I’m totally lost - any advice appreciated

[MrsXx4]

Please could someone tell me if I’m about to get myself in deep financial trouble. I am totally clueless, I’m trying to read all the information I can but I need blunt facts that I can understand.

I have a credit card that has gotten out of control, it’s up to £13k and now with coronavirus I’m struggling to meet the minimum payments, I’ve never missed a payment but it is a struggle and I will never be able to clear it. I am considering declaring myself bankrupt as on top of this credit card I have quite a few things I’ve bought on finance over the years, but I used to be in a much much better financial position and it’s only recently that it’s all become far too much. I’m currently not working as I left to go on maternity leave and didn’t need to return at the time but my ds is now coming up to 2 and my job no longer exists partly due to the virus and decisions my old company were forced to make, I always had a fall back position there before the virus hit.

Of course I can look for another job and have been but I can’t afford the childcare either and have no family support. But I will continue to look into this.

My husband owns his own company and has taken a real hit himself, we are very much in this together he isn’t trying to stitch me up but we are both at our wits end and he has suggested declaring myself bankrupt could be a start in clearing this mess. I know I will be blacklisted and it’ll be on my credit record etc but I don’t understand what that means other than not being able to apply for credit etc which I am ok with.

This is where more complications start, we rent in a very expensive area and our house is very big as I said we were in a very different financial position when we moved here and we have gradually lost everything and keep losing. My husband would like to buy a house but purchase it / mortgage it(?) through his company. Mortgage repayments would be much lower than what we pay in rent, we also pay for parking where we are now costing £500 per quarter. Whereas if we moved to a house we would have parking / driveway.

What implications are there if I am bankrupt and the house is bought in a company name? We are happily married I’ve no concerns about being separated in the future but obviously you just never know what’s around the corner and if we were to split am I up shit creek?

Please can anyone advise?

You don’t buy your residence through a trading company. If at all, these companies are special purpose vehicles and are suitable for rental property.

Do you both need a car at the moment? Get rid of one and that cuts one lot of parking fees. From your comment about parking fees, you'll save around £3000 a year on parking by getting rid of one car. Nevermind insurance and fuel. It's perfectly possible to adapt to one car family, especially when you live in a city and aren't driving to work.
You should approach your landlord to negotiate an early termination of lease.
Do you mind if I ask how you were paying back the interest on £13k credit card debt? Was your husband paying it?
Do you have anything major that you can sell? You definitely need to list all your outgoings and be ruthless about cutting them.
Earning minimum wage a few nights a week isn't going to cut it. You need to slash your outgoings ruthlessly first.

Yes my car is something we have discussed and it’s still an area we are considering. I don’t use my car and for the trips I do make I can use public transport. My husband worries about emergencies and what I’d do without a car in that instance which is why we have never done much about it.

Yes my husband has been paying it but the card is in my name.

I honestly wouldn’t have anything of any value to sell.

Have a look at debt relief orders.

Not RTFT but you say that you rent a big house in an expensive area. Can you rent a small house in a significantly less expensive area while you clear the debt?

I'd look at the moneysavingexpert web site, lots of advice on there

I'd get rid of one car. It sounds as though you live quite near city centre, so walking/public transport would work for most journeys. Taxi for emergencies. Much cheaper than running a car.

See if you can get out of your rental and find somewhere cheaper.

Cut all outgoings to the bone.

Work out how much you can put aside for debt repayments each month and then use tools on moneysavingexpert to work out when debts will be repaid. This will give you a date you can look forward to being debt free.

Can I ask, why are all the debts in your name if you're married?

For emergencies, just download the Uber app.

It doesn't seem as if you, or your husband, have made any attempt to cut outgoings, so I think you'll be surprised at how fast you will pay off your debts once you do.

You might want to look into your rights if a company (your DH's) owns the house you live in. You'd find it harder to rent somewhere as a bankrupt. You might feel secure in your marriage but that set of circumstances puts you at risk.

Post on the debt free wannabe section of money saving expert. Many people there in a worse situation than you have managed to turn things around without declaring bankruptcy. Lots of debt advisor experts too.

Also contact Stepchange.

Do not buy a property through the company. It's an asset to the company and there are many financial implications. Also sit tight on bankruptcy, that's a drastic step.

Thank you all for your advice.

I feel in such a different headspace than I did when I wrote this post yesterday. I spent the day reading and researching as much as I could about my situation and I still have more I want to look into.

Going through my finances helped massively. It was something I couldn’t bear to do before and actually I don’t think things are as bad as I thought. There are big changes we can make and cuts we can make to help.

You are right that bankruptcy is drastic but I was clueless this time yesterday and didn’t think I would have options.

Speaking to my husband last night it seems I may have ran away with the thought of a house being bought in his company name as although he did say this to me he said last night that he had no idea of the risks and that we would be better to clear debt then look at our position to buy, probably rent somewhere smaller in the meantime so that we can clear this faster and maybe even be able to save quicker for a deposit.

So on the whole, I feel so much more relaxed and not the jittery tearful mess I was yesterday when I really felt in this black hole with no options.

Good to hear, OP!

Brilliant news, being on top of the finances is being in control, sounds like you have made some positive changes since yesterday. Well done 👍

That's great OP! A problem shared etc
If you sold the car, put the money towards your debt and then the money you would have paid out for petrol, tax, insurance and parking each month towards your debt for even 6 months or a year would make a big difference. If parking for 2 cars is £500 per quarter that's £1,000 per year on one car? And in an emergency you can phone a taxi or a friend or family member?

Your DH sounds as clueless as you are.

Your DH sounds as clueless as you are.

Bad day?

Try to move house if possible. Get some advice from CAB or Shelter. It seems odd you're tied in until next summer unless you just moved there this summer. It also sounds like you could survive with one car which would help you save money. Good luck.

Look at a debt management plan if your debt is under the limit, first step is cut up your credit cards & sit down to work out a sensible budget you can stick to. Investigate swapping utilities to cheaper contracts, cut your food bill by buying basic own brands where possible, cook from scratch, no ready meals or takeaways, batch cook if you can. Speak to step change for advice, get a copy of your credit file so you have a full picture of your finances.

@user1493494961

Your DH sounds as clueless as you are.

Yep! That’s fair! I’ve not made either of us out to be clued up which is why I’m asking strangers on the internet for some advice and to point me in any direction they can. Just from starting this thread I feel better and have faced looking at my bank account which I hadn’t done previously.

We have lived here 3 years but it’s on a rolling yearly contract I believe.

I do cook from scratch and have the ingredients delivered which I’ve always felt worked out cheaper than going shopping as I don’t pick up random bits and pieces and the the only extras I ever buy is stuff for lunch and our cereal as well as the necessities obviously like bread, milk, and cleaning products but I go to the pound shop for all household bits like that.

We really don’t have any luxuries, we haven’t had a holiday in over 4 years, we never go out for dinner or weekends away (pre lockdown). We do get a takeaway of a weekend but we can cut that out if it’ll help.

My husband booked to view a smaller property yesterday and is currently there now having a look, I couldn’t go with him due to COVID restrictions but he has sent the photos through and seems an option!