I’m struggling to cope with our ever mounting debts

I AM really worried as I have a pile of debts and don’t know what to do. I can’t tell my family as they would not understand, never mind help.

I have debts all over the place, including five credit cards and two bank loans, and I am falling behind with my mortgage and council tax. I have managed until now to keep things going by juggling things around. I am ashamed as I have never fallen behind with payments before.

I haven’t told my partner as he is on medication and I don’t want to make him worse. The problem is that I am now getting calls at home regarding the mortgage and he is asking me what’s going on. Also, the credit card companies are chasing me as I have been late with my payments, and are saying they will pass the debts on to debt collection agencies, and that my credit record will be affected. One has threatened to take me to court and then arrest my wages.

I have also been off work for the past two months with depression, but I am still getting paid some of my salary, but I will soon be on half pay, and that is worrying me as well.

At the moment we have a joint income of £2,000 a month, and the mortgage is £750, personal loans are £400, and if we make only minimum payments to the credit cards that is another £500. On top of that we pay £80 per month for gas and electricity. Our council tax is £150 per month. After our insurances etc are paid I am left with only £50 to feed us for the month, which isn’t enough for us to live on. I am at my wits’ end.

Mrs M (by e-mail)

Yvonne Gallacher, of Money Advice Scotland, replies:

FIRST of all, you are brave in trying to deal with your situation, and with time and some assistance I am sure you will find a way of coping.

First things first, it is important that you make your creditors aware that there is a change in your circumstances, as you have been off work for some time and your income reduced, and hopefully they will be sympathetic towards you.

I suggest that you compile an income and expenditure statement – you can access copies from National Debtline’s website. Once you have completed it, this will give both you and your creditors a better idea of your situation. You could also request that they give you a payment holiday (some breathing space to let you get your priorities sorted out) and consider freezing interest.

It is very important that you deal with your priorities: that means your mortgage and any secured loans, and payments for your gas and electricity.

I would contact your mortgage company immediately and let them know your situation. If they don’t know why you have a problem with your payments they can’t help you try to solve it.

It is very important that when working out what you can afford to pay towards your arrears that it is a realistic payment. Your financial statement will help you in this regard.

I would also suggest that you check whether or not you have payment protection, and make a claim to your insurance company without delay.

If you feel that you can’t deal directly with your creditors there are money advisers who will act on your behalf and who don’t charge for their services. They will write to your creditors, and they will also check to see whether there are any benefits to which you or your partner may be entitled.

As you own a house, bankruptcy would not likely be an option as you may lose your home. You could enter into voluntary agreements with your creditors, or a more formal agreement with your creditors called a Protected Trust Deed, or indeed apply for a Debt Payment Programme through an approved money adviser. You could also consider remortgaging but would require advice from a financial adviser.

The key issue is to act quickly. If you need help, then call 0141-572 0237 or see www.moneyadvicescotland.org.uk for details of a money adviser in your area.