Struggling with debt? Ask a debt advisor a question

StepChange_James · 9 July 2013 at 5:26PM

rubyjam wrote: »

Thankyou James,
I'll try not to worry ... I'm just getting my figures together and hoping to call StepChange tomorrow. Not liking the 'something more suitable' bit though! I want to pay all my debt back and carry on with my DMP if I can as I really don't want to go down the IVA route (or even go bankcrupt :eek:)... not after 2 years of puting everything I have into a DMP. I just hope that my Creditors and StepChange agree with me!

Reading it back it does sound a little bit ominous, but it wasn't meant that way.

I was just trying to say we'll go over your options with you and because we're impartial, we'll give you an honest opinion about what's best.

We'll always take your situation and preferences into account when giving advice though.

Kind regards

James

Dragon_of_Consumer_Power · 10 July 2013 at 6:23AM

In September 2011 I enrolled on a one-year full-time Master's programme and, during the course of the year, my overdraft with my primary bank went from £300 to its current level of £4,500.

I graduated last November and my monthly outgoings, for rent and standing orders, clock in at around £700 a month. From the end of this month my monthly outgoings will drop down to around £450 a month.

I was offered a job abroad upon graduation last November that has been perennially delayed and, due to their continued insistence that the job was 'just around the corner', I did not seek alternative employment, this being a great opportunity, both career-wise and in terms of financial potential.

To cover the shortfall, I took out an overdraft with my second bank provider, which now stands at £1,250. I also have a third overdraft, dating back to my undergraduate student days (interest-free until one year after graduation from my Master's), which stands at £1,600 and which I haven't touched since hitting the limit during my undergraduate days (although I do put £10 in every 42 days to comply with the rules regarding repayment).

My overdraft of £4,500 has interest charged upon it monthly, which averages about £60pcm. The second overdraft's interest comes to about £15pcm. The third overdraft, the student one, remains interest-free until later this summer.

In sum, therefore, my overdrafts stand at £7,350. All three need to be repaid swiftly, to avoid amassing interest charges and to rebuild my credit rating.

My question is this: Is there any way, in my present situation without a guaranteed income, to switch my three overdraft debts to a single repayment method, like a special credit card deal or loan? I know I will soon have a very good regular income when this job materialises (which should happen within a month, now that the paperwork has finally come through), but my pressing priority is (a) to meet my monthly outgoings of £450, not having any money left; and (b) to repay the £7,350 overdraft monies.

System · 10 July 2013 at 9:38AM

Dragon_of_Consumer_Power wrote: »

In September 2011 I enrolled on a one-year full-time Master's programme and, during the course of the year, my overdraft with my primary bank went from £300 to its current level of £4,500.

I graduated last November and my monthly outgoings, for rent and standing orders, clock in at around £700 a month. From the end of this month my monthly outgoings will drop down to around £450 a month.

I was offered a job abroad upon graduation last November that has been perennially delayed and, due to their continued insistence that the job was 'just around the corner', I did not seek alternative employment, this being a great opportunity, both career-wise and in terms of financial potential.

To cover the shortfall, I took out an overdraft with my second bank provider, which now stands at £1,250. I also have a third overdraft, dating back to my undergraduate student days (interest-free until one year after graduation from my Master's), which stands at £1,600 and which I haven't touched since hitting the limit during my undergraduate days (although I do put £10 in every 42 days to comply with the rules regarding repayment).

My overdraft of £4,500 has interest charged upon it monthly, which averages about £60pcm. The second overdraft's interest comes to about £15pcm. The third overdraft, the student one, remains interest-free until later this summer.

In sum, therefore, my overdrafts stand at £7,350. All three need to be repaid swiftly, to avoid amassing interest charges and to rebuild my credit rating.

My question is this: Is there any way, in my present situation without a guaranteed income, to switch my three overdraft debts to a single repayment method, like a special credit card deal or loan? I know I will soon have a very good regular income when this job materialises (which should happen within a month, now that the paperwork has finally come through), but my pressing priority is (a) to meet my monthly outgoings of £450, not having any money left; and (b) to repay the £7,350 overdraft monies.

Hi,

We’re specialists in giving debt advice – we wouldn’t advise you to take on more credit if you’re struggling to repay the credit you have.

What you’re referring to is a debt consolidation. It isn’t technically a debt solution but a way to manage payments. It’s worth remembering that it can potentially put you in a worse position than you are in now. As your borrowing is at the limit of what you can afford and you are not earning a fixed salary at the moment you are unlikely to be offered a credit card or loan at an interest rate low enough to benefit you. You would still pay interest on the credit card or loan which may be higher than you’re paying now.

If you are into an overdraft the bank can reduce or take away the facility at any time – even if you are within the limit. It’s called the right of offset. I would advise you to set up and use a basic bank account at a different bank – avoiding the ones you have credit with. That way you can manage your money from a secure account. You can set up a standing order for the overdraft interest amount to ensure it’s paid and then pay off the overdraft when you’re in a position to.

