Unsustainable Debt Repayments

Cmd1611 said:
Their initial suggestion was to call all creditors and try to reduce repayments.
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Rule number one, always engage with your creditors on a regular basis if you want to keep a home over your head.

My friends attempted to run a business a couple of years ago and it went well for a few years but then it went down the pan and they had some debts / loans.

The engaged all of the people straight away including the bank, came up with all of the payment plans based on what they could afford, went onto interest only with the mortgage and they have managed to keep roof over their head while paying back all of their debts.

They found that by tackling it this way they actually managed to get some things written off small debts (small credit card)

They had an extra fiver a week to pay off the credit card, when they called the credit card company to try and pay the extra amount of the credit card company weren't actually allowed to accept any more money from them so what they did was they actually just wrote off the small amount that was left on it because they knew that they were trying to pay and they had actively engaged them all along.

So while it might feel like a good idea to put your head in the sand, it is the worst thing that you can do and based on their experience, I know if I was to ask them now what is the one piece of advice you would give it would be to speak to everybody every week to tell them what's the current situation is.

Best of luck.
 
For clarity, everything below is said without judgement, hopefully it comes across as such
Cmd1611 said:
I am in no way familiar with processes that can be used to make this more affordable, but from what I've researched a PIA seems to be an option for someone with my circumstances?
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I don't think a PIA is possible for you, there is no reason why you cannot repay this debt. The main reason you are in trouble is because of your own mismanagement and secrecy. Returning to MABS will help you understand the right course of action but your overall finances are not that bad so you should not be struggling with this debt.

Cmd1611 said:
My wife is unaware of the gravity, hence the constant smaller loans to keep things ticking over.
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This is by far the most important thing you need to do. It is crazy that she is unaware of the situation. You need to tell her very soon and get the arguments out of the way before you can both move forward with a clear plan to tackle everything. Once plans are in place, you also need to include your children in the conversation. They don't need specifics of amounts but they do need to know that as a family you need to be more prudent with money. Some modern luxuries will be off the table for the next 12 months until you are in a better place financially

Cmd1611 said:
Additional income is possible on given months/ quarters, however I am far below what is needed for a household month on month.
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Every little helps, especially if your wife can earn more because she is in the lower tax band. If her income is low because of part time hours/family life then it's not a luxury that you can currently afford

Cmd1611 said:
Renting a room is not an option unfortunately, given kids are both sexes and need their own rooms.
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If it comes to it, this is possible. A former colleague of mine did this for multiple summers taking foreign language students. The sleeping arrangements became dad/son & mom/daughter for July/August freeing up a room. If your situation is dire then sometimes you need to make a small sacrifice to resolve it

Onto your finances, I've calculated the interest rates backwards so they may be a little off but the overall point stands:

You have a cumulative personal debt of ~€78k with a monthly commitment of €1731, including your mortgage, this rises to € 2685/m. While on the high side, this should be very manageable on a joint income of ~€6k/m net. But it seems your problem is you've been hiding this from your wife so you are only accounting for your own salary.

But for breathing space, you really need to refinance all of your debt into a cheaper and longer term to allow yourself room to maneuvre. As an example below, An Post will lend up to €75k for up to 10 years at 6.9%. If you could refinance all of it to 8 years, you reduce the monthly commitment to approximately €1k

Term
LoanMonthlyBalance(months)(Years)Rate
An Post 1€ 491.50€ 17,252403.37.90%
An Post 2€ 410.51€ 26,887847.07.40%
An Post 3€ 171.22€ 6,408443.78.90%
Revolut€ 368.00€ 17,651584.88.00%
AIB Visa€ 290.00€ 7,600--?
AIB Overdraft€ -€ 2,500--?
Total€ 1,731.23€ 78,298
An Post Refinance€ 1,011.00€ 75,000968.06.90%

But the really critical steps that you must take are:
- Tell your wife everything
- Going forward you must work of shared finances, joint accounts and full transparency
- Refinance as much of the debt into a single consolidated that is manageable
- Do not take on any more debt and cut up the credit cards
- Budget for the next 12 months and cut all non essential spending
- Increase income where possible for both
- Include the kids so they understand why...e.g. lessons/classes are gone, netflix/disney is gone, holidays are on hold etc.
- Once everything is in place, begin regular overpayments of the loan to clear it faster than the 8 year term

If you do the above, you will have a net income of €6k+ and monthly debt commitments of ~€2k. You should still be able to live very comfortably like this

A few other things that can be considered to help the overall situation:
- Ensure you are jointly assessed to take full advantage of tax brackets
- Complete tax returns for the last 4 years to make sure you are claiming everything possible
- If any of the debts are associated with new cars, you need to take the hit and sell and buy something older
- If, like a lot of people, there is an account for the child benefit payments, it should be used to clear as much of the debt as possible

Your problems are not financial, it is all very solvable once you approach it as a family unit with one combined income.
 
