. Shifting the balance even from a couple of them would at least help your monthly expenditure - in other words it's easier to make two or three minimum payments a month than five, even if it takes a bit longer to clear the debt.
Have you any "free" childcare that you could rely on even for a few hours a week from a relative or friend? If you could manage even 8hrs a week work then you'd be unlikely to be paying any tax or NI, so all the money would go into your pocket and the extra income would help!
I know you say that your budget is already the lowest it can be, and I don't want to patronise you - but if you don't already or haven't considered it, look online for low-cost recipe suggestions. Some take a bit more effort, but if you have the time, things like making your own bread or bulking out with tinned/frozen veg can really help stretch your budget that bit further.
Good luck!
The cards are not offering me balance transfers anymore so I can't move the debt around to get them onto a lesser number. They're all pretty much maxed out anyway. Due to my low income I don't think a loan company would lend in order to consolidate as I wouldn't meet the affordability criteria now. It's all a big mess (of my own doing).
We don't have any friends or relatives nearby that would be able to provide free childcare unfortunately. They are all either working, in ill health or over 85.
I'll definitely be following some of the low cost meal ideas here on MSE, I can cook and do cook from scratch so hopefully cutting back on the food bill should be doable. We already buy value pasta, rice and veggies.
I'm sorry if I seem dismissive of some of the suggestions that have been made, I think they're great suggestions, and hopefully they might help somebody else reading even if they won't work with my circumstances.
Thanks once again.0 -
You'd be better putting your £30 per month into an emergency fund.
Change bank if you can and pick up a switching bonus - you should never bank where you have debts.0 -
to be honest, I think you need to do a JOINT SOA.
Your husband needs to be on board with this as well. You need to sit him down and explain what is happening. Why? Because then he won't inadvertantly sabotage your debt paying efforts. Also you need to check whether proportionately you are paying the right amount for the joint bills. My suspicion is that your OH should be paying more towards this.
Next is there any way he can get a job with more stable shift patterns, or better pay? For you is there 'stuff' you can sell to put towards an emergency fund so that you do not have to resort to cards again if something breaks? Are you able to sign up for surveys, both of your, for some additional income.
Good luck going forward
chevI want a job that is less than an hour driving away from my house! Are you listening universe?
0 -
Can I just suggest that you don't stop paying the relative, even if it's only £5 or £2 per month. The extra stress of a family chasm isn't worth it.
Also is there any chance of you returning to work and leave your partner to look after the children, as you were the higher earner?
Finally even though it may involve a big row, I think you should consider being honest with your partner and telling him everything. At least you won't be keeping all this anxiety to yourself.0 -
Hi OP,
How old are your credit agreements ?
Did you open them in recent years, or are they 10 or more years old ?
Im guessing they are all fairly recent if you've been balance transferring.I’m a Forum Ambassador and I support the Forum Team on the Debt free wannabe, Credit file and ratings, and Bankruptcy and living with it 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 emailing forumteam@moneysavingexpert.com. All views are my own and not the official line of MoneySavingExpert.For free non-judgemental debt advice, contact either Stepchange, National Debtline, or CitizensAdviceBureaux.Link to SOA Calculator- https://www.stoozing.com/soa.php The "provit letter" is here-https://forums.moneysavingexpert.com/discussion/2607247/letter-when-you-know-nothing-about-about-the-debt-aka-prove-it-letter0
This discussion has been closed.
Categories
- All Categories
- 343.2K Banking & Borrowing
- 250.1K Reduce Debt & Boost Income
- 449.7K Spending & Discounts
- 235.3K Work, Benefits & Business
- 608K Mortgages, Homes & Bills
- 173.1K Life & Family
- 247.9K Travel & Transport
- 1.5M Hobbies & Leisure
- 15.9K Discuss & Feedback
- 15.1K Coronavirus Support Boards