Is our situation fixable?

[Richteafingers]

Hi,not going to overshare as dh isn’t keen on me posting.

we’ve just come out of a financially disastrous 4 years but we’re now on good full time jobs with £7600 coming in each month.

our living costs including mortgage and bills are £2800. The problem is that we’ve been left with monstrous debts if £110k

do you think that’s it’s possible for us to tackle these debts despite the scale of them, without having to go into an IVA or bankruptcy???

How much are your debt payments per month? How did you get into so much debt? Can you downsize as £2800 is a lot for mortgage and bills.

You could tackle them, but without the relevant info it’s hard to say what’s best for you.

Alarm bells ringing at “DH doesn’t like me posting”. Mostly his fault you’re up shit creek, by any chance?

Depends on your other outgoings if you have £7600 coming in, mortgage and bills are £2800, and you limit other spending each month to £800, you'll have £4k to throw at the debts. What are your minimum payments?

Might be worth a chat with StepChange to see what your options are.

Hi, about £2200

What kind of debts OP? Are they gathering interest, or on 0% cards?

If they aren’t on 0% cards, could you move some around so that it is?

In theory you have £4800 left after paying all bills, if they are (or could be) on 0% you could throw £3500 a month towards the debt, you’d still have £1300 left each month to save/do nice things/treats, within 2 years you’d have paid off £84k doing that.

If it’s on a high interest card and can’t be moved then it’s a bigger problem because even if you made a £3500 payment each month a lot of it will just be paying off the interest rather than the actual debt.

It’s spread across lots and and cards. Some 0% and some low interest but also some higher rates that we are prioritising

No not at all, we’re both responsible.

Have you stopped spending on credit and addressed the readons the debts arose? Stepchange could help negotiate interest freezes and help prioritise the debts so you can reduce the balances.

Yes, it wasn’t really accrued by overspending- it was due to a very tricky business issue. Stepchange can help as we’re easily able to make the minimum payments. No creditor would freeze interest etc on a debt that’s affordable

It may be worth having a look on MSE to see if you can move any other debts to 0%.

If I was you I’d be throwing every spare penny at getting the debts cleared. There is a method called “snow balling” which is essentially where you focus on one debt at a time, starting with the smallest, and pay that one off then move onto the next one. The only issue with that strategy is depending on which have the highest interest rates it may not work out financially best.

I would avoid bankruptcy. Stop spending. Look at all your expenditure and reduce where you can. Increase your income. Get a second job. Sell what you can. Write all your debts up. Pay off the smallest one first. Then work your way up the list. You are going to have to change your lifestyle if you are ever going to be free if debt. Can be done but you need to accept the need for change first.

This is possible. It will take time.
Go see a financial advisor, someone qualified to help x

How would you become banlrupt, then, OP? If your debts are affordable? Do you mean you'd both quit jobs? Wouldn't they then just take your house and any other assets to pay off as much as possible?

I know the debt is big and dauting but really it does rather sound like you don't want to go bankrupt, you just want a clean slate without having to pay it all back. Cos how are you bankrupt with affordable debts, assets you can afford to pay for and enough money for living? You aren't bankrupt, you are just in the shit. It will pass. Gey your heads down and target the loans in order of interest rate. You have a really good monthly income. There is no reason why you won't get out of this. It just won't be very fun is all.

Bankruptcy will set you back 6 years financially, you could spend the next 3 years paying stuff off instead with your spare money every month.

Im sure that someone will now come along and explain that bankruptcy is discharged after a year, which is correct however it destroys your credibility for 6 years.

do not go down the bankruptcy route if there is any other way, which it sounds like there is.

If you run your own business then bankruptcy could be an issue for any future business. You can repay this, Stepchange et al could advise you on managing it more efficiently,

Would remortgaging to add your debts to the homeloan help?

It sounds like a lot but you have a lot of spare income so I don’t really see the problem, just buckle in for 3 years and throw as much money at it as possible.

You have more than enough income to live and service your debts, what's the problem?

It’s likely you’d be denied bankruptcy as one of the criteria is an inability to service or repay the debt - and you clearly have the income and assets (your home) available to do so. If you knuckle down and push as much of your non-essential spending money into the debt as possible, you could have this paid off in as little as 3-4 years. It might be tough, but the wolf isn’t at your door.

You’re tackling the higher interest debts first, which is the right strategy, and can aim to move as much of the rest as possible around to new 0% cards as and when the existing terms run out on them.

Sounds possible but obviously no one here can say for sure without lots more information. Speak to a free debt advice charity eg stepchange https://www.stepchange.org/ as they can help you to draw up a budget and calculate how long it will take to be debt free by repaying, and explain other options. They can sometimes arrange for interest to be reduced.

Some advice companies will recommend IVA because they get income from it but that doesn’t mean it’s the best thing for you (maybe it is, I’m just saying to be careful and ask questions!). StepChange has a good reputation, although I’ve no personal experience with them. Citizens Advice can also help with budgeting and debt, I believe.

To get rid of debt in a reasonable time you usually have to pay above the minimum and / or have interest stopped, even then it takes a lot of determination and discipline over a longish period of time but it’s so worth it to be free of that weight and worry.

Seriously though, get proper advice from a non-profit debt advisor. Don’t be ashamed of asking for help, that’s what they’re there for and you are definitely not the first people to get into this situation. Good luck!

If you declare bankruptcy, you will lose your house and likely the ability to buy another one in future. Your debt is completely manageable on that size of income. It might feel uncomfortable for a few years. This reads more as if you want to get out of paying it off.

I think that you need some perspective as I sense that you’re in panic mode at the moment. I’ve worked in finance for many years and actually worked for stepchange at one point. A debt charity such as stepchange or pay plan aren’t really going to be able yo help as you’re debts, despite high are VERY affordable in comparison to your income. People who use stepchange etc are usually unable to afford even the minimum payments. That isn’t your situation by a long way.

i think it’s easy to panic when we see a higher amount of debt, but it does have to be considered against income. To take home 7600 I estimate that you have a combined gross salary of between 140-150k per year. Let’s go with 145k-

so you earn 145k with debts of 110k. This means that your debts are a little over 75% of your gross income. This is the same as someone on a salary of 40k owing 30k. This person would probably have similar living costs so overall a slightly trickier position, I’m not minimising your situation op, but I do want you to realise that your situation is by no means unusual or insurmountable.

So your living costs are £2800 and debt payments £2200 so total outgoings of £5000 per month, this leaves £2600 that you can use to overpay. This is a very very fortunate position to be in despite your debt level.

i agree that you need to use this money to reduce the debt, however I would also recommend building a emergency fund abd also budgeting some money for fun/leisure. Not everyone will agree with that, however life is for living. You haven’t broken the law- you’re just in debt, so don’t feel the need to punish yourself constantly.

Just as an illustration, if your debts were all at 20% and you used £1000 of the ‘spare’ £2600 then you would debt free in just over 4 years. You would also have £1600 leftover which is a huge surplus. If you threw an additional £500 then you would be debt free in 3.5 years with £1100 left over for saving/fun. I don’t know your interest rates but I wanted to give you an idea of how this could work.

You’re right to want to get this sorted, however please don’t feel that things are hopeless -far from it. You’re actually in a good position despite your debt level 😀