Need urgent advice about DEBT MANAGEMENT PLAN? Please...

[thatsnotmymonster]

This may be a bit long but I really need some advice.

DH and I have embarked on a process with CCCS. Initially when I told them our income, outgoings and all debts they said we could start a debt management plan. This was beginning of December but they couldn't give us an appointment with a counsellor until Jan 16th.

I just had the appointment on Friday. After discussing the budget with the lady, the money left over to pay the debts would take 18 yrs to repay. She said this was too long, the creditors wouldn't accept it and we would have to sell our house instead.

I have since spoken to an estate agent who said that at the moment we are unlikely to be able to sell our house at all and if we did manage we would be lucky to just break even. So we would be homeless, lose all our equity and still not have enough to pay all our debts off. We also have 3 children under 4 and this just seems such a desperate measure.

We can actually afford to pay more than the CCCS said because their budget includes EVERYTHING- a monthly budget for prescriptions, birthdays, Christmas- everything you can possibly think of. I know you need money for these things but I do car boot sales, we ebay stuff and I have a small irregular part-time job which gives us money from time to time.

Anyway I have reworked the budget a bit (we overestimated on petrol) and have secured another small long term monthly payment for selling some small assets which means it would bring our time taken to repay the debt down to 9 years.

We are also going to advertise a room to let in our house and I am going to try to find a part time job that fits around the children and DH's work (not an easy task).

Do you think this should be acceptable or ca they force us to sell our house?

We have no CCJ's at the moment.

Does anyone have any advice/opinions/ideas- anything?

Thank you for reading this all!

bump

I wish I could help but can at least bump for you - sounds like a nightmare and it seems like you're doing all you can. The house-selling has to be a last resort, I would have thought.

I'm no expert but a few ideas

Can you get rid of your car? That is our biggest expense.

Can you pay interest only on the mortgage.

Do a serious budget on food et all. Cut heating to an hour a day at bath time (we often do this)

What is CCCS?

Thank you for reading and bumping anyway- I appreciate it!

Just having some more persepective on it is good because we feel that selling the house is a last resort (especially at the moment with house prices as they are). We are willing to consider selling when things pick up again- hopefully within 2-5 years.

pop and see the cab instead. they have the power to freeze interest on your debts and will be able to hep you. Bankruptcy should always be the last resort, make sure above all others that the mortgage and the council tax are being paid. The CAB will give you a second opinion, take all your income/expenditure forms with you.

Thanks noonki but the food budget is seriously low anyway it has been flagged up by CCCS (Consumer Credit Counselling Service)
as being very low for a family of 5 although I know a lot of people live on less- it is £75 a week for all food, household items, nappies and cat food.

Am going to turn heating off more. Trouble is we don't have a combi boiler and need to turn gas on to heat hot water which is a pain.

Car- not really as the school is 2 miles away and walking twice a day with a 3yo, 2yo and baby is (I don't think) doable. We also don't live within walking distance of anywhere.

Thanks scrooged. Is there CAB in Scotland?

There should be, they are all over the place. You can phone them up too.

thatsnot i agree about the car tbh
we have lived without one (being repaired for last 2 weeks)
I have spent a lot on bus fares as we 2 miles from school , shops etc.
Also dd at pre school mornings it was a nightmare.

Have you looked at evening shifts at supermarkets?

I would go back to them 9 years is a big difference than previously.

I don't think it's a good time to sell at the moment.

you can also email CAB go to their website

Have you looked on the Moneysavingexpert site?

forums.moneysavingexpert.com/forumdisplay.html?f=76

This is the Debt-Free Wannabe board - you will find lots of people who have been through this and will give great advice, especially when it comes to budgeting.

Have been there really would get advise from cab. They managed to freeze the interest on all unsecured debts and set up nominal payments, that was 2 years ago and have no hassle from creditors.
Basically if there unsecured and you can not afford to pay they cannot force you, as a judge would ask for the same thing income and expenditure.
Also the minute the cab started corresponding with my creditors all the hassle stopped.

I am going to contact CAB tomorrow. I just feel it's unfair that I was almost told to put the house on the market immediately without even discussing any alternatives.

Lilyloo- ds is at preschool mornings too and tbh it is really hard to get us all out the door for 8.30am. I would probably have to leave at 7.45am to walk as I think it would take ds an hour to walk 2 miles uphill in the rain and dd would have to go on buggyboard.

I am going to apply for an evening/weekend call handler job with NHS24. If I don't get that will look again at supermarkets. Last time I looked Tesco only wanted night shift (12 hour) and I couldn't do that and look after the children in the day!

Any chance you could both go bankrupt if there's not much equity in the house?

With prices falling it might be a viable option

thatsnotmymonster, have been told many times to sell or go bankcrupt. Still may have to but that is very much the last resort.

Thanks, LargeGlassofRed. That is really useful to know. I will definitely do that first thing tomorrow.

CCCS cannot make you sell your house. Try this site for debt help advice - look for "forum" on the toolbar thingie on the site. Some very knowledgable people there who will give you loads of good advice.

