what to pay off and in what order

Hootie19

We have a few debts. We have just received a cheque for just over £6,000 as we have surrendered a life insurance policy. We are not sure what to do with it. Obviously paying off the debts is the most important thing, but just how to spread the money around is what's confusing us.

My husband has
Barclaycard (card cut up) - balance £1,373.43
Sainsbury visa (card cut up) - balance £2,558.57
Smile visa - £350 balance (card kept "for emergencies" in future - it being the one with the lowest limit, £500)

I have
Lloyds TSB visa (card cut up - the account is cancelled) - balance £2,050.18
Tesco visa (currently paying £50 a month to a credit agency, so no interest is accruing) - (card cut up) - balance £1,365
Capital One visa - card cut up - balance £1,198.50

Jointly we have a loan which was initially from First National, but is now being paid back at £35 a month to AssetLink so no interest is accruing. This was a CCJ, so is now a second charge on our house. I can't remember offhand what the balance is (that info is on the main pc, and I'm on the laptop at the moment) but I recall is in the region of £5,500.

Obviously the money we have from the surender of the life policy isn't enough to clear all the debts, but we're not sure if we should pay a "chunk" off each of them, or pay all of one or two of them and keep the rest. Any advice is welcome.

We have missed payments in the past, but certainly over the last 6 months have made all payments on time. Not sure how that would affect our ability to make a "full and final settlement" offer to all or any of the above.

Due to an error in their calculations last year, our tax credits payments (god bless our IR!!) are being reduced by £350 per month from this month (so as not to cause "hardship" - rolls eyes), and the above loans/credit cards are costing us about £550 in repayments each month, so we really need to reduce our outgoings as much as possible. We pay more than the minimum each month, trying to repay as quickly as possible - at least £75 a month to those which are accruing interest and the agreed amounts to the ones that are being paid to credit agencies.

Our mortgage is with a lender who specialised in poor credit (they are a branch of the Halifax) and is really too expensive for us at the moment. It was taken out when my husband's income was a third more than it is now. Obviously at some time in the future, when our credit rating is rather more healthy, we would like to re-mortgage with a "better" lender, as our £115,000 mortgage is costing us £820 a month. We need to keep our hopeful remortgage in mind when working out what to pay off (I think!)

Again, any advice is welcome, and sorry for the length of the post.

kickingkay

im not a finance expert as yet,.......................... but there is time so help me!
you will get some better advice im sure if you paid off a bit from all (sorry are they all without interest) then it will reduce the time you pay off, not the amount you apy as im sure they will want you to keep the remaining payments the same,
however if there are cards with interest pay those off first then thatdebt is gone use the money saved to hit against the others that way you can reduce your debt and the time you have to pay it hth
have to say though my WFTC have also been stopped due to over payment im waiting to find out how much i will have to pay back but they have been great they dont want to cause me hardship ha! im so flush im about to go belly up as i cant afford any loans or card repayments now, my own fault for not being more credulus with money and if i hadnt gambled and shopped as much as i did i wouldnt be in thi smess but thats neither here nor there now
take care hth
klare xx

nearlyrich

Account Balance % of total debt pro rata £6000
Barclaycard £ 1,373.43 10% £ 572.43
Sainsbury visa £ 2,558.57 18% £ 1,066.39
Smile visa £ 350.00 2% £ 145.88
Lloyds TSB visa £ 2,050.18 14% £ 854.50
Tesco visa £ 1,365.00 9% £ 568.92
Capital One visa £ 1,198.50 8% £ 499.52
Loan £ 5,500.00 38% £ 2,292.35



You have nothing to lose by writing to each of your creditors offering Full and final settlement in the proportions I have worked out above.

Include a full statement of income and expenditure, if you want to post it here first you will get some good advice.

southernscouser

From what I'm aware if you are able to make your monthly payments you will probably find the lenders won't accept final settlements.

Can you explain what you mean about the Lloyds TSB card being cancelled as you still owe money on it!

You want to pay of your debts with the highest APR (not including the ones with frozen interest). This means you will then only be paying interest on £1,530.68.

Once you have paid the cards off and have a zero balance just cutting them up is no good! You need to actually phone the lenders and ask them to close the account. Ask for a letter of confirmation. This way you are more attractive to new lenders as your potential debt is a lot less.

If you want you can post all your incomings and outgoings on here and people can try and help find ways to reduce your monthly costs. In fact I bet we could! (if I could afford to bet).

$17mma

Take a look at this site it sorts it all out for you and even tells you what to pay first!!


http://www.whatsthecost.com/