If at any point you struggle to manage the overdrafts you can contact us for free, impartial debt advice. An overdraft is an unsecured debt so you should only be paying it from your disposable income. For a personal action plan explaining the best way to deal with your debts you can use our free, online tool – Debt Remedy.

I hope this helps,

Jess

Sue**_3 · 10 July 2013 at 4:18PM

Can I ask for some advice please. I have an IVA which has been running for just over a year now and I have five years left. Although the payments are manageable. I am now wondering if there is any way I could come out of the.

Dragon_of_Consumer_Power · 10 July 2013 at 7:03PM

Thanks Jess!

Tony_Soprano_2 · 10 July 2013 at 9:38PM

I'm looking at entering into a DMP but I'm worried about my mortgage.

I have a personal loan and an overdraft with Natwest bank which would go in to the DMP. My mortgage is also with Natwest.

I have opened an account with a different bank and will arrange for my wages to be paid in to this. But I am really worried that Natwest will say I have to pay back the mortgage if I dont bank with them anymore or switch me to a higher deal. I am currnetly on their Standard rate Offset mortgage.

thanks for any advice

Debts1 · 11 July 2013 at 2:49PM

Hi

I wander if you can help me, I have an overdraft of around 15k but the planned limit was £2k initially. Firstly I asked the bank as to how it got so bad without them telling me they told me I set up a direct debit etc etc. anyways so I goes I want sent up a plan for payment to pay £500 a month. Now they set it up but told me £200 of that will b intersect charges so in effect I only pay £300 to my overdraft. I was wandering if they are allowed to take all this interest as I am trying get out of financial difficulties an they are not helping with this.

Thanks in advance guys

G

Former_StepChange_Rachel · 11 July 2013 at 3:58PM

Debts1 wrote: »

Hi

I wander if you can help me, I have an overdraft of around 15k but the planned limit was £2k initially. Firstly I asked the bank as to how it got so bad without them telling me they told me I set up a direct debit etc etc. anyways so I goes I want sent up a plan for payment to pay £500 a month. Now they set it up but told me £200 of that will b intersect charges so in effect I only pay £300 to my overdraft. I was wandering if they are allowed to take all this interest as I am trying get out of financial difficulties an they are not helping with this.

Thanks in advance guys

G

Hi there

The bank are allowed to charge you interest but they may be inclined to freeze it if they know you’re getting free and impartial debt advice on your situation. While you stay with this bank, they have what’s known as the right of offset. This is the right they have to not only charge interest but to continually dip into your account and take money out to pay towards your debt. Also, the most effective way to make a creditor understand your situation is to show them a breakdown of your budget. Your living costs are always a priority and must be paid first.

I feel from what you’ve told us on the forum today that you would benefit from some free and impartial advice – our online tool Debt Remedy can provide you with a debt solution in just 20 minutes.

Hope this helps

Best regards

Rachel

StepChange_Private_Messages · 11 July 2013 at 4:02PM

Tony_Soprano wrote: »

I'm looking at entering into a DMP but I'm worried about my mortgage.

I have a personal loan and an overdraft with Natwest bank which would go in to the DMP. My mortgage is also with Natwest.

I have opened an account with a different bank and will arrange for my wages to be paid in to this. But I am really worried that Natwest will say I have to pay back the mortgage if I dont bank with them anymore or switch me to a higher deal. I am currnetly on their Standard rate Offset mortgage.

thanks for any advice

Hi there,

You’ve done exactly right thing by opening up a different bank away from Natwest. A mortgage is a priority debt and will be budgeted along with your other priorities before your DMP is paid. But if you were to stay banking at Natwest they may take more for the loan or overdraft.

Even though you have a personal loan and an overdraft with Natwest it is treated separately from your mortgage. Moving banks will not affect your mortgage payment – they will not ask you to pay it back because you no longer bank with them.

Meeting your mortgage payment in full and on time is their main concern – you are more likely to do this on a DMP where you are paying more to your creditors than you can afford.

As a side-note you should always enter into a DMP that is fee-free so all of the money you pay goes towards paying off your debts. If you're paying a fee you can get in touch with us or another free provider.

I hope this helps.

Thanks,
Jess

fatface88 · 12 July 2013 at 10:54PM

hi sorry to bother you but looking for some help.

started dmp a year ago and all going well with it, trouble is our car is not on it due to it being related to car finance and.....as if our bad luck isnt enough the car is about dead :-( and without it we cant get to work so cant pay bills etc! are we allowed to renew car finance (if some company is willing to take us on?)

we have no savings, no help from anyone so don't know what else to do? sometimes feel like its a step forward and 10 back!
sorry for the moan, but very grateful for any advice that you offer.

Thanks

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