Is insolvency the only way?

JayCollins · 7 July 2017 at 6:20PM

I owe approximately £20,000 with all original creditors selling it on to debt recovery agencies, not including the few thousand that I owe family. Having been through hell over the past 3 months - homelessness, emotional abuse etc - I've completely lost track of everything financially. I have now been granted a tenancy under the local council and moved in June 26th.

Looking at things on a spreadsheet, I'm seriously concerned that I'm not going to be able to make proper dents in the above balance. My monthly responsibilities for the flat are £770 and my income is £540. My income is standard Universal Credit (with £50 deduction due to advance repayment / court compensation order for 6 months) and the Housing element to cover rent only. Even getting rid of the TV licence, Wifi and Mobile Phone (£84 total), the only 'luxuries' I have, I'm still coming up very short.

Now I have been made aware that I may qualify for ESA, however this only increases my income by approximately £220 per month - I'm still £10 short of even having nothing to live on for the month once the bills are paid. I may qualify for PIP, and this would increase my income further by approximately £230 per month. Assuming I get PIP, I'm looking at £220 after priority bills. I've cut the groceries/toiletries/cleaning budget to a minimum of £150 per month, leaving £70. I will sometimes have to spend some money on public transport to get me to and from JobCentre/Council appointments, using my push bike as far as possible. There just doesn't seem to be anything to even get me some decent clothing, towels, let alone have any resemblance of a social life.

That's my situation and I don't think it will realistically allow me to pay this debt off, as much as I want to repay every penny. I've already exhausted a TPP, and being on that sort of plan for another 12+ months would make a negligible difference in the balances. I can't see this £70 making any difference on a DMP either. My credit file is shot to bits, but ideally I don't want to go insolvent if I don't have to, but I can accept what ever will be will be.

I will be in touch with StepChange on Monday morning to see how they may help point me in the right direction, but I'd like some more input over the weekend as well - This forum came highly recommended for advice.

Thank you for reading. :embarasse

Edit: SOA added...

Statement of Affairs and Personal Balance Sheet

Household Information
Number of adults in household........... 1
Number of children in household......... 0
Number of cars owned.................... 0

Monthly Income Details
Monthly income after tax................ 0
Partners monthly income after tax....... 0
Benefits................................ 540
Other income............................ 0
Total monthly income.................... 540

Monthly Expense Details
Mortgage................................ 0
Secured/HP loan repayments.............. 0
Rent.................................... 341
Management charge (leasehold property).. 0
Council tax............................. 15
Electricity............................. 45
Gas..................................... 0
Oil..................................... 0
Water rates............................. 26
Telephone (land line)................... 0
Mobile phone............................ 21
TV Licence.............................. 30
Satellite/Cable TV...................... 0
Internet Services....................... 33
Groceries etc. ......................... 150
Clothing................................ 10
Petrol/diesel........................... 0
Road tax................................ 0
Car Insurance........................... 0
Car maintenance (including MOT)......... 0
Car parking............................. 0
Other travel............................ 30
Childcare/nursery....................... 0
Other child related expenses............ 0
Medical (prescriptions, dentist etc).... 5
Pet insurance/vet bills................. 0
Buildings insurance..................... 0
Contents insurance...................... 0
Life assurance ......................... 0
Other insurance......................... 0
Presents (birthday, christmas etc)...... 10
Haircuts................................ 12
Entertainment........................... 4
Holiday................................. 0
Emergency fund.......................... 0
Total monthly expenses.................. 732

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

No Secured nor Hire Purchase Debts

Unsecured Debts
Description....................Debt......Monthly...APR
M&S Credit Card................2988......1.........18.9
Santander (Wescott)............1393......1.........18.9
Barclaycard (Link).............1214......1.........29.9
Family.........................3500......1.........0
EE.............................398.......1.........0
Halifax Overdraft..............595.......1.........0
Hitachi (Cabot)................1799......1.........0
Wonga.com (?)..................434.......1.........12
Santander (Wescott)............7402......1.........15.9
Total unsecured debts..........19723.....9.........-

Monthly Budget Summary
Total monthly income.................... 540
Expenses (including HP & secured debts). 732
Available for debt repayments........... -192
Monthly UNsecured debt repayments....... 9
Amount short for making debt repayments. -201

Personal Balance Sheet Summary
Total assets (things you own)........... 0
Total HP & Secured debt................. -0
Total Unsecured debt.................... -19,723
Net Assets.............................. -19,723

Created using the SOA calculator. Reproduced on Moneysavingexpert with permission, using other browser.

FatVonD · 7 July 2017 at 7:43PM

I can't help you but just wanted to wish you luck.

There will be plenty along later to help you later this evening but in the meantime you could consider also posting on the benefits board to check you are getting everything you are entitled to.

JayCollins · 7 July 2017 at 9:02PM

Thanks for your kind words. I will check out to see if I may qualify for anything else.

fatbelly · 7 July 2017 at 10:36PM

It's tough trying to live on UC.

Your situation does seem suited to a Debt Relief Order.

Basic Criteria for a debt relief order :

•Must not be a homeowner,

• Debts less than £20,000,

• Can have a car worth up to £1000,

• No other assets of more than £1000,

• Must have £50 or less left at month end, after all essential payments have been made (not inc debt repayments),

• Cannot have had a DRO in last 6 years.

However, until you have more income (maybe ESA or PIP) you may get further into debt. Normally I would say leave the dro until your situation is stable. But you are very close to the 20k limit. Above that level you're looking at full bankruptcy with £680 fees.

sourcrates · 7 July 2017 at 11:09PM

To be perfectly honest, you can't afford any debt repayments on that budget.

I would write to each creditor detailing your situation, ask them to write off the debts, in your situation, there's nothing they can do to you, it's pointless paying when you are so strapped for cash.

You have no property or assets, no job to deduct money from wages, your creditors can't touch you at all.

Is insolvency the only way?

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