Is this doable?

[Richteafingers]

Hi,not going to overshare as dh isn’t keen on me posting.

we’ve just come out of a financially disastrous 4 years but we’re now on good full time jobs with £7600 coming in each month.

our living costs including mortgage and bills are £2800. The problem is that we’ve been left with monstrous debts if £110k

do you think that’s it’s possible for us to tackle these debts despite the scale of them, without having to go into an IVA or bankruptcy???

Yes, potentially. You need professional advice though. What sort of debt is it? What assets do you have?

What kind of debts OP? Are they gathering interest, or on 0% cards?

If they aren’t on 0% cards, could you move some around so that it is?

In theory you have £4800 left after paying all bills, if they are (or could be) on 0% you could throw £3500 a month towards the debt, you’d still have £1300 left each month to save/do nice things/treats, within 2 years you’d have paid off £84k doing that.

If it’s on a high interest card and can’t be moved then it’s a bigger problem because even if you made a £3500 payment each month a lot of it will just be paying off the interest rather than the actual debt.

Unless that includes you outstanding mortgage that's a helluva large debt.

Try speaking to and adviser like Step Change or National Debtline.

I've put those in as links becuase Googling for debt advice can lead you up the garden path with less then reputable advisors.

I presume it's not including a mortgage? In which case it is a tremendous debt. However you could pay it off in a few years if you really strip down your lifestyle to the bare minimum.

No it doesn’t include the mortgage. Sadly 😣

Have a look at the debt free wannabe forum on Money Saving Expert. They have a statement of affairs you can complete and the posters there are very experienced - you’ll get good, knowledgable advice on how to go about paying things down.

The debt free diaries on Moneysaving expert are a good place to look and keep track, people on there have cleared such large debts.

What's the breakdown of the debt in terms of amounts and interest rates? You want to prioritise paying off the highest rate debts first, paying the minimum on the others (avalanche method).

Speak to a debt charity and they will talk you through you're options. They are really helpful.

They aren’t able to help us as we can easily afford the contractual payments

Is there a reason you can’t or won’t push £4000 per month towards fhe debt?
You would have it paid off within 3 years

Why would you file bankruptcy when you have a huge £4800 free each month? What's the problem with just paying the debt down?

Plenty of people pay down their debts over a number of years. you have a go income so there is no reason not to do that.

As you can afford to pay it back I don't see the issue here.....

Dave Ramsey on YouTube and Mike from Meaningful Money are your gurus for clearing this debt.

You want to prioritise paying off the highest rate debts first, paying the minimum on the others (avalanche method)

Or the snowball method where you pay off the smallest debt first.

What's important is that you and your DH commit to being debt free in, say, 3 years and you throw everything at it. Cut up your credit card and honour your contractual obligations.

Best of luck.

Of course it's doable. Review your budget to make sure you're spending as little as possible on essentials. Minimise spending on non essentials as much as is bearable.
Transfer debts to 0% deals where possible.
Throw as much as you can at the debt each month paying the minimum on all debts except the one charging the highest interest, for this pay as much as you can. When you've paid off the highest interest one, move on to the next one etc etc. This is the snowball method.

With nearly £5k spare each month, you could be out of debt in 2-3 years depending on how much interest you have to pay and how strict you budget.

Have a look at Moneysaving Expert for a full explanation of how to do it.

https://www.moneysavingexpert.com/loans/debt-help-plan/

Snowball method in this case could cost literally thousands in extra interest.

If part of OP's debt is on credit cards charging 20-30%, that absolutely needs to be paid down asap (or refinanced at a better rate).

What you've described is the avalanche method (highest interest rate first). Snowball method is lowest balance first, which is mathematically inferior.

Surely with that income, you won’t be allowed an IVA or bankruptcy? Don’t both require you to be unable to pay your debts?

*Snowball method in this case could cost literally thousands in extra interest.

If part of OP's debt is on credit cards charging 20-30%, that absolutely needs to be paid down asap (or refinanced at a better rate).*

But it's all dependent upon OP's self discipline and staying motivated. Dave Ramsey argues that you're more likely to stay the distance if you have regular small victories like paying off a smaller credit card debt in full rather than chipping away at the huge one and losing heart and giving up.

Well you'd have to look at the actual amounts and interest rates, but with a debt this large it can make a very substantial difference. I've seen fans of the Snowball method recommending overpaying debts with very low rates when there's credit card debt charging over 30%.

Yes, it can make sense in some circumstances to clear small debts quickly, but not without looking at the actual numbers.

Snowball method according to Martin Lewis, highest interest rate first.

https://www.moneysavingexpert.com/news/2022/02/if-you-can-t-afford-to-clear-your-credit-card-in-full-and-you-re/#:~:text=This%20is%20about%20an%20important,payment%20on%20all%20the%20others.

But whatever you call it, obviously you transfer as much as you can onto 0% deals and concentrate all your payments above the minimum on the the highest interest rate debt until that's paid off then overpay the second highest interest debt.

It would be very helpful if you could give a list of the amounts of each debt and the % interest being charged currently.

Also if there is any council tax debt or other debts that need prioritising.

Are your jobs fairly secure?

I think it's definitely doable but the % interest rate will hugely affect how long it will take you. Although as your debt reduces you can hopefully transfer to better interest rates on the remaining debt.

Any chance you can remortgage and free up some equity to pay down more expensive debt?
I know someone who negotiated hard and got lots of the debts reduced which they then managed to pay off in full, but they hadn't the income you have.
2-3 years living frugally, doesn't seem to much of a sacrifice? Especially as it's so short term and you earn so well.

Hi, we aren’t keen on remortgaging as it would put the house at risk if our circumstances changed etc. I’m not sure if they’d accept a reduced payment offer given our income- I think they’ll only do that if they can see that there is not much chance of getting all of the money back