Debts same as income

Davidp77

Hi

Was just wondering if someone would be able to offer some advice.

My girlfriend has debts of 30,000 which is broken down into the following

£19,000 personal loan with Natwest, currently paying £309 per month.
£5,000 credit card with MBNA at its limit
£2,000 credit card with Lloyds TSB at its limit
£3,000 with Barclaycard at its limit
£1,000 with Capital One at its limit.

Slowly these cards have got to their limits and with other household bills that she has which come to roughly £300 her outgoings are the same as her income.

We have thought of asking the credit card companies to freeze the interest temporarily to help but have been told this will affect her credit rating. Transferring the balances to new cards is an option but the minimum payments will probably be the same but at least we would be paying some of it off as at the moment, the minimum payments are more or less just covering the interest.

Does anyone have any suggestions/advice?

Thanks

Gemmzie

I don't think she'll get very far with new cards with £30k of debt at its limit, I'm afraid. But it might be worth a try.

If she's at the limit and only paying the minimum, they'll start to go over the limit and then charges will kick in.

She needs to do a full SOA and cut down her outgoings or increase her income.

SouthernSoftie

Davidp77 wrote: »

Hi

Was just wondering if someone would be able to offer some advice.

My girlfriend has debts of 30,000 which is broken down into the following

£19,000 personal loan with Natwest, currently paying £309 per month.
£5,000 credit card with MBNA at its limit
£2,000 credit card with Lloyds TSB at its limit
£3,000 with Barclaycard at its limit
£1,000 with Capital One at its limit.

Slowly these cards have got to their limits and with other household bills that she has which come to roughly £300 her outgoings are the same as her income.

We have thought of asking the credit card companies to freeze the interest temporarily to help but have been told this will affect her credit rating. Transferring the balances to new cards is an option but the minimum payments will probably be the same but at least we would be paying some of it off as at the moment, the minimum payments are more or less just covering the interest.

Does anyone have any suggestions/advice?

Thanks

Are the cards getting to their limits because she is buying stuff she doesn't really need or is she starting to HAVE to use them to buy everyday things such as petrol, food etc.
If so I would nip this in the bud before it gets any worse... as if she does start to miss payments, or even send late ones they may start to raise her interest rates.... which will be a vicious circle, esp if she is struggling now and has no spare cash each month.
Getting a new card is a dangerous thing, even is she could get one.
If she got declined, that will show on her credit rating.
If she got accepted and is still spending we may see you back on here with another card at it's limit.
If she got accepted and is still putting everyday things on cards... again we will see you back here at some point.

As suggested she needs to do a full, honest and accurate SOA an post it on here and we can see what we would suggest.
Here is the link...... http://www.makesenseofcards.com/soacalc.html

Davidp77

Hi

Thanks for the replies. I think at first it was stuff she didn't really need, but recently it has been just to get by each month and now it has come to the point where all the cards are at the limit and now there is nothing left. I had thought transferring balances could be a problem because then there is another/more cards to start using which we don't want. I'm just worried where we go from here. I have done an SOA for her, as you can see from that she is not paying bills, just her half of the rent. We live together and at the moment I am paying all the bills but can't afford to pay off her debts on top and my money is used on us living.

Here is her SOA
Statement of Affairs and Personal Balance Sheet

Monthly Income Details
Monthly income after tax................ 1050
Partners monthly income after tax....... 0
Benefits................................ 0
Other income............................ 0
Total monthly income.................... 1050

Monthly Expense Details
Mortgage................................ 0
Secured loan repayments................. 0
Rent.................................... 297.5
Management charge (leasehold property).. 0
Council tax............................. 0
Electricity............................. 0
Gas..................................... 0
Oil..................................... 0
Water rates............................. 0
Telephone (land line)................... 0
Mobile phone............................ 20
TV Licence.............................. 0
Satellite/Cable TV...................... 0
Internet Services....................... 0
Groceries etc. ......................... 50
Clothing................................ 20
Petrol/diesel........................... 0
Road tax................................ 0
Car Insurance........................... 0
Car maintenance (including MOT)......... 0
Car parking............................. 0
Other travel............................ 0
Childcare/nursery....................... 0
Other child related expenses............ 0
Medical (prescriptions, dentist etc).... 0
Pet insurance/vet bills................. 0
Buildings insurance..................... 0
Contents insurance...................... 0
Life assurance ......................... 0
Other insurance......................... 0
Presents (birthday, christmas etc)...... 20
Haircuts................................ 50
Entertainment........................... 50
Holiday................................. 0
Emergency fund.......................... 0
Total monthly expenses.................. 507.5

Assets
Cash.................................... 0
House value (Gross)..................... 0
Shares and bonds........................ 0
Car(s).................................. 0
Other assets............................ 0
Total Assets............................ 0

No Secured Debt

Unsecured Debts
Description....................Debt......Monthly...APR
Catalogue......................790.......127.......26.4
MBNA Credit Card...............5000......91........21.9
L/TSB Credit Card..............2000......40........14.9
Personal loan..................19000.....309.......12
Capital One....................1000......30........20.9
Barclaycard....................2300......51........25.9
Total unsecured debts..........30090.....648.......-

Monthly Budget Summary
Total monthly income.................... 1,050
Expenses (including secured debts)....... 507.5
Available for debt repayments........... 542.5
Monthly UNsecured debt repayments....... 648
Surplus(deficit if negative)............ -105.5

Personal Balance Sheet Summary
Total assets (things you own)........... 0
Total Secured debt...................... -0
Total Unsecured debt.................... -30,090
Net Assets.............................. -30,090

Created using the SOA calculator at www.makesenseofcards.com.
Reproduced on Moneysavingexpert with permission.

