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

One thing I got stuck on is you saying your mum has savings and would help but they're not enough to cover your debt. But why wouldn't you use that to cover some of the debt? It's not a 5k lump, it's different chunks to different creditors and paying some of it off has got to help. Likewise borrowing less than 5k from your uncle has got to help. So some from your mum, the rest from your uncle and then pay them both back a step at a time.

@PlanDeRaccordement

If your uncle clears your debt of £5k, the best way you can repay him is to set up a sustainable budget where you do not just fall back into debt again. You need to set money aside every month in savings in addition to any payments you might make to your uncle if a loan, not a gift.

This.

Talk to Step Change!

@FS2020

I will come back and update when I've spoken to him. I don't want to get my hopes up and go into it thinking he will definitely help me. This is my last resort, I don't think I have anything to lose by just asking though

Have you contacted your creditors? Do you have CCJs? Who do you owe money to?

I work for a debt advice service, please feel free to PM me. Your situation is not anything like as bad as you think.

What is it exactly that you are asking your uncle for? Are you asking him to loan you money or do you want him to give you money because he is a wealthy business owner?

I would be very worried about becoming emotional and my uncle feeling he couldn't say no as a result.

Have you:

1. Put together a Statement of Affairs so that you know what your income and outgoings are?
2. Reduced all your outgoings as much as possible by going on price comparison sites?
3. Asked creditors to freeze interest?
4. Spoken to your bank manager about your situation?
5. Assuming you have some disposable income, have you worked out a realistic amount and timeframe for paying money back (whether to your uncle or to a bank)?
6. Do you have assets? (A bank may consider a secured loan).

Do everything that you can on a practical level as that should help keep your panic level down.

If this debt is formed of expenses from maternity leave, why isn't the baby's father helping? They're his expenses too, keeping his child housed, warm, and fed.

And tackle the payday loans first, as the interest will be shocking on those. Maybe ask your mum to pay those off with her savings, but set up a repayment plan with her for that help.

I think it's fine to have asked him. I would have some sort of financial plan though to go through with him to show how you intend to pay it back and to keep yourself right.

I would hate one of my nieces or nephews to feel this bad over money and would help in any way I could. If he doesn't have the money or won't lend it perhaps he might be able to just give you some advice or moral support to see your way out of this.

To add to calm and measured before you speak to your uncle get a list together:
Rent
Council tax
Utilities
Pay day loans
Catalogue
Other loans
Food/travel

Spend some time online making sure your utilities are the cheapest you can get them, if your uncle could help you with the pay day loans and the catalogue, that takes a lot of the pressure off, you need to focus on the highest interest rates first. Now is a good time to do this as for the next few months there will be no pressure to socialise so you can get on top of your monthly budget by the time things start to normalise again.

Borrowing money off a family member to pay off your various debts
IS NOT A SOLUTION.

Sitting fretting and worrying is actually you procrastinating, putting your head in the sand and not preparing to take responsibility. You have a child so you need to accept you’ve been a bit irresponsible financially in the past but you’re now taking steps to change.

The correct approach is to follow the sensible advice that you’ve been given about writing to creditors and making arrangements to pay off your debts, a small bit at a time.

Can you look at your finances and see where any changes can be made to save outgoings each month? Is there anything you've taken on that you can return or downgrade?

If you are going to ask your Uncle for a loan you really need to know exactly how much you can afford to pay him back each month and ensure that you 100% do. You also need to explain to him how this happened and show him that you've learned your lesson.

In honesty, if I were your Uncle I'd be wary about lending unless you can show you're trying to dig yourself out of this hole by making sacrifices. I wouldn't lend to anyone who was eg smoking, going out drinking, getting regular takeaways etc.

I would suggest posting on Money Saving Expert's forum on the Debt Free Wannabe board. There are some very knowledgeable people there. Post a statement of affairs and they'll show you ways to trim the fat and make a dent in the debt. You need to remember council tax is a priority debt, more than any other debt you currently have (unless housing?). The council can get an attachment of earnings quite easily so your work will deduct the money before paying you. They can also withdraw the ability to pay monthly for your council tax going forward, requesting the whole year in one lump sum. Council are really hot on getting their money, you need to make this one a priority.

Its lovely that your uncle is so nice and ready to help. I'm glad you have such great family support. But you need to live as if you still have this debt (because you do). You can pay it off in 1 to 2 years if you reduce all your outgoings to the bare minimum and utilise every opportunity that you can to increase income. You need to set a budget, this sadly sounds like the debt built up because your outgoings were more than your income, if that is the case you will never be able to pay this debt off so important that you make a change now.

Hand hold for you, OP. I am glad you have called him. As others have said, just be totally honest and realistic with him about what has happened and how.

He might be able and willing to loan you the money, in which case be absolutely realistic in your repayment plan. A monthly plan without over promising so that you are paying the money back to him and the light is at the end of the tunnel, yet you and your child still have enough to live on each month. Calculate it carefully on a spreadsheet. Include childcare costs as they can be a killer financially.

If he can’t lend you the money then he may just have a friendly ear and good advice. Either way, don’t be embarrassed.

