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(@smit0310)
Active Member
Joined: 5 years ago
Posts: 6
Topic starter  

Good afternoon,
We have been struggling for numerous years and have now realised we need to deal with the situation as we have no life and worry 24/7. This is completely the 1st time I have spoken to anyone about our situation so excuse my lack of knowledge.
Our situation is a couple (married) combined debt around £65000! We have a mortgaged home.....approx £55000 outstanding and the house is worth around £125,000.
We earn £21000 and £20000 per year.
We are a family of 4 so have 2 dependants.
What is our best option? What will happen with our mortgage? We have bad credit scores as have been paying cc/loans late/ missed payments etc so it's already shhowing that on our report.
Any advice / direction/ help would be so greatly appreciated. We are at breaking point and we are really struggling.[:(]
Thanks in advance


   
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David Tannock
(@david-tannock)
Famed Member
Joined: 11 years ago
Posts: 2581
 

Hi smith0310 and welcome to the forum.

Well done on reaching out for help and advice to deal with your debts. It’s always the hardest step to take and a very brave one. The positive in all of this is there are solutions available to help!

Based on what you have told us in terms of your property and the possible equity it looks like a Debt Arrangement Scheme could be the most suitable option for you. This is a plan whereby it has absolutely nothing to do with your house or the equity and is a repayment plan that will freeze the interest and charges if accepted by the lenders. The plan works on the basis that you put all of your debts into this and make one more affordable payment per month until the debt is repaid.

Reason I suggest the DAS is that a Trust Deed involves your assets and the main one is your house. If you have more equity in your property than unsecured debts then you can’t do a Trust Deed and from what you have told us it looks like you have approx 65k debts and 70k equity. Even if your equity is lower than the 70k you have to pay over a reasonable proportion of this into the Trust Deed.

The payment you pay per month to the DAS is based on affordability but it also needs to be a payment which the lenders will be prepared to accept. It’s a good idea to speak with an Expert about your situation and they can work through a very thorough budget to see what you can afford to pay per month. When we do a budget we try to avoid cutting things back too much as the budget needs to be realistic and sustainable. Having 2 kids myself I know how expensive things can be!

Realistically if you didn’t have to pay all the debts per month and it was combined into one payment how much do you think you could afford to pay per month to a plan? To give you an example of timescales based on 65k of debt if you used a free sector organisation to set the plan up over 10 years the payment would be approx £542 per month.

David is not currently posting in the Trust-Deed.co.uk forum


   
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(@smit0310)
Active Member
Joined: 5 years ago
Posts: 6
Topic starter  

Thank you so much for your reply, I really appreciate the time you have taken to advise me.
Who would be the best to contact to try and arrange a DAS.... I believe we could afford around that figure so would you really think that would be an option? It would be a strict budget but one I think we could work to.
If we come into a large sum at any point could that be paid to it?
What do you recommend I do now, should We open a new basic bank account as we have some debt with the bank we currently bank with? Do I still try and pay what I can albeit it's just paying money out and having none left. How long usually does it take to set up an arrangement?
I can't thank you enough for your advice honestly!


   
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David Tannock
(@david-tannock)
Famed Member
Joined: 11 years ago
Posts: 2581
 

There are two ways in which you can set up a DAS. The first is to speak with your local
Citizens advice or Stepchange who can discuss it all for you and set it up free of charge.

The second is speaking with a fee charging organisation (such as my firm or the other experts on the forum) for advice. With my firm only when you actually decided to proceed with a plan would there be a fee. All our advise and help up until that point is free of charge.

If you came into a large sum of money during the plan then if you choose to do so you could use that to pay all the debts off and the plan would end.

In terms of what to do next with 65k of debt prioritise your living costs, mortgage, food etc and the debt payments to come last. If you have no money to pay the debts you can call the lenders to tell them you are struggling and to reduce the payments down to £1 per month for the next couple of months. Lenders will normally try to work with you when you tell them you are struggling.

The best thing to do is reach out to an organisation for some advice. In the space of a 20 minute phone call a lot can be covered to put your mind at ease. I along with the other experts on the forum would be happy to give you some initial advice and then you can decide what to do from there.

In terms of how long it take to set up a plan that really depends on which organisation you use. With my firm it’s 6-8 weeks. That can sound like a lot but it takes up 2-3 weeks to verify the debt balances to the lenders and then when we make the proposal to the lenders they have 3 weeks to consider it.

Once you have had that initial phone call with an expert it’s normally at that point I tell people to stop all debt payments and then I take care of the rest for them. We try to make it as easy as possible.

The important thing to remember is that there is a solution to help you deal with the debts so try to stay positive.

David is not currently posting in the Trust-Deed.co.uk forum


   
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Kevin Mapstone
(@kevin-mapstone)
Member Admin
Joined: 15 years ago
Posts: 4237
 

A lot of good advice already from David, but just to take a step back can I check, is your home jointly-owned together? I am assuming so, but worth asking as it might well change your options if not.

Also, do you have any joint debts?

Scottish Debt Solutions Expert - Ask me for help setting up a Scottish Trust Deed or Debt Arrangement Scheme plan.


   
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(@dasdude)
Eminent Member
Joined: 5 years ago
Posts: 41
 

Hi smit0310

Reading your post it is quite similar to my situation that I was in last year. Getting professional advice and choosing a DAS was the best thing we did. We are in a joint DAS. There is absolutely nothing to stress about, it can be an anxious time waiting for it to be approved however the relief you feel is huge. Open a basic coop account asap they are a really good bank. I dealt with all creditors in writing and any annoyances I wrote to their complaints department. Things will get better from here on in, go for the professional help best thing you will ever do, as with everything I wish I had done it sooner! Feel free to ask me any questions. I spent many a day and night reading and worrying. Your credit report will be shot to pieces but that's ok, you learn to live, budget and not use credit to survive it's actually quite refreshing.


   
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