======== Enter any other useful information below ========

e.g. the number of adults & children in the household, the number of cars included in the SOA or anything else that may be useful.

I don't know really what to do, we don't want to go down the IVA route, so any help/advice would be appreciated.

Thanks

Dave

Debt_Free_Chick

Her budget doesn't look right

No council tax?
Groceries only £50 per month?
No car/transport/travel expenses?

Should she really allocate £100 each month to haircuts/entertaining? I am extravagant with hairstyling, but "only" pay £30 a month (a cut, followed by a cut & colour every six weeks)

Are you sure her budget is correct? Sorry to be a pain, but we can be more helpful with more information and/or a more accurate budget.

Bismarck

Once she starts snowballing, she'll start to make some inroads, can't say it will be pleasant but it's doable.

the concern is that there is a loan and the CCs which suggests that this has been consolidated once and then repeated.....if you keep posting on here we can provide suggestions or better still, get her to post on here and take ownership of the problem...she would get a warm welcome.....well done you for coming here and being supportive.

Deep_In_Debt

As DebtFreeChick says - £50 on haircuts is a lot per month. Also can she cut back on entertainment, presents and clothing?

SouthernSoftie

I would say you need to think about if it is HER problem or if you are in it together. Depends I spose on how long you have been together etc. All my debts are in my name but my other half says they are OUR debts as it is stuff for us both. Hence my SOA was a joint one.

If you are bailing her out by paying for stuff she really should be paying, like food, utilities etc then it already is both your problem, so yes a joint SOA would be helpful.

The haircut thing is waaaay too high as is the entertainment, knock them on the head and you'd be getting somewhere.
I presume there is 'stuff' that she bought to get those debts? If so can she sell on Ebay and pay off some of it? She may only get a small % of what she paid for things but it needs to be done as from what I can see she will be in trouble if she doesn't start tackling this. Then she can use the snowballer to best effect.
Agree with incisor about the catalogue debt must go first! That will also help.

I wouldn't worry about her credit rating tbh as if she does start to miss payments and is near the limit of her cards they can start to hike up the rates anyway. That's what mine did, you make minimum payments but the total is going up instead of down as the rate is so high.

I think most important is she needs to be on here and seeing that it can be done, but I worry if you sort her out, ie she doesn't do it for herself, she'll be back in the same mess in the future. Until you've had to scrimp to get debts down you don't realise how dangerous buying 'stuff' is.

dancingfairy

Can she get a part time job on top of her normal work? anything - saturday shop work/bar work - etc. It could be the difference between being o.k or going under.

Ebay/car boot like mad?

The other way is to default on the cards/loanand enter into a repayment plan via CAB/CCCS/Payplan etc- but 1) her credit rating will be screwed (not that she will need more credit at the moment) and 2) I'm not sure if you can go into a repayment plan before you have started missing payments.

Either way she/you should be able to get some help from CCCS/Payplan/National Debtline/CAB etc so try them.

SouthernSoftie

dancingfairy wrote: »

2) I'm not sure if you can go into a repayment plan before you have started missing payments.

Either way she/you should be able to get some help from CCCS/Payplan/National Debtline/CAB etc so try them.

Yes you can, I've never missed a payment and am going to be doing a DMP with CCCS.

If she was going down this route she will either have to do it totally alone, ie doing a SOA for them including food, her share of utilities etc or including your income. Either way they will then advise the best way forward.
If it is a joint one, both of your will need to get new basic bank accounts and also give up all credit cards, debit cards, overdraft facilities etc.

Btw, has she got any credit card charges she could try and get back?

GeorgeUK

If she were to do it without going in to a DMP she would need to look at creditcards that had a low monthly minimum so that she had more funds available with which to tackle the debt. I'm not sure as she already has so much credit if she would be able to get another card that the limit would be very high.

Have her check her creit file (free at experian if she cancels within 30 days) and to see if ther are any late payments or defaults. Also how many credit checks does she have in the last 6 months? If you are turned down for a credit card or loan, this is not shown on the credit file but it does show in the credit checks who has recently looked at your file. Usually you can have about 3 in a 6 month period before your credit score is affected.

The virgin money card has a minimum payment of £25 from the 2nd month (3% 1st month) but she will need to be very careful as she can definately not afford to spend on the cards. I agree that she will need to cut the hairdcut and entertainment budget. Once she has a managable amount of debt then she should be able to enjoy herself again, but more than half her wage is going towards paying the minimum payments. That is out of control.