I'm not sure what to do about our debt problems??

Question

My husband and I had our income reduced 18months ago. We arranged informal arrangements with our creditors to reduce our payments. However when we did this we didn't factor in dental expenses and prescription cost. Birthdays, christmas' and car maintenance. We have borrowed off our friends and family and we need to pay them back £800. We have called our creditors but as we've not fell behind with any payments yet they aren't helpful in reducing our payments as our wages are the same, in fact some of them want us to increase our payments. This month we are now going to be forced not to pay them as some family members want their money back and our cars MOT is due. I'm not sure what to allow (money wise) in the household budget. If someone can help me I could at least send the creditors a breakdown which might help them reduce our monthly spend. We owe £45000 approx and bring in before any bills or expenditure £2100 approx.

Answer 1

The citizens advice bureau are good at helping sort out debts. work out every penny you spend- from the big bills to the coffee when shopping- change to cheaper brands in the supermarket. Make meals from scratch instead of buying ready meals. make enough for 2 or more meals at one time and freeze the others-- saving time and fuel.

as well as a budget- make a menu for the week- do a weekly shop with a list and stick to it. If you impulse buy maybe shopping on line would help---ok they charge delivery but you don't have petrol and the extras you have bought.  I'm sure relatives would accept a scratch card or lottery ticket in their home made birthday card if you explained times were hard---its going to be hard for a lot of people.  i hope these ideas have helped--good luck

Answer 2

Wow, you really don't make enough money to be able to pay back 45k with a 2.1k budget.  I mean even if you could save 50% of your income and you were not being charged interest on that 45k, it would take some 3.5 years to pay off that money.   I'm guessing that a good portion of that 45k is your car.  So i suggest you sell the car and take the bus.  You will save on car payments, insurance and petrol. (did you know that about every 4km you drive costs you a quid in petrol?)  So if you drive 16,000 km per year, that like 4,000 pounds you are paying just in petrol.  That means you are working 2 months out of the year just to fill up your tank and nothing more.

Also...forget presents for birthdays/christmas.  You can buy kids a present for no more than 5 pounds, you dont need to spend 500 quid on presents.  Also, stop dental expenses until you are out of debt.   You can also live off beans & rice for the next few years until you are out of debt.    Its going to be a hard road for you the next couple of years, but its what you have to do.  Alot of us have gone down that road that you are on, but actually once you start budgeting better, you could find it fun to pay big chunks of your debt off and see that balance get smaller and smaller until you are debt free.

Dont give up...you CAN do it.

Answer 3

You are better off discussing this with Citizen's Advice, who will be able to arrange impartial discussions about what is affordable and liaise with your creditors. IVA's / going bankrupt should be a last resort not a first or second.

Quite naturally, your creditors are going to want as much back as possible as soon as possible.  

Answer 4

I suggest going over to the "debt free wannabe" board on the http://www.moneysavingexpert.com  forum.  They should be able to give you some good advice.

I'd start with conatcting one of the free debt charities such as Payplan or CCCS and asking them to review your case.  They can help set up a debt management plan and possibly get the interest stopped on the accounts.

Answer 5

Contact your local Citizens Advice Bureaus (you should find them online) as they will be able to make you an appointment with a debt advisor. I did this 4 years ago and i am really glad i did as they wrote to all my creditors with offers which had to be accepted. They even provided me with a financial statement (something you can do yourself if you have Excel). Don't use a debt management company as they usually charge you for their services and you will end up in a worse position. Good luck and i hope this helps.

Answer 6

The best thing you can do is contact a specialist money adviser at either your council's trading standards department, with your local CAB or with the Consumer Credit Counselling Service.  They can do a financial statement for you that will take into account the outgoings (including loans from family) that you forgot about before.  They'll then negotiate acceptable payments with your creditors.

A word of advice - the services offered by these agencies are free but there are other places who offer 'debt' advice that charge you for it!

Answer 7

you may have to consider bankruptcy.  are you spending on little things that you don't think about? like coffee, dinners, expensive hair salons? sit down and come up with a budget, it might suck for awhile but you have to do it.  bring your lunch to work, wash your own car. How much are you paying in interest for all of these credit cards? can you put all the bills on one with a low interest?  I think its better not to borrow money from friends; that can get ugly.  do you have 1 or 2 vehicles? do you need them both?