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  • FIRST POST
    • Grendyl
    • By Grendyl 15th Mar 17, 4:59 PM
    • 5Posts
    • 5Thanks
    Grendyl
    Advice on Consolidation Loan
    • #1
    • 15th Mar 17, 4:59 PM
    Advice on Consolidation Loan 15th Mar 17 at 4:59 PM
    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.
Page 1
    • MrsTinks
    • By MrsTinks 15th Mar 17, 5:07 PM
    • 14,980 Posts
    • 22,687 Thanks
    MrsTinks
    • #2
    • 15th Mar 17, 5:07 PM
    • #2
    • 15th Mar 17, 5:07 PM
    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
    DFW Nerd #025
    • Grendyl
    • By Grendyl 15th Mar 17, 7:49 PM
    • 5 Posts
    • 5 Thanks
    Grendyl
    • #3
    • 15th Mar 17, 7:49 PM
    • #3
    • 15th Mar 17, 7:49 PM
    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
    • By sourcrates 15th Mar 17, 8:00 PM
    • 11,604 Posts
    • 11,171 Thanks
    sourcrates
    • #4
    • 15th Mar 17, 8:00 PM
    • #4
    • 15th Mar 17, 8:00 PM
    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'm a Board Guide on the Debt-Free Wannabe, Credit File And Ratings, and
    Bankruptcy And Living With It, boards. I'm a volunteer to help the boards run smoothly, and I can move and merge posts there.
    Board guides are not moderators and don't read every post. If you spot an abusive or illegal post then please report it to forumteam@moneysavingexpert.com. Any views are mine and not the official line of MoneySavingExpert.com.

    For free debt advice, contact either : Stepchange, National Debtline, or, CAB.
    For Legal advice see : http://legalbeagles.info/
    • Grendyl
    • By Grendyl 15th Mar 17, 8:07 PM
    • 5 Posts
    • 5 Thanks
    Grendyl
    • #5
    • 15th Mar 17, 8:07 PM
    • #5
    • 15th Mar 17, 8:07 PM
    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.
    Originally posted by sourcrates
    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
    • By fatbelly 15th Mar 17, 8:10 PM
    • 11,092 Posts
    • 8,272 Thanks
    fatbelly
    • #6
    • 15th Mar 17, 8:10 PM
    • #6
    • 15th Mar 17, 8:10 PM
    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.
    Originally posted by Grendyl
    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
    • By StopIt 16th Mar 17, 8:01 AM
    • 761 Posts
    • 690 Thanks
    StopIt
    • #7
    • 16th Mar 17, 8:01 AM
    • #7
    • 16th Mar 17, 8:01 AM
    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.
    Originally posted by Grendyl

    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
    • By Grendyl 16th Mar 17, 9:14 AM
    • 5 Posts
    • 5 Thanks
    Grendyl
    • #8
    • 16th Mar 17, 9:14 AM
    Thanks
    • #8
    • 16th Mar 17, 9:14 AM
    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?
    Originally posted by fatbelly
    Thanks for the advice, it seems that for the most people are saying don't even consider a consolidation loan.
    • Grendyl
    • By Grendyl 16th Mar 17, 9:15 AM
    • 5 Posts
    • 5 Thanks
    Grendyl
    • #9
    • 16th Mar 17, 9:15 AM
    • #9
    • 16th Mar 17, 9:15 AM
    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.
    Originally posted by StopIt
    Hi and thank you.

    Looks like I will be speaking to PP and seeing what can be arranged.
    • EssexHebridean
    • By EssexHebridean 16th Mar 17, 9:58 AM
    • 7,578 Posts
    • 39,449 Thanks
    EssexHebridean
    Thanks for the advice, it seems that for the most people are saying don't even consider a consolidation loan.
    Originally posted by Grendyl
    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.
    MORTGAGE FREE 30/09/2016
    Sainsbugs 0% card: 22/12/16 £1229.00/£450.55 (14/08/17)
    • fatbelly
    • By fatbelly 16th Mar 17, 10:09 AM
    • 11,092 Posts
    • 8,272 Thanks
    fatbelly
    Hi and thank you.

    Looks like I will be speaking to PP and seeing what can be arranged.
    Originally posted by Grendyl
    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!
    • Sam29
    • By Sam29 16th Mar 17, 10:14 AM
    • 28 Posts
    • 22 Thanks
    Sam29
    Consolidation loans dont "pay off your debt" they just put it into a big lump and make you feel like you have spare money which then means you can fall into the trap of adding to your debt with a new credit card etc.

    You are best of throwing whatever spare cash you have at your current debt. Dont worry about credit ratings because the last thing you need is more debt.

    Good luck you sound like you are moving in the right direction. Slowly but surely things will improve.
    • Bedsit Bob
    • By Bedsit Bob 16th Mar 17, 1:17 PM
    • 9,603 Posts
    • 50,549 Thanks
    Bedsit Bob
    it seems that for the most people are saying don't even consider a consolidation loan.
    Originally posted by Grendyl
    I've done the consolidation loan (and refinanced it twice ), and it was the worst thing I could've done.
    My job is Top Secret. Even I don't know what I'm doing.

    Amount I have so far denied the BBC - £1161
    • DCFC79
    • By DCFC79 16th Mar 17, 4:30 PM
    • 29,749 Posts
    • 18,836 Thanks
    DCFC79
    I just dont see you getting a loan to pay the debts off anyway, your credit file is trashed plus your would be wanting to double the amount of debt which would be more than your salary. Theres no guarantee you would use the new loan to pay the debts off, as far as the lenders are concerned you will splurge the money on a car, a holiday etc.

    As BB has said consolidation loans rarely work.
    Last edited by DCFC79; 16-03-2017 at 4:35 PM.
    Can people stop loaning money/being a guarator to family/friends, it rarely ends well and you lose out as your money is gone or you get shafted with being a guarantor.
    • Fireflyaway
    • By Fireflyaway 16th Mar 17, 4:56 PM
    • 1,089 Posts
    • 1,108 Thanks
    Fireflyaway
    Don't get in more debt. A loan will occur interest which I'm guessing with pay plan you are not paying? Plus if you did get a loan with poor credit the interest would be sky high. I don't understand how a loan would be cheaper than just increasing your pay plan payments? If you can afford a loan at £550 a month then pay £550 to payplan, they can't force you to pay more if its an informal agreement ( rather than iva).
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