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issieb
| 22-03-2008 01:19 PM |
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Joined: 22 Mar 2008 Posts: 9 | I was the type of person who never ever owned a credit card, never used an overdraft etc., kept my finances in order and stuck to a monthly budget. Then, just about two years ago, after a shocking divorce and 3 kids, one with special needs, I spiralled into deep depression, got some tablets and starting buying, mostly over the internet. Then, when I ran out of all savings and the credit card offers were coming through the door, I thought 'why not'? Well, that was my first mistake, taking that first credit card offer! After a few months, I had a couple of credit cards but was still well in control. Then, my GP gave me different anti-depressant tablets and that is when I thought I could do anything and just went ahead and applied for about 12 credit cards, two unsecured loans and kept buying and buying, mostly useless things but I just couldn't help it! When that got too much, I contact finance companies was offered about 4 secured loans - I took two - paid off my other loans and credit cards, but, instead of cutting them up starting using them again. Now I am in so much over my head, have no-one to talk to about it and am thinking of going into sequestration but don't want to because of the short and long-term consequences. I feel so stupid and am now selling stuff on Ebay to try paystuff and have stopped paying the credit cards as I don't have enough coming in to pay them and the two secured loans. I am getting threatening letters from them and can't sleep - is anyone out there in a similar position? |
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MarkP
| 22-03-2008 01:50 PM |
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Joined: 28 Jan 2008 Posts: 1 | Apologies, I placed the above REPLY in the wrong place- Please ignore my reply above & reply to the original opening post "Debt before I knew it", as the poster issieb intended. |
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issieb
| 22-03-2008 05:27 PM |
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Joined: 22 Mar 2008 Posts: 9 | Thanks. I have been phoning a few advisory places, I think I called them also. I am in Scotland by the way. There was one place who advised that they can freeze the interest on all the credit cards and I pay so much every month for as long as it takes - catch is, they take 15% per month from what I pay which gets added on at the end - seems a bit much! What worries me the most about sequestration or bankruptcy is not that I won't get credit but I have had conflicting advice about whether or not I could lose my house, because of the 2 secured loans I have been told there is no way I would lose the house but others say it is still possible! I am pulling my hair out! |
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| DW George | 23-03-2008 12:51 PM |
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Joined: 01 May 2007 Posts: 148 My Profile | Hi issie Welcome to the forum. You are doing the right thing here in addressing your debt problem. Debt alone can be quite depressing but coupled with going through a heavy divorce and bringing up a family it is no wonder you are feeling overwhelmed. Secured loans are only really useful if you have control of your sending and by the sounds of it you weren't. I have accessed your SOA you have completed, (if you make it public in your profile page everyone else can comment on it) and it doesn't look if you have much room in your budget for many options. Your first port of call should be to speak to your local authority money advice centre. They will look at trying to maximise your income by doing benefit checks and giving you advice on how to deal with your creditors. Since your SOA does not show much spare cash, you may have to consider selling your house and renting. The equity in the house can be used to pay off your secured creditors with any short-fall being classed as unsecured credit which can be included in a Protected Trust Deed. The surplus income, made up of the secured loan payments and mortgage payments, may be used as an offer of payment towards the unsecured creditors either in the form of a Protected Trust Deed or in a Sequestration. Issie, you have options. You should pick up the phone on Monday and call your local money advice or CAB and arrange an appointment with them. Be prepared to sell your house. What is most important to you and your family is happiness and health and not the shackles of debt. Get rid of your debt and rebuild your future. Good luck, let me know if you need any more info George |
| paladin | 23-03-2008 01:57 PM |
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Joined: 06 Jun 2007 Posts: 55 My Profile | Hi Issie I agree with what has already been said. But I need to know how much equity you have in your house. Is your mortgage interest only or capital and repayment? Actually if you make your SOA visible as George has suggested above we can give you some of advice. You mentioned above that a company will charge you 15%, which is the going rate, and guarantee that the interest will be frozen. No company can guarantee freezing the interests. Keep in touch. P |
