Advice on Consolidation Loan

Grendyl · 15 March 2017 at 5:59PM

Hi,
I've been using a Debt Management Company for a number of years to maintain a minimal payment towards my £23,500 debts, during that time I have been unemployed .. I now have a steady secure job that pays a salary of £26,520.00 per year. What I would like to do is to take out a personal unsecured loan for £25,000 to pay off all my debts .. but my credit rating is almost non-existent - last check was 235 / 700 - I can afford to pay back around £550 per month and still leave myself some "free" money, if I go through my debt management company either by increasing my monthly payments or via an IVA it would require a monthly payment of over £600 per month. So my question is does anyone know of a place I would have a reasonable chance of being accepted for a loan of that amount over 4/5 years with a monthlky repayment of around £550.

Thanks in advance.

MrsTinks · 15 March 2017 at 6:07PM

Firstly - if you are using a fee paying DMP company then there is half of your problem!!!!! Stop it immediately! Not next month - right now, today if possible! They are probably taking 30% of your payments for passing over your payments to your creditors.

secondly - I'm afriad the chances of you getting any loan let alone a loan of £25k is highly unlikely. And that's a good thing.

With a DMP your interest should have been stopped and YOU pay what YOU can afford - not what someone tells you to. If you do a self managed OR debt charity DMP then yes you have a good chance of being debt free in about 4 years

Grendyl · 15 March 2017 at 8:49PM

Hi thank you for the response. No my DWP is free .. PayPlan .. and as I understand it they would calculate what I have left after taking into account rent etc and that would be my monthly payment which basically leaves me with no spare money. I don't seem to have any option to decide how much I want or can afford to pay.

sourcrates · 15 March 2017 at 9:00PM

Never, ever attempt to borrow your way out of debt, it's just another step on the eventual path to bankrupcy.

You have a decent income, stick to the DMP or self manage it, don't attempt to borrow more money, never works.

Grendyl · 15 March 2017 at 9:07PM

sourcrates wrote: »

Never, ever attempt to borrow your way out of debt, it's just another step on the eventual path to bankrupcy.

You have a decent income, stick to the DMP or self manage it, don't attempt to borrow more money, never works.

I just dont want to be handing over over £600 per month when I know I can pay the whole lot off in 4 years at around £550 per month. A loan .. if I can get one .. would do that and the monthly payments are fixed for the term of the loan regardless of any increases in salary.

fatbelly · 15 March 2017 at 9:10PM

Grendyl wrote: »

Hi,
I've been using a Debt Management Company for a number of years to maintain a minimal payment towards my £23,500 debts, during that time I have been unemployed .. I now have a steady secure job that pays a salary of £26,520.00 per year. What I would like to do is to take out a personal unsecured loan for £25,000 to pay off all my debts .. but my credit rating is almost non-existent - last check was 235 / 700 - I can afford to pay back around £550 per month and still leave myself some "free" money, if I go through my debt management company either by increasing my monthly payments or via an IVA it would require a monthly payment of over £600 per month. So my question is does anyone know of a place I would have a reasonable chance of being accepted for a loan of that amount over 4/5 years with a monthlky repayment of around £550.

Thanks in advance.

I think one answer is to do a dmp at £550 per month - debt free in 42 months. If Payplan won't do it, go d-i-y

https://nedcab.cabmoney.org.uk/dmp.asp

Have you talked to Payplan about your new situation yet?

StopIt · 16 March 2017 at 9:01AM

Grendyl wrote: »

Hi thank you for the response. No my DWP is free .. PayPlan .. and as I understand it they would calculate what I have left after taking into account rent etc and that would be my monthly payment which basically leaves me with no spare money. I don't seem to have any option to decide how much I want or can afford to pay.

A DMP is an informal arrangement, so they can't force you to hand over every penny you have.

If you can afford £550pm for a loan, pay that to PayPlan.

Your debts should be on 0% interest now they have defaulted and likely been sold on. Putting yourself back on the hook with another loan and paying interest again is suicidial financially speaking and you'll be doomed to making the same decisions that got you into this debt to begin with.

Stick with the DMP, up the payments to the level you're comfortable with and you'll do fine. a 4/5 Year payoff rate would likely be more than acceptable to PayPlan and your creditors anyway.

Grendyl · 16 March 2017 at 10:14AM

fatbelly wrote: »

I think one answer is to do a dmp at £550 per month - debt free in 42 months. If Payplan won't do it, go d-i-y

Have you talked to Payplan about your new situation yet?

Thanks for the advice, it seems that for the most people are saying don't even consider a consolidation loan.

Grendyl · 16 March 2017 at 10:15AM

StopIt wrote: »

A DMP is an informal arrangement, so they can't force you to hand over every penny you have.

If you can afford £550pm for a loan, pay that to PayPlan.

Your debts should be on 0% interest now they have defaulted and likely been sold on. Putting yourself back on the hook with another loan and paying interest again is suicidial financially speaking and you'll be doomed to making the same decisions that got you into this debt to begin with.

Stick with the DMP, up the payments to the level you're comfortable with and you'll do fine. a 4/5 Year payoff rate would likely be more than acceptable to PayPlan and your creditors anyway.

Hi and thank you.

Looks like I will be speaking to PP and seeing what can be arranged.

EssexHebridean · 16 March 2017 at 10:58AM

Grendyl wrote: »

Thanks for the advice, it seems that for the most people are saying don't even consider a consolidation loan.

Yes - don't even consider a consolidation loan...!

Have you got a current SOA (Statement of affairs)? If so post it in here if that helps and we can go through it.

Remember even if PayPlan won't take the extra amount from you, you can always set that amount aside to save towards full & finals too - that might be another way around it, and will give you the advantage of an emergency fund building up in the event of the worst happening too. It also gets you into the habit of saving - something that a lot of people struggle with after paying off debt.

fatbelly · 16 March 2017 at 11:09AM

Grendyl wrote: »

Hi and thank you.

Looks like I will be speaking to PP and seeing what can be arranged.

Or...

keep the present arrangement with Payplan, and use your increased income to build a fighting fund (if you can be disciplined enough not to spend it) then try full & final settlement offers.

Just noticed Essex has had the same thought!

Advice on Consolidation Loan

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