Sorry that times are so hard for you. Definitely agree with all those who suggest CAB. Don't rush into bankruptcy or selling your house. Bankruptcy is ruinous and will cost you much more financially than your debts as many other costs are added to it. Your house is your only asset and tbh 18 years is not such a long time that creditors won't accept it. All that you can do is pay what you can and if creditors see that happening they should back off, as they will be getting as much as any court would order. Initial advice doesn't sound brilliant so I hope that CAB help tomorrow.

I really don't think your creditors would make you sell your house if there is no equity in it. Theres no point.

Agree CAB and trying to find a job.

If you want to save your house then dealing with the mortgage company must be your top priority. They are the people with a charge over the property and they are the ones who would push for it to be sold if you fell behind. They wouldn't care about what price they got either as long as they got enough to cover your mortgage. In fact, if they thought you were a really bad debt they would take less than that even, just to be rid of your bad debt. So whatever else happens I would really be careful to keep up with the mortgage company one way or another. Switching to interest only immediately may help a little.

I'm surprised that you haven't had better luck with CCCS. You can try CAB, but depending on where you are they may only be able to give limited help. They cannot force creditors to stop charging interest for example, and what creditors will do depends very much on your financial statement (budget).

You're obviously thinking on the right lines in terms of trying to maximise income. Have you had a benefits check and are you sure that you are claiming everything that you can?

In general CCCS/CAB will try to help you on a non-judgemental basis ie they will not go through your budget and say "wow do you really pay £X per month ofr that - that's ridiculous". They will comment on a few categories where there are trigger figures set (so if you pay more than the set figure for a household of your size it raises a flag and will be commented upon).

If you want more robust comments on your budget then post on here if you are feeling brave!

It is still worth going to CAB, but they won't be able to help you with your budget.

Thanks for all the posts. We don't need help with our budget and we can afford all our critical expenses. We can meet our mortgage payments, bills, council tax, food, insurance etc. We can't afford to pay all our debts on top of this, however we do have money left at the end of each month (£188) currently which the lady from CCCS told me was not enough (and that was with their budget for us which was higher than our budget- because she said it wasn't sustainable).

We pay a lot for gas and electricity which I am going to try to cut down on but other than that the only thing that flagged up was food/household expenses because it was TOO LITTLE.

We are not considering bankruptcy at all. We have enough money to do a debt management plan but I was basically told I should try to sell the house as a first option!

We do have equity in the house but in the current market we would not make enough to pay off all the debt and we may not be able to sell at all. We would also fall off the property ladder, have fees and relocation costs. I'm not saying I wouldn't do this but surely it shouldn't be the first option.

Hi, just read through all postings very quickly. We are currently in a IVA, scheme, which isn't bankruptcy, but you pay set amount for 3 to 4 years (depending on agreement) and then your house is assessed for equity,if you can increase mortgage, debt is then written off, if no equity etc, then pay IVA for one more year and then debt is written off.

check out link: www.iva.co.uk/forum/, great advice from actual Accountants involved in this, plus people who are on IVA. If it helps we could only afford £200 a month, which was passed.

Hope this helps, sleep easy, it does get better, we've only got 1 year to go, it's been a struggle but at least we've still got our house and debt will be wiped clean after the IVA is completed.

We're in a similar position, hopefully starting a DMP with CCCS next month (but in the mean time making token payments to non-priority creditors). We have a small amount of equity in our house but rent would cost us at least double what we are paying in mortgage & we would still have large unsecured debts & even less money to pay them

The housing market is dead here & our house is a former wreck not yet finished e.g. we have no central heating & no money to put it in - hence a large chunk of debts. It makes no sense to sell it.

If the creditors accept the DMP & freeze charges we can pay back the money we owe from our surplus (slowly) & at the same time work on ways of increasing our income. If they don't then it will continue to increase & our only option may then be bankruptcy - not something we want to consider atm. We're not eligible for an IVA because my dh is self employed. I think they like to see debts paid off in 10-12 years maximum, but I have seen people do 'low start' DMPs where initially repayment would take forever but there's an anticipated increase in payment at some point. You can also save for 6 months or so out of your then pay a lump sum off the DMP (or offer full & final settlements - this will improve return for the other creditors so it's allowable within the DMP).

We've never missed a payment but the continuous increase in interest rates (one APR has gone from 21% to 42%) means that in order to even make the minimum payments we're not eating/heating/buying essential clothes etc. Our SOA/budget actually leaves us with more money to live off that we've had for the last 18 months because we've been cutting back so drastically. If we'd been able to manage for another 18 months we'd be okay because both have big loans that will be paid by then freeing up a lot of money but that's impossible now.

We applied for our new bank account this morning & will begin sending out token payment letters with our CCCS reference next week - just sat here waiting for the shit to start raining down (& contemplating when to change our phone number)

It is all very scary.

Thatsnotmymonster, if you're in Scotland (from your question asking about CAB in Scotland, I assume you are) things are slightly different from England, e.g you can enter into a Protected Trust Deed, IVAs are not available. Additionally there are debt management plans, and some other stuff too. Google national debtline scotland, and you should be able to find some more info there.

AFAIK there are government funded organisations to help you with this, so do not pay a 'debt management company' - they will take a huge chunk of your payments, and your creditors will get v little! However, if you were going to enter into a formal agreement like a trust deed, you do need to do this through an accountant.

Good luck, you will be able to find a way through this.