| paladin | 25-03-2008 10:53 AM |
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Joined: 06 Jun 2007 Posts: 55 My Profile | Issie I hope you have spoken to your local money advice centre/ CAB as they will be the only ones who can help you. Looking at your SOA I can see in paying an interest only mortgage, with no provision to pay off the capital, that you are basically renting the house for the duration of the mortgage term. Also your food budget is very low for a family of three, it should be at least £250. The council tax is very low is this the right figure? Are you getting some form of housing benefit? You can save yourself £30 a month and ditch the satellite TV, you can't afford it , free-view is just as good. There are areas in your SOA where you can save money eg electricity and smoking, but I don't think that your SOA is a true reflection of your spending. Keep a spending diary and record everything that you spend, newspapers, bus journeys, sweets for the kids etc. and you'll soon find out that you are spending a lot more. Getting your SOA as accurate as possible will not only help you just now but sets you up for the future. Knowing how much you spend is the first stage in being control of your budget. No longer will you saying to yourself "I think I can afford it", you'll definitely know. Assuming 2.5% min payment on your credit cards you are spending £1335 a month on servicing your debts leaving you £335 for the essentials which is not enough. What are your thoughts about selling your house and renting? With your current income it will be difficult to keep hold of your house. The law in Scotland will be changing in respect of sequestration reducing the current discharge period from three years to one year. This means your debts will be cleared in one year. I know you have been through a lot but clearing your debts will certainly improve your situation. I know this will be a lot to take in so if you have any questions just ask. P |
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issieb
| 25-03-2008 02:59 PM |
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Joined: 22 Mar 2008 Posts: 9 | Hi P. I get benefits as I am not working, have 3 kids, one with special needs, so I get carers allowance and benefits for him. My mortage in a fixed rate one and the DSS help with interest payments, I pay about 50 a months towards it. I have been advised that sequestration is the best option for me because my equity is nil or minus a few thousand - I have cancelled d/d for all credit cards as I can't pay them AND the two secure loans I have. I have been told that THERE IS NO WAY I will lose my house through sequestration because of the equity thing. Any more advice - would be grateful. |
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| helpmenow | 25-03-2008 04:04 PM |
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Joined: 15 May 2007 Posts: 30 My Profile | Hi Issie I have been following this thread and I agree with all that has been said before. I am not an expert but have been there and written the book. I am now in an IVA and got a careful eye on all my money. I used to gamble, a lot, after the break up a relationship and I fell in a pit of despair and depression. Since doing my IVA I have now got my life back on track and I can now sleep at night, no more waking up at night in a cold sweat wondering how I was going to cope. Why keep the house you'll have to give it up once the mortgage term is over? Your £22k credit card debt will written off with sequestration but you still will have the secured debt, £57K and paying £785 a month servicing it. Do you really want to do this? Sell the house clear the majority of the secured debt and write the rest of it off with sequestration. Hang in there. HMN |
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issieb
| 25-03-2008 05:07 PM |
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Joined: 22 Mar 2008 Posts: 9 | HI HMN, Now, I wasn't told that I would have to give up my house once the mortgage is paid off?? I was simply told I wouldn't lose my house as there is no equity. I owe round about 32000 on my house which is over 25 years - surely they won't take it from me after all that time? Help please!! I. |
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| helpmenow | 25-03-2008 05:21 PM |
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Joined: 15 May 2007 Posts: 30 My Profile | No, I meant that if you are paying only the interest on a mortgage at some point you'll have to pay off the capital £32K. I can't see the anything in your SOA which indicates you have made provision for this. |
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issieb
| 25-03-2008 05:24 PM |
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Joined: 22 Mar 2008 Posts: 9 | The DSS are paying the interest, I am paying the other if that makes sense? What sort of provision do I need to make? Sorry for being so vague but I really haven't a clue about these things? |
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| helpmenow | 25-03-2008 05:46 PM |