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@Cmd1611 - Just want to make sure that you realise that this step that you have taken in starting this thread means that you are on the road to try to resolve it. It's a huge step and so take a breath, a deep breath - it's worth taking a moment to remind yourself that you've made a start to change things for the better.

I won't offer you advice on what to do / don't do to resolve your financial issues - there more than enough great people here on AAM to guide you on such. But please, for you and your family , don't isolate yourself or try to burden yourself with all this alone. You are not the first person and won't be the last person, to go through this. Don't be putting pressure on yourself to fix all this, by yourself. You need some help / guidance and this thread is another step in that process. You mentioned reluctance in seeking help, and pride stopping you from doing things, but I would say, do NOT be worried about what others think - you have no control over what people think or say. You can only control things within your means - so put your effort into that.

The very, very best of luck with everything and people are always here if you need to rant (see the letting off steam section ).
 
Thank you all so much for taking the time to respond.

I understand that the information provided may not have been sufficient to paint a full picture.

Sometimes when we see ourselves at our lowest ebb, the best place one can go is to people whom you do not have a personal relationship with.

I really do appreciate every person taking the time to comment and advise here.

I will take everything on board, and have already begun conversations with my wife with regards to this.

Thank you
 
OP do make sure to include your family. You are all in this together so you don't have to be alone. A lot of times one partner takes care of the finances but you are both capable of doing so. She might have ideas herself that help the situation, ones that will work well for your family sustainably that we can't offer advice on.

Echo as well about involving your kids in an appropriate way. We often do this, explaining why we are not doing x as we need funds for y, even in times of plenty. It just reminds them that our spending is a choice that we make every day. Could the older one for eg take on a project to look at utility bills to see if you are getting best value? Could the younger one come up with a meal plan if groceries are an area that you are trying to tackle etc There are different ways of doing things that don't necessarily involve a family meeting of the tightening our belts speech etc.
 
At the risk of getting lashed out of it does anybody not ask how in the name of God this man was allowed by the banks to be repaying nearly twice his mortgage in unsecured debt ?
This is the lunacy that was supposed to be left behind after the Celtic Tiger Crash.
Did none of the loan applications get cross checked against the Central Bank Central Credit Register ?

I wish him luck trying to unravel that mess.
 
CorkHome2022 said:
At the risk of getting lashed out of it does anybody not ask how in the name of God this man was allowed by the banks to be repaying nearly twice his mortgage in unsecured debt ?
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Because maybe they can afford it?
ClubMan said:
<Household income details snipped>

Let's assume that that's €72K p.a. net household income ignoring motoring expenses and child benefit (€3,360 p.a.). That's €6K p.m.

<Debt details snipped>

And that's €3K p.m. ignoring the overdraft.

In which case there's €3K left for other expenses.

Maybe the situation isn't so grave and the debts aren't "unsustainable"?
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Im a PIP this is not really a case for a PIA. You have significant assets but appear to be overspending. In a PIA you would have to repay all the debt because of your Equity in House. This is where MABs can help you. If they can not agree a solution with your Creditors then you can engage a PIP but its using a sledgehammer to crack a nut and would be rather expensive
 
What sort of cars do you have? Is it possible to sell one or both and or trade down and use the surplus to pay down debt?
 
Having a quick look - the least stressful and easier route is to consolidate the 3 an post balances into one.
That's €675 a month over 8 years at 6.9%

Cut up the credit card. Your wife probably has one herself for when a card is essential.

A huge cost for many is subscriptions. Check every a subscription and see if its necessary, see if there's a lower priced option (standard netflix is €10.99), dump those that you don't get value from (Sky would be #1 target). Do the same on all utility bills and as all have said, two of you together is far better than keeping it bottled up.

She'll have a few choice words for a day or so, but well worth it after a week. - I've been there, done that, went into liquidation and shining very brightly today 18 years later.
 
Would it be possible to top-up the mortgage by 75k over the remaining term of 19 years and clear the loan balances for An Post, Revolut and Visa? The extra monthly payment on the mortgage might be about €500 - €550 so much easier to manage than the five amounts being paid now. The main thing then would be to avoid taking out any more loans and get rid of the credit card.
 
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