Drowning in debt

[movesyouveneverseen]

I’m certain AIBU isn’t the right place but I’m hoping to get some real help.

Between my partner and I we have around £100k of debt, equates to around £2,000 a month in repayments each month and does NOT include our mortgage.

We cannot add this to our mortgage and wipe the slate clean so to speak because we have help to buy and so adding extra to the mortgage isn’t allowed.

The debt isn’t being added to, we are paying the required amount for loans and any credit cards are being paid the minimum payment - we are just keeping our heads above water.

I feel like I’m drowning, nobody knows any of this except for my partner and I. I just don’t know what to do and am really hoping for some practical advice.

CAP ( christians against poverty) are brilliant they help with the emotional stuff and shame too, there was a documentary about them a while ago they do not push religion at all
some of the principles of frugal minimalism might help too
someone mentioned Dave Ramsay, he an be a bit dogmatic bu using snowball or avalnache method to pay off debt is good so is the idea to build a tiny emergency fund so if your car breaks down or needs a new tyre you don;t need to put it on it a credit card
zero balance budgetting is also good
so you decide in advance when you get paid where every single pound is going
you put all your money into different pots the bills food clothing allowance fuel etc you can't rob peter to pay paul so if you put £300 in food for the month you can only spend £300 not £305 if you only spend £294 you decide exactly where that £6 goes

www.stepchange.org/

It does matter because it needs to be something that has now changed, otherwise the situation won’t get better. It may be simple overspending rather than anything dramatic like a gambling addition, but it needs to have stopped otherwise OP will end up like the people who consolidate over and over again and just rack them cards back up.

It sounds like you have your spending and budget now under control OP which is great and I agree with PPs that if you can make all your payments without a payment plan you’re better off not destroying your credit rating. Having no options around your mortgage renewal could be catastrophic in the current climate.

Try the MSE debt free wannabe board, it’s incredible. Be brave and post your budget on there and people will find ways to help you trim
it more.

With £100k to pay off you’re going to be in it for the long haul so whatever budget you live to needs to be sustainable long term and you also need to be able to make some pretty dramatic changes. Saving £5 a month on a phone contract etc is great but it will be something like taking in a lodger, a second job etc that actually makes a difference with a debt that size. Good luck!

It matters for a couple of reasons

in the short term if it’s been built up buying assets they could be sold.

in the longer term it’s important to understand so that you don’t end up in the same place

At this point @movesyouveneverseen your only option is bankruptcy. Not great but the only option. Unless you win the lottery or get a massive inheritance, you are NEVER going to pay of a six-figure sum of debt.

Sorry you're struggling. Hope it gets sorted soon.

Can you sell anything?
have you had the interest frozen?
You must have high earnings to be in such debt - otherwise they wouldn’t offer you the credit. Which is good!

Can you take a higher paying job? Or work weekends? Both of you! And start making a dent in it?

How did it amount to that much? You'll get there. Could you live in a camper style house until you've paid it off?

You need to speak to someone like Stepchange asap if you are struggling to service the debt. How on earth did it get that high?

I’m glad you’ve contacted Stepchange. They are wonderful. Helped us put together a realistic budget and most of our creditors such as credit card providers accepted the proposal almost right away. You can also apply for breathing space where creditors agree not to contact you for 60 days which was really helpful while we were sorting things.

That may not be true. Its possible with readjustment to the budget, cutting back where they can that the op could clear the debt, we don't actually know whether their income is £3k a month or £10k a month

If you have equity in your house could you downsize?

You don't know that. The OP has said nothing about their circumstances. If they've just got through the 'childcare years', are about to be promoted, are currently quite spendy but open to some serious budgeting for a few years, and some of the loans are due to finish fairly soon, combining all that could free up £2/3/4k pm, they could be out of debt in under 5 years.

No-one can say what's best without seeing all their incomings and outgoings.

Bankruptcy might be the most appropriate solution, but it's not a given.

100K at a £1000 a month it will take 8.5 years to pay off if you can save a few hundred, consider some extra work for a few hundred more , look at assets you can sell, could you sell at 10K car and buy 2-3kcar, SIM only deals can be as little as £6 a month
make sure you both commit to putting a 100% of any pay rise towards debt
any possibility of a salary rise
bankruptcy is the very very last option, if they are managing debt it is best not to wreck your credit rating
depending on where you live investigate what goes on for free

What did you spend £100k on?

I daresay that if the OP was on £10K a month, she would not be six figures in debt in the FIRST place. I re-iterate, the only option is bankruptcy now. I genuinely believe that. The OP asked for opinions and advice, and I gave mine. Mine is just as valid as anyone else's.

Is that really your business? She's reaching for advice, not judgement.

It is important to really get to the nitty gritty of how the debt came to be. Not to pile on more regret and shame, but to work out how not to end up in the same situation once you have a plan. If you follow the money saving expert site, you see people consolidating / paying down debt and then adding more to it, as the root cause is not dealt with.

However you choose to progress (and there are some great tips here) make sure you are also looking after your mental and emotional well-being. It will be hard work at times, but doable and so worth it.

@newfence I think it's a fair question.

Is any of the debt for cars? If so get rid of the cars, buy a cheap runaround instead.

Well if it’s designer handbags or a sports car she can raise some cash selling them.

The Money Saving Expert forums are excellent for this. You'll get good help with your statement of affairs.

You do need to understand how it was run up. Easier if it's a failed business or covering illness or I employment. But too often it's living a bit beyond your means and just adding a bit more and a bit more. It then spirals trying to keep up with repayments.

If you fall into the latter category you do need to get a handle on your spending, why you spend and how to address it. Otherwise you risk repeating the same mistakes over and over.

That isn't intended as a criticism, your situation is sadly very common. But understanding it for yourself will help you

My friend has just finished paying off their debt consolidation (think it was stepchange).

She said it was the best thing she ever did and wished she’d done it sooner.

She said it was making her ill with worry but it immediately took all of the stress away.

Every month they were having so much interest charged that they barely touched the actual debt.

The debt consolidation people took it all off their hands and dealt with all of the companies and then she just paid a reasonable amount each month.

There were no letters or phone calls off all these different companies demanding money and it was much less than what she’d been paying originally.

She wanted to get finance but had some still left to pay off so asked them if she could pay more for 6 months now they’re earning more and they said that it was absolutely fine and she got a lovely new car on finance a few weeks ago and is now debt free.

Sell clothes on eBay. Sell the cars. Sell the flat and move back in with family or somewhere cheaper. Cancel the holidays. Cut up credit cards after transferring the balance to 0% interest.

Book a call with StepChange debt charity - they won’t judge, they’ll just help.

Stop spending.

What did you spend the money on OP? I find it interesting to know what’s driving your debt. Otherwise won’t you just get back into the same pattern again!

How do you spend £200k you don’t have?!

It could be quite relevant actually. If some of it was to buy cars or other expensive assets, then selling those assets would be a good way to repay a big chunk of debt.