Bottom line is that 7 years ago my partner and I split up, we were apart for 2 years and I continued paying for all of the bills for her and my boys as well as then having to pay for myself to live and eat. Within 2 years I had racked up £20k of debt and it has progressively got worse. Thankfully we got back together and we are extremely happy now apart from our debt situation.
Myself and my partner bring in £2,900pm but our household expenses are £1,881. At the moment our repayments on debts are £1,221.
2 loans totalling 13,500 will be paid off in 2 years, releasing £605 from our debt repayments. Obviously I am only paying off the interest on credit cards, so those debts will remain as they are for the next 2 years and I can no longer get credit.
Whatever happens I need to ring fence the in laws loan as this was taken out against their mortgage and apart from the remaining 9k that we owe, it is paid off.
Some hints, tips or advice would be so very welcome as I am going insane trying to work out how we are going to be able to get through this.
So glad to hear that you got your relationship back on track but not good that you have so much debt now.
It sounds as though an IVA could be an option for you and I believe that your loan from the family can be left outside to be paid back after IVA completion.
I would speak to a number of companies though. Visit www.iva.com for a list of companies and reviews. The advice will be free and impartial and give you an idea of the best way forward.
Sharing from experiences of dealing with debt
The greatness of a man is not in how much wealth he acquires, but in his integrity and his ability to affect those around him positively.
Bob Marley. http://kallis3.blogs.iva.co.uk
If you need to continue paying the loan to your in laws a debt management plan may be an option as creditors would be unlikely to allow it to be repaid during an IVA as Jan has said. If they can afford to wait an IVA is certainly an option.
It would be worth looking at your case to see the income and debt split. If the debts are all in your name your wife could use her surplus to repay her parents and you could use your surplus for an IVA. If the debts are evenly split a DMP may be the best option so take some free advice from an IP firm to determine the best way forward.
Do you think that creditors would be happy to see this being paid off preferentially in a DMP Michael? If not, could they thwart the DMP, or are they more likely to lie down and accept the offer as a done deal?
Melanie, I completly understand what you are saying regarding the in laws loan. I dare say that "ring fencing" is a highly unlikely option to have but of course I really do not want to penalise them and i assume it would go on their credit record. This is the whole reason I came on to this forum, so i appreciate all responses.
Would it be worthwhile speaking to my individual creditors (credit cards) about freezing interest?
In terms of a debt management plan, so long as any payment to your in laws each month is reasonably proportionate to the repayment rate to other creditors I doubt there would be any issue with this.
How much do you pay to them each month?
There is no harm in speaking to the credit card companies yourself regarding the freezing of interest. You may find that they want quite a lot of detail from you in terms of your income, expenditure and other debts so that they understand that they are being treated fairly.
Last edited by Andrew Graveson on Fri Feb 18, 2011 1:13 pm, edited 1 time in total.
Andrew Graveson
Bright Oak Ltd
UK Debt Management Company
Website: www.brightoak.co.uk
I see family loan repayments listed as expenses in many DMPs and the creditors seem to accept them. Given that many DMP payments are received by debt collectors on commission or by debt purchasers who bought the debts for pennies, I think many don't really care. As long as they get money and do not have to write off the debt they don't seem to go into the I&Es too much.
Given that DMPs are effectively 'gentleman's agreements' you can propose what you want and creditors can do what they want.
Me
Credit cards - £11,000
Bank Loan - £4,500
overdraft - £3,000
Partner
Loan - £12,000
In laws loan - sits in the middle as obviously no agreement was signed.
I suppose I really am looking at getting through the next 2 years. As i said in my original post, in 23 months the in laws loan and my personal loan will be paid off, releasing £605 for additional repayments. The repayments on the credit cards total £356 and I am not paying anything off them apart from interest.
Obviously 2 years is a long way off especially when you are paying out more that you are bringing in.
If your partner earns enough she could repay her loan and her parents and not need any sort of insolvency. You could consider an IVA with your parents in law also included as creditors and any dividend they receive would shorten the period it would take your wife to repay.
It is likely that your debts are increasing each month so you should consider some sort of repayment plan before it gets any worse. Of the £2900 income what is your salary, what is your wife's and how much child benefit/tax credits do you receive?
The problem is that you have the biggest income and therefore a larger percentage of the surplus. Your wife does not have sufficient income to repay her loan and parents while paying her fair share of the bills.
It may be that consolidation would be the best option over a long period and once the parents in law have been repaid you could quickly reduce the loan balance. This at least would not harm your credit file but it would make it easier to meet the monthly payments.
Your bank could be the first port of call or some credit cards are offering up to 17 months interest free on balance transfers. You could make the minimum payments until the loans are repaid and then pay off the capital as quickly as possible. The loan to your parents in law would not be on your credit file so on affordability grounds it may be accepted.
If consolidation is refused you could still try debt management or struggle on. See about extending the terms of your existing loans to bring down the payments as it does seem to be a cashflow issue albeit a serious one.
Another option might be to embark upon a debt management plan and disclose the full repayment of the family loan as part of it.
It appears as though your "disposable income" is around £1000 per month based on the previous details. On that basis near £250 would normally go to the family loan anyhow, so an uplift to £410 isn't massively prejudicial to the other creditors and wouldn't be long-term anyway. Seems like a good case could be made to encourage creditors to support that.
I agree with Michael that consolidation is well worth considering assuming that it can be done affordably.
Andrew Graveson
Bright Oak Ltd
UK Debt Management Company
Website: www.brightoak.co.uk
I cannot get any credit, though i have not missed a payment on any debt(so far). I was thinking of asking my partner to apply for a virgin credit card (0% for 18 months). Transfering 5k from 2 cards on to this, paying at £200pm for 18 months £3600 repayment. I could then transfer the remaing 6k to my barclaycard (0% for 12 months existing customers)pay at £100pm £1200 repayment.
That would wipe £4800 of the 11k credit card debt and obviously try and find remendys in the meantime for existing debts without having to iva or ppm.
Will my bank discuss a payment plan to clear my overdraft?
The bank probably would allow you to reduce it gradually or even convert it to a loan. You could possibly reconsolidate it with the existing loan over a longer term again saving some money each month.
Your other ideas seem sound and once you have cleared the parents in law your debt problems will dramatically ease.
