AIBU to think that we can't sort this ourselves without professional help - desperate situation

[phillers]

Morning,

In a terrible situation. Years and years of poor communication and financial mismanagement have led us here. I am broken, ashamed and not sure if this is something that we can ever get out of. Terrified of losing our home

please be kind

Household Information[/b]
Number of adults in household........... 2
Number of children in household......... 2
Number of cars owned.................... 2[b]

Monthly Income Details[/b]
Monthly income after tax................ 4355
Partners monthly income after tax....... 2511
Benefits................................ 0
Other income............................ 250[b]
Total monthly income.................... 7116[/b][b]

Monthly Expense Details[/b]
Mortgage................................ 801
Secured/HP loan repayments.............. 386
Rent.................................... 0
Management charge (leasehold property).. 0
Council tax............................. 139
Electricity............................. 98
Gas..................................... 112
Oil..................................... 0
Water rates............................. 35
Telephone (land line)................... 0
Mobile phone............................ 67
TV Licence.............................. 13
Satellite/Cable TV...................... 36
Internet Services....................... 21
Groceries etc. ......................... 600
Clothing................................ 30
Petrol/diesel........................... 220
Road tax................................ 22
Car Insurance........................... 64
Car maintenance (including MOT)......... 30
Car parking............................. 0
Other travel............................ 0
Childcare/nursery....................... 0
Other child related expenses............ 120
Medical (prescriptions, dentist etc).... 9
Pet insurance/vet bills................. 28
Buildings insurance..................... 22
Contents insurance...................... 17
Life assurance ......................... 49
Other insurance......................... 9
Presents (birthday, christmas etc)...... 100
Haircuts................................ 20
Entertainment........................... 150
Holiday................................. 0
Emergency fund.......................... 100[b]
Total monthly expenses.................. 3298[/b]
[b]

Assets[/b]
Cash.................................... 0
House value (Gross)..................... 320000
Shares and bonds........................ 0
Car(s).................................. 14000
Other assets............................ 0[b]
Total Assets............................ 334000[/b]
[b]

Secured & HP Debts[/b]
Description....................Debt......Monthly...APR
Mortgage...................... 140098...(801)......4.11
Hire Purchase (HP) debt ...... 17000....(386)......0[b]
Total secured & HP debts...... 157098....-.........- [/b]

[b]Unsecured Debts[/b]
Description....................Debt......Monthly...APR
updraft loan...................21000.....360.......16.9
updraft loan 2.................8000......210.......18.9
Updraft loan 3.................6500......165.......18.9
overdraft......................2500......80........42
Creation Credit card...........7100......192.......21
very...........................700.......48........50
halifax cc.....................2400......24........0
fluid..........................3600......170.......39
LLoyds.........................3890......132.......8
HSBC loan......................7309......210.......7.9
Lloyds.........................10500.....269.......29
barclaycard platinum...........12600.....258.......4.9
barclaycard....................4960......109.......4.9
natwest........................2000......20........0[b]
Total unsecured debts..........93059.....2247......- [/b]

[b]
Monthly Budget Summary[/b]
Total monthly income.................... 7,116
Expenses (including HP & secured debts). 3,298
Available for debt repayments........... 3,818
Monthly UNsecured debt repayments....... 2,247[b]
Amount left after debt repayments....... 1,571[/b]

Cards are all cut up. No possibility of us moving to 0% right now as we have too much debt and are seen as high risk

Partner thinks that it's fixable if we budget properly and start on the highest interest debt. I wonder if we need professional help

AIBU to think that this is not fixable by simple budgeting

I think what the £93k was spent on is relevant here as on paper you have more than enough to live within your means, but you obviously haven't been. Tackling the spending will be as important as tackling the debt.

@AlyssaHasAChaaaaild ha- yes I know people will disagree with me but for mental sanity and feeling more in control it makes total sense- you then only have your cars and the house, all of which have value. Your partner def has to be on same wavelength though. I wonder if a lot of this has been spent on doing a house up??