Good luck. Very many of us have been where you are for a whole variety of reasons. It sucks and it is hard, but £5k is still a relatively manageable debt level compared to a lot of people. You WILL get through this.

www.stepchange.org/

It's a debt charity offering debt advice and will campaign on your behalf.

Get in touch and if you feel like they can't help h then get in contact with your uncle.

Prior to contacting him make sure you calculate what you can realistically afford to pay back. Make sure it's realistic as you don't want to let him down by missing a payment. You also might want to establish whether he would like you to pay interest and if he did then at what percentage.

Take care 💐

I'd sit down now and write a list of all of your regular expenses, precise to the nearest pound.

Then a list of how much you owe on each individual debt and what the interest rate is.

Then your uncle will hopefully sit down with you and work out how YOU can sensibly sort the situation out.

I understand the fear. I built up £10k of debt over 3 years and got to the point where I had no credit card capacity to buy shopping on and was at the end of my overdraft. I've had to change my approach to money but for some reason I had to hit rock-bottom before I did that. With a lot of effort and cutting out unnecessary spending (no trips to cafes, no purchases apart from basic necessities, no days out) I've paid off more than half my debt. You can do it but it's important that you don't just have your uncle pay your debt all off or you won't change the behaviours that got you here in the first place.

You need to engage with your finances. It's harder to do nowadays that everything is dealt with electronically but you need to know what all of your essential bills are and only buy anything else once these are paid.

I can tell you the exact figures for my mortgage, gas, electricity, phone bill etc. off the top of my head.

Just wanted to say that depending on the firm you work for, you may have been obligated to tell them about your financial difficulties. I've worked for several that did that as you being in debt is a risk to them (makes you far more likely to commit fraud) - they'd all have issued a low interest loan to pay off the debt though so it's no bad thing!

Can everyone stop with the "5k? That's nothing...". If you're on a low income £5,000 could be a hell of a lot of money

It's four months worth of take home pay for me, so this would be impossible -

5k isn't a lot! It just fills like it. I've been there. But it really is manageable in about 6 months if you really pay off every penny you can.

@GrolliffetheDragon

Can everyone stop with the "5k? That's nothing...". If you're on a low income £5,000 could be a hell of a lot of money

It's four months worth of take home pay for me, so this would be impossible -

5k isn't a lot! It just fills like it. I've been there. But it really is manageable in about 6 months if you really pay off every penny you can.

It's not a lot compared to the debt that some people are in, rather than it's not a lot comparative to your income. ie, 'don't worry OP, there are many people who have got themselves into more debt than you'

Apart from self esteem of the borrower, though, it doesn't really make that much difference. If you owe a million pounds but can only afford to pay back a pound a month, you pay a pound a month.

@GrolliffetheDragon

Can everyone stop with the "5k? That's nothing...". If you're on a low income £5,000 could be a hell of a lot of money

It's four months worth of take home pay for me, so this would be impossible -

5k isn't a lot! It just fills like it. I've been there. But it really is manageable in about 6 months if you really pay off every penny you can.

This, also the 'just cut back a bit and you'll be able to pay it off in a year or two' type comments.

Not if the OP doesn't have much spare money beyond that for essentials and/or the interest being charged is taking most of the money she is able to pay them, so she's getting nowhere. £5k over 2 years is over £200 pm and that's if the interest is cancelled. In reality, the minimum payment on a credit card, only just covers the interest and almost nothing goes on the debt.

@FS2020

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

You're catastrophising. It feels unbearable to you, but that is only a feeling. In reality, you are a young person, in employment, with a moderate amount of debt.

Why are you unable to come up with a repayment plan? Do you literally have nothing left over at the end of the month to pay it off with? If you have a child, do you have a partner who can help?

Look at income maximisation first - are you absolutely sure you are getting all the benefits you are entitled to?
Write down your income and expenditure and see if there are any places you can make savings so that you can put this to pay off the debt.
Start talking to your creditors, as others have said.

You need to have a clear cold look at all your options and then decide on a plan. This is manageable OP.

You're catastrophising. It feels unbearable to you, but that is only a feeling. In reality, you are a young person, in employment, with a moderate amount of debt

Yes. What you feel will make no difference to the outcome. You will still end up paying back only what you can afford, and are not in enormous trouble. As long as you contact your creditors

I would go to MABS and get a credit union loan to pay off all the other debts. Something like that.

I thought I had a family who'd be there for me but after I left my abusive x I asked a cousin (solicitor) for a bit of advice and I got a message back ''no sorry don't give advice to relatives'' and another time I asked a different cousin if I could use her address and again I got a message back ''no''. No hard feelings, they have boundaries, they maintained them, but I feel bad for asking. I wish I hadn't asked in my ''hour of need''. I can't change it now. But my family is all smiles so long as you don't need anything or ask for help. I think a lot of families are like that, so spare yourself the humiliation of having asked. That's my advice.

Have you looked at all sources for a consolidation loan? I was refused by banks but went on money supermarket or similar and sorted by likelihood of approval. Got approved quickly. I think the company was lending works.

yes I would ask your uncle but make a written affordable plan with a standing order to pay him back .

But don't make things worse by trying to pay back more than you can afford.