Debt Clearnace Advice

Baker1985 · 25 March 2017 at 11:11AM

Hi there,

Me and my Husband are in the process of clearing our debt ready to apply for a morgage to own our own house. I was wondering if anyone could offer any step by step advice to do this.

We aren't at crisis point, as we are paying of the minimum amounts to all of our lenders- but we feel that might be a better way of doing it to make it more affordable and managable.

Here is the current situation:

My debts:
£2616- currently being managed by Money Plus Group, (previous debts). I am paying £100 a month on this but they are taking a £30 admin charge a month. I am now howver in a position that i have around £1500 in a lump sum- i am considering writing a full and final settlement letter to these lenders to try and get the debt repaid off. This amount is made up of the following: Westcot Credit Services: £1581.80, Westcot Credit Services £179.31, PRA Group £854.96. What recomendations would people make that i offer these creditors for full and final settlement out of the £1500 lump sum i have available?

Aqua Credit Card: £3300- i am paying £150 a month of this- but after interest i am only clearing about £80 a month- What would peoples advice be on this? I dont think i can get a low balance transfer because of my bad credit history.

Vanquis Credit card: £500 - I am paying £100 a month off on this card. Works out to be about £85 a month after interest.

My Husband:
Barclaycard £5200 making a £150 repayment a month, but after interest this is currently at £79 a month.

Combined together we have £11656 remaining to repay.

So essentailly my questions would be
Should we just keep chipping away separatly like we are?
Should we consider moving any of our credit cards to a balance transfer 0% deal to clear them quicker- i wont be able to do this because of my lower credit rating (Ive checked on the MSE pre Approval tool) but my husband may be eligible. (He has been pre approved for some cards through the MSE tool) But is not being offered a long oenough interest free period to clear it all based on the monthly payments. So..
If you transfer to a 0% deal and you cant pay the full amount off within the period of 0% do you just move it to another card before the 0% deal ends- i.e. before the 2 year interest free period is up?
Or finally...
Should we look at getting a joint loan to consolidate our debts to make it one affordable monthly payment.
Essentially we are looking at the best way of managing our money so we can improve our credit rating, still save like we are for our house deposit, and pay off our debts.

As I say, we arent in a position of worry, we feel like we are managing what we have- but of course i think we can just be a bit more savvy about it.

Any advice greatly recieved.

Thanks
:j

sourcrates · 25 March 2017 at 12:16PM

Baker1985 wrote: »

Essentially we are looking at the best way of managing our money so we can improve our credit rating, still save like we are for our house deposit, and pay off our debts.

As I say, we arent in a position of worry, we feel like we are managing what we have- but of course i think we can just be a bit more savvy about it.

Any advice greatly received.

Thanks
:j

Hi,

Dumping the £30 a month debt management company would be my starting point.

Why are you paying them to click a mouse every month ?

enthusiasticsaver · 25 March 2017 at 2:07PM

Baker1985 wrote: »

Hi there,

Me and my Husband are in the process of clearing our debt ready to apply for a morgage to own our own house. I was wondering if anyone could offer any step by step advice to do this.

We aren't at crisis point, as we are paying of the minimum amounts to all of our lenders- but we feel that might be a better way of doing it to make it more affordable and managable. Paying more than minimum payments is a good start. I would consider you to be in debt crisis if you are only able to manage minimum payments.

Here is the current situation:

My debts:
£2616- currently being managed by Money Plus Group, (previous debts). I am paying £100 a month on this but they are taking a £30 admin charge a month. Get rid of them and manage the payments yourself. £30 a month is a rip off. I am now howver in a position that i have around £1500 in a lump sum- i am considering writing a full and final settlement letter to these lenders to try and get the debt repaid off. This amount is made up of the following: Westcot Credit Services: £1581.80, Westcot Credit Services £179.31, PRA Group £854.96. What recomendations would people make that i offer these creditors for full and final settlement out of the £1500 lump sum i have available? If you are looking to get a mortgage I am not sure that going for F and F is a good idea although someone more experienced than I may suggest otherwise. I would have thought splitting the £1500 to pay off PRA group in full and partial repayment of Westcot would be better with arrangement to clear the remaining £1116. Are you paying interest on these debts?

Aqua Credit Card: £3300- i am paying £150 a month of this- but after interest i am only clearing about £80 a month- What would peoples advice be on this? I dont think i can get a low balance transfer because of my bad credit history. If you are not paying interest on the debts above with Westcot and PRA I would use part of your £1500 to reduce this instead.

Vanquis Credit card: £500 - I am paying £100 a month off on this card. Works out to be about £85 a month after interest.

My Husband:
Barclaycard £5200 making a £150 repayment a month, but after interest this is currently at £79 a month.

Combined together we have £11656 remaining to repay.

So essentailly my questions would be
Should we just keep chipping away separatly like we are?
Should we consider moving any of our credit cards to a balance transfer 0% deal to clear them quicker- i wont be able to do this because of my lower credit rating (Ive checked on the MSE pre Approval tool) but my husband may be eligible. (He has been pre approved for some cards through the MSE tool) But is not being offered a long oenough interest free period to clear it all based on the monthly payments. So..
If you transfer to a 0% deal and you cant pay the full amount off within the period of 0% do you just move it to another card before the 0% deal ends- i.e. before the 2 year interest free period is up?
Or finally...
Should we look at getting a joint loan to consolidate our debts to make it one affordable monthly payment.
Essentially we are looking at the best way of managing our money so we can improve our credit rating, still save like we are for our house deposit, and pay off our debts.

As I say, we arent in a position of worry, we feel like we are managing what we have- but of course i think we can just be a bit more savvy about it.

Any advice greatly recieved.

Thanks
:j

Yes I think you can be a lot more savvy about clearing it.

If I read it right you are paying £500 per month towards your debts but only reducing it by £314 because the rest is going towards interest or the debt company fee.

Ditch the debt company and manage the debts yourself. That will give you an extra £30 a month towards the debts.

If your husband can still get a balance transfer then moving his Barclaycard (your highest debt) to a 0% card will give you an extra £70 a month towards your debts and maybe some of your Aqua or Vanquis which will save you even more. Even 2 years interest free is better than nothing and as you pay off debts you will find it easier to get 0% deals.

When you know if you can move any of your debt to 0% use the £1500 to tackle the most expensive of your debt which is probably the Aqua. Once you have tackled the most expensive debts and got everything else on 0% maybe up the payments to Westcot and PRA to clear it quicker.

enthusiasticsaver · 25 March 2017 at 2:10PM

I would also point out that there is no point in saving for a house deposit if you are in debt especially if you are in default as you presumably are with Westcot and PRA and you are paying high interest on the credit cards. Clear the debt then save the deposit. You will need a clear credit history to get a mortgage so it makes sense to clear the debt as soon as possible and focus only on that.

Dobbibill · 25 March 2017 at 2:28PM

Consolidation loans rarely work, even with the best intentions.

STOP paying a fee - you are wasting £30 pm that you could be paying off your debt.

You don't say how much you are paying to Wescott/PRA etc each month.

A 0% CC may well help as you can chip away at the capital rather than just the interest - don't be under the illusion you can borrow your way out of debt though.

There's an eligibility checker here https://www.moneysavingexpert.com/eligibility/

Your OH has a BC - these are known to offer existing customer offers? What is his credit limit? Does he ever get these offers?

See what offers you get before you make an offer using the £1500.

It isn't going to disappear overnight but it can be done.

Do make sure you address the reason you have the debt in the first place, you need to prevent this happening again in the future.

Debt Clearnace Advice

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