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Joined: 15 May 2007 Posts: 30 My Profile | Got it, it's a capital and interest mortgage with the DSS paying the interest. Right now I understand and don't worry about not having a clue , I was the same until I started taking control of my spending. I still think that you could get rid of the secured loans by selling your house using the equity to pay them off and then going bankrupt. You would then have to rent a house but you would have a lot more free income and less stress. Some of the experts will be along to give their tuppence worth. HMN |
| paladin | 25-03-2008 08:26 PM |
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Joined: 06 Jun 2007 Posts: 55 My Profile | Issie You won't lose your house going bankrupt as there is no equity in it but you'll still have to pay off your secured debts. I see two options 1. Keep your house, go bankrupt - all credit cards will be cleared but you will still have the £785 a month secured debt for how long? or 2. Sell the house at the market rate and pay off the secured loans. The credit card debt and any secured debt not cleared with the equity, can be included in the bankruptcy. This means you'll be 100% debt free. Hope this clears things up. P |
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issieb
| 26-03-2008 09:02 AM |
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Joined: 22 Mar 2008 Posts: 9 | Hi and thanks for all your kind advice! It is all a great help for someone like me, believe me! Well, I am really not wanting to lose my house, I have 3 kids, once with special needs and they are settled at school etc. Moving house could cause such upset. We are in a good area, it is only an ex-council house but even so, I don't see us getting anything like this with good neighbours etc. - so, the secured loans are on a 10 year basis - from July I will have 9 years left! I reckon it will not be too bad paying that off in that time, it could be 20, 25 or even 30 years! So, I reckon once I go into sequestration - no credit, which in my view is GOOD - I will be a bit hard up what with the secured loans debts but no credit cards etc. will make a huge difference. Not looking forward to sequestration but I reckon that is probably the best option for me right now. Do you agree? |
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| paladin | 27-03-2008 04:36 PM |
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Joined: 06 Jun 2007 Posts: 55 My Profile | Issie It appears from what you have said that sequestration is the best avenue for you. Keeping the house is a judgement call. Not including selling the house is a viable route only if you are confident that you will be able to maintain the payments on the secured loan as well as the payments on your house. You are right about it being a good thing not being able to get any credit. The trick to financial survival here is know the cost and worth of everything. Being semi organised goes a long way here. Budget for everything, plan your meals, switch, turn off lights when not in use, turn down heating and even keep a wee bit aside for a reward. Good luck with everything I hope it all works out for the best. Stay in touch Paladin |
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issieb
| 27-03-2008 07:23 PM |
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Joined: 22 Mar 2008 Posts: 9 | Thanks Paladin. Yes, I will try to budget carefully as I used to in the days before I went haywire! The kids and I love this house and where we live, that is why I am determined to keep my house and pay off these awful secured loans. I just wish all these lenders were more responsible - they are even STILL phoning me and asking if I want more money from them! I unplug the phone a lot these days. Thanks for the advice. I. |
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| DW George | 27-03-2008 07:35 PM |
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Joined: 01 May 2007 Posts: 148 My Profile | I echo Paladin's sentiments and hope everything goes well for you. Stick in there you sound very determined now. I hope everything works out for you and your family. Don't let the b's get you down. All the best and lets us know how you get on George FYI I have written about irresponsible lending . |
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issieb
| 27-03-2008 08:24 PM |
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Joined: 22 Mar 2008 Posts: 9 | George, your article was very very interesting and rings true in every way! I think anyone who has had problems with borrowing should read it! It is good to know that there are a lot of people in the same boat as me, I think it is when we are rather 'vulnerable' that we just kind of think 'what the heck' and just don't realise that we are getting sucked deeper and deeper into these vultures' clutches! Well, I know one thing for sure, I have learnt a bit lesson and that is, I will never allow myself or my family to get into such a state again - it is not just the money owed but all the stress and harrassment that goes with it. I sympathise with anyone who is going through this hell on earth as it is just a living nightmare but two things keep me going - first, my kids - second, I won't let THEM get the better of me! Take care. |
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