To ask you honestly if this is a bad idea?

[FS2020]

Stuck in two minds at the moment but I've gotten myself into a situation that I just can't deal with much longer. I've had this hanging over me for months, it's made me really ill (severe depression) and I can't deal with the sleepless nights and worrying.

I've gotten myself into debt (circa £5k) and I'm at breaking point. It's spiralled out of control and I don't know what to do. Debt relief orders, IVAs, bankruptcy are out of the question for me as I work in financial services (ironic, I know) so my options are limited.

I was thinking of asking my uncle to help me. He is a business owner and is quite wealthy, I do believe he could help me and I don't have anywhere else at all to turn to. It's my absolute last resort but I don't know if it's a bad idea to ask him. I wouldn't even dream of asking him if I didn't think there was a chance he could say yes, but I'm just worried I'm not doing the right thing here.

What does everyone think? I've just had enough, I feel broken and exhausted

Borrowing off your uncle would be a solution but I'd go and ask with a plan of how you would pay him back. He may not even charge you interest.
But if you were hoping he would give it to you as a gift then if it was me I couldnt ask.

Yes i'm asking for a loan, not a gift. The debt is a couple of credit cards, pay day loans, council tax and utilities from my previous house and a catalogue that I used when I first moved out for things like washing machine, TV etc

I wouldn’t ask your uncle for help here, particularly as your mother has in the past and I think it is a bit much for him to repeatedly have to bail family members out.

Obviously this debt is hanging over you, but it isn’t horrendous and £5k of debt is something a working person should be able to get under control with some planning/ budgeting and perhaps some professional advice.

If you are in a position to pay him back monthly , I would definitely ask him.
I know that I would not hesitate to lend money like that to a relative with a job .

Why can’t you contact Step Change or Payplan and set up a debt management plan? Your credit score is ruined anyway and at least you can make repayments without going into an IVA or bankruptcy. Your employers would not know. £5k is not that much in the great scheme of things.

I have missed payments so my credit score is really bad, I have looked at the options of 0% credit cards but they aren't available to me

I think its fine to ask, but present a plan of how you intend to pay this back as well.

@FS2020 if you work in finance can you not sit down and make a solid plan to start paying this back? 5k isn’t a lot in the scheme of debt. Then if you do still ask your uncle for help at least he can see you’ve sat down and tried to sort it. Even if you ask him to loan you the money and you pay him back an affordable amount. Try not to get so down what’s done is done now at least you won’t make these mistakes again but I’m sure there’s a lot of us out there that have got into debt unnecessary (myself included)

I did contact Stepchange last year but they wouldn't set me up on a DMP? They basically only give me the options of IVA or bankruptcy which obviously I didn't want to go ahead with

Credit Unions offer loans. You can talk with them, they can often help. You can search for your local one.

If you’d missed payments, personally I’d think twice about lending you money. But then, he’s not likely to know that, but you know you’ve done that. If you ask your uncle, then miss payments again, it could cause a family fall out. Would you be responsible enough, going on your past form, to repay this loan, in full, in a timely manner?

I went on self destruct for a while, just spending money to make myself better

A lot of it was used to help me get by month to month

Those two statements don’t really match up.

Given your updates, I would not ask.

5k for someone who works, (in financial services), is not a huge debt.

You must be aware of the organisations you can approach for advice, as well as the various options you have for repaying this debt. Outstanding council tax and utilities companies are particularly easy to come to an agreement with once you’ve made them aware of your difficulties.

Thanks everyone, I'm still undecided on what to do though

Martin Lewis has a template letter on his website that you can use to send to your creditors. It asks them to stop interest and to accept a monthly payment that you can afford. You'll have to send them a breakdown of your outgoings but it will stop the chasing letters and calls and allow you to pay off the debt at a rate that's manageable for you.

You need to sit down before you speak to him and work out REALISTICALLY how much and how often you can comfortably afford to pay him back.

I say comfortably because you absolutely need to make sure you can manage with the income you have and don’t over commit to repayments that will then land you back where you currently are.

Then I would go to your uncle and explain your situation and the repayment plan you have come up with.