@pinksunglasses So by your logic everyone dhould just have what they want regardless of affordability?

Whether you want to accept it entertainment & pets are a form of luxury that done people cannot afford. That may not be nice but it's accurate.

I hope you have some lovely things to show for £93,000 worth of debts!

It looks do-able though? Sure, it's a lot of debt but if you have £1,500 to throw at it every month then you just need to hold your nerve and start paying it down and you will pay it off in 5 years.

You're probably right @poppetandmog but sometimes the actual overspend isn't that great if the debt has increased over a long time and there has been repeated consolidation. A lot of it can be due to interest and charges.

For example, £93k over 20 years is about £90 a week. Half of that or more could be interest, but in any case, it could have been run up by one extra meal or day out each week that was above the budget. The OP also says they haven't always been high earners, so it's not necessarily the case that they've always been high earners and even higher spenders.

There's another thread running with lots of examples of people getting into very large debt and given that there are supposed to be rules against irresponsible lending, while individuals have to take responsibility, the industry clearly isn't following the rules as they should be.

OP, what are 'updraft loans'? I've never heard that term before - were they to 'pay off' credit card debt?

@phillers please don't panic- you have equity and good income- we once had a situation not disimilar (but less) due to tax. Putting the money on the mortgage but getting rid of all other liabilities at that time made sense- are you able to do this- I would be checking with a broker right now- also if anything happened to your incomes it's far easier dealing with and negotiating with a short list of liabilities than it is a list as long as your arm - once you have done this- start sticking £750 a month away for an emergency fund.

Would you be able to access a bank loan? Rates are around 6% at the moment, it would allow you to pay off some of the higher interest credit cards.

You've got so many individual unsecured debts it probably feels like you can't see the wood for the trees.

You have £1.5k a month to throw at them. Ignore the interest rates for the minute, pay them off one by one, lowest balance first and use the debt snowball. Get your position simplified.

You could knock out your four lowest debts in 4-5 months, then you only have a list of 10 creditors instead of the current 14.

Then review again. And breathe.

Your financial situation is fine for repaying the debt and still having enough to live comfortably. Feel free to contact debt advice charities if you want but really your financials aren’t fucked but you need to stop spending money you don’t have. You’re in a far far better position than the majority of the country by the looks of it.

I would turn to a charity who can have an agreement put in place for the interest to be frozen on the debts and you enter into an agreement to pay what you owe.

It won’t be easy. They will take the max repayment you can afford. You’ll knuckle down and have limited money for anything considered a luxury such as eating out or hols.

But it can be done - more importantly it will help you get a coming your feet. Otherwise you’re going to drown trying to keep up with payments and interest and never pay off the principle.

Look at Cap for advice. You can do this but some support will help you get a hold of things and make sure you don't get back in this situation. Good luck

I rarely suggest this but in this situation with high repayments out but reasonable equity I would remortgage to £210,000 and pay everything off except the cars

Jesus Christ.

Do NOT do this. Awful advice at any time but especially in the current shitshow climate of mortgages. Turning unsecured debt into mortgage debt when there is good affordability to just pay them off over several years would me utter madness.

Consolidation for people with a history of overspending very rarely works out well.

OP, We had the same level of unsecured debt as you due to various life changes/irresponsible spending etc, but with 2k less coming in per month and renting our home.

We spoke to StepChange who were amazing. We are now 2 years into a DMP and have halved our debt in that time and we have just under 2 years to go, plus have a small amount of savings too.

Our credit file will be screwed for a while but we’re not bothered by that.

Good luck and hope you get sorted, it’s a massive weight off your mind when you do.

How long is left on your unsecured loans?

I dont think it's as bad as it initially looks as between the unsecured debt repayments and the extra 1500 you have, you can pretty much throw 3.5k a month at your debt (unless I have misunderstood).

Use the £1500 to target the highest rates as pp have said.

Depending on when your loans end, you would be able to use this in future too. Its not normally advisable to move unsecured debt to against your house but may be worth considering if it means you could get 1 or 2 of the loans at a better rate, and would also mean you could use the freed up money (as additional mortgage payments likely to be lower than loans payments) to focus on getting the higher rate debts paid off.

But I would only suggest this if you would absolutely trust yourselves to use the remortgage forcthis purpose and then once all cards paid off, you overpay the mortgage to make up for securing the loans against it.

However, you also need to really reflect on how you got to this point , I don't say this to make you feel bad but so you don't end up here again. You have a very good income and also a low mortgage. If I've understood your figures correctly without debt you have 3.5k a month you Could piss up a wall which must put you in a better position than most households. So to end up still getting into debt despite this, there may need to be a complete change in mindset and thinking about how you change this.

But yeah while 93k debt would scare the shit out of most ppl, on your income I think you can get yourselves out of this hole. Good luck

I feel for you OP, we had 60k unsecured debt at one point and it was consuming me with worry.

We borrowed money from a family member and paid them back directly which saved us, but I appreciate that's a luxury we had.

Contact Stepchange, they give great advice.

@phillers can you sell any of the items you bought that contributed to this debt?

I think that is partly why people are asking how the debt came about.

If it was due to holidays, home improvements, consolidation etc then that’s one thing.

If it was spent on cars that are sat on the driveway that you can sell then that’s another.

Everything? No, that’s a bit of a stretch.

But realistically, nobody is going to get rid of a pet they already have to pay an extra £25 a month off their credit cards. Nor should they, pets are part of the family. In fact, I would happily get into debt/sell my car/spend hours doing surveys for 10p a go to keep my cat 🤷🏼‍♀️

And no, I don’t think just because you’re in debt you should have nothing nice in your life at all. I don’t mean fancy cars and expensive holidays but FFS, the little things are what keep you going.

I don't know what Very is or an 'updraft' but you need to consolidate your debts as much as possible. Don't re-mortgage, rates are horrible at the moment. You might want to think about selling and downsizing. Defo lose on of the cars. And yes as others have mentioned stepchange are informative, helpful and non judgemental and can't advise re consolidation.

They are utter arseholes. Yes, people should be responsible with their money but once you, the lender, with the power to go to court and ruin someone to get your money back, can see the person isn't a good lending risk, you need to stop offering them more and more. You may not be responsible for their spending but you can refrain from exploiting their situation to get them in even worse trouble knowing it'll all result in more made-up money (credit) for you. You know someone in dire straits is in a vulnerable position when you offer them yet more credit that will give them a little temporary relief that's hard to resist under that kind of stress.

It's outrageous that they don't seem to apply the usual lending risk rules to cards. It's supposed to protect both borrower and lender.

You can certainly repay it, but you’re going to need to actually budget and stick to it, and it seems like you haven’t been doing that in the past.

You have quite a lot of equity in the house could you increase your mortgage loan to pay off the high rate debt? Having loans at 16.9% and 18.9% is crippling. If you added £35,000 (or however much you can or want to) to the mortgage you could get rid of those and start paying down the other debts, highest rate first.

I agree that the reasons how you got here are important. Thats not to say that its any of our business but some honest self relfection about it will help identify which danger areas you may have the could lead to it spiralling again.

It would worry me that your DH isnt considering outside help, does he not take finances very seriously? Is that part of the reason you have ended up with the debt, is he a "We are high earners, we will be fine...." kind of person?

I think I would insist on speaking to someone together, just so he can maybe get the point driven how that this is a huge amount of money to have to deal with.

But it is doable. As PP have said, you have a good disposable income to throw at the debt. The standard advice is the pay the minimum off everything but the highest interest debt. Throw every other penny into that until its gone and so on down the tree.

@pinksunglasses let's agree to disagree rather than derail the thread any further.

I get sucked in every time, but I do feel strongly about this.

Unsecured debt crazy% v remortgaging on a fixed rate of 6% is a no brainier.

Consolidate
Pay off highest % remaining debts
Start paying down on the mortgage eventually

It works if you stick to your budget and saves a fortune in interest.