I do think you need to seriously start putting in the work now to change the habits you have that have landed you in a 5k debt in the first place. Really sit down and face all your finances and then you can start to plan how to change your spending habits or cut down unnecessary costs.

Good luck, it’s only money at the end of the day but use these feeling as a line to draw under your money habits and start fresh.

I'd ask him but with a solid plan of the amount you can pay him monthly. Have an agreement of what you will do if you can't pay due to unemployment or sickness. Suggest a direct debit so he knows you're committed.

I'd also raise the issue of how he feels about how you spend your money. Eg if you're paying the agreed amount monthly is he fine about what you do. Or is he expecting a very frugal lifestyle (and what is that to him) if you borrow from him.

I honestly feel sick, I'm struggling to live with this much longer. It may not seem a great deal to others but for me it's literally been a burden on my life, it's such a mess. I can't even believe I've gotten myself into it, I feel like kicking myself. Sometimes I truly feel like I've ruined my life and I'm only mid 20s. I'm desperate for a way out of it

Do you own or rent? Are you single or living with a partner? If you are a single parent, is your child's father paying maintenance? Have you done a budget and checked that you are getting all benefits you are entitled to and cut your costs as much as you can?

If you have little or no surplus, and rent, a DRO would probably be the best option, unless this meant that you lost your job. Have you any staff welfare or union that you could seek advice on in relation to the effect of financial difficulties and your job?

If a DRO is not an option, borrowing the money from your uncle might not be a bad idea, but before you do this, I would suggest looking at the MSE debt advice, especially making sure you have a really good handle on your incomings, outgoings and surplus so you can show him, that you've thought about the situation and are offering a realistic payment plan - eg don't offer to repay £100 pm if you only have £50 pm spare because it's going to come undone sooner or later. Also don't forget to budget for annual and irregular essentials like insurance, and replacement of things like a washing machine.

www.moneysavingexpert.com/budgeting-debt-help/

Yes I would ask your uncle. Be prepared to explain how you would repay him. Have you sat down to work out how much you could repay a month? How long would it take? You have nothing to.lose when you ask family. Even if he does say no, say thanks for the chat anyway.

@fairydustandpixies

Martin Lewis has a template letter on his website that you can use to send to your creditors. It asks them to stop interest and to accept a monthly payment that you can afford. You'll have to send them a breakdown of your outgoings but it will stop the chasing letters and calls and allow you to pay off the debt at a rate that's manageable for you.

Absolutely this - it's what Citizen's Advice would do with you as a first step.

If you were my niece/nephew, I would want to know and would help you if I could.

Look at the Money Saving Expert Debt Free Wannabe forum. You will get advice from people who have been where you are (and in much deeper trouble).

£5k is small enough that a sensible plan can turn it around.
Some people find the Dave Ramsey baby steps helpful although it is US focused.

If you are absolutely sure that you would be able to repay your uncle within a reasonable period, and wouldn't skip payments to him, I would ask him. But if, honestly, you can't promise this in good faith, don't, because you'd end up feeling even worse.

You wouldn't be the first financial adviser to have bad debt!! Are you an IFA or connected to a firm? If it's a firm then you would have to declare an IVA (which sounds like your best option, if your Uncle cannot help you). Talk to the people you have the debt with, you may be able to agree a repayment package , but you have to discuss this with them. Some have the option to freeze all interest so the debt gets paid, rather than you paying off the interest only. They would much rather see the liability reduce from payments made...it's scary talking to them, but you will feel so much better once you have done this.

Please don’t let a 5k debt cause you so much desperation. There are ways out of it. It’s good you are taking it seriously.
I also can’t work out whether it was due to grief and spending to help yourself feel better or really was just to get you by due to maternity leave. These contradict a bit.
So - just sort out the real reason.
I would ask your uncle but only if -
You are honest with him Re how it mounted up.
You tell him without drama how it is affecting you.
You set out a clear repayment plan (one you can stick to don’t be over optimistic and then miss payments to him).
You explain clearly how things are now different and you’ll be able to repay.
You say you understand if he can’t or doesn’t feel comfortable for any reason.
Good luck op. There’s other good advice here Re alternatives. Don’t let it get out of proportion. It is able to be sorted out even without your uncle.