Clear debts with savings?

GhostHunter_3

Hi me again

I am trying to 'avoid' commitment to a DMP as I can't see it helping me in the long run. I have done a plan with CCCS and the results were that I have to pay £89 a month and debts would be cleared in aprox 10 years! A crazy suggestion to me. I need to make a decision quickly though as Credit Card companies are hounding me and I havent answered the telephone in 2 weeks now!

At present I am keeping up repayments to 'purchase loans' but not credit cards. These 'purchase loans' will all be cleared within 2 years if I continue to pay them. The total combined amount of these 4 'purchase loans' is £70 a month.

I also have a loan via Lloyds TSB which not only is it a 'joint loan' but is already on a low payment and we have been paying £46.64 for the past 4 years and have roughly £4,900 left to pay so a while longer yet. Again I dont want to 'rock the boat' as we have been managing to keep up repayments ok so far.

As I said its my Credit Cards that are 'the problem' I have 4 credit cards -

Skycard (credit limit £690) outstanding ballance £647. minimum payment this month - Aug £71 to bring it back into limit).

Capital One (credit limit £800) outstanding ballance £838.86 minimum paymement this month - Aug £159. to bring it back into limit).

Aqua (credit limit £1,100) outstanding ballance £1,204. minimum payment this month - Aug £104. to bring it back into limit

Nationwide (credit limit £1,500) outstanding ballance £1,602. minimum payment this month - Aug £211. to bring it back into limit.

The 'purchase loans'

Barclays Partner Finance - £167. left to pay (account in dispute)

HFC1 £256. left to pay

HFC2 £636. left to pay

HFC3 £85. left to pay



I have aprox £2,000 in savings and am looking at using this to clear some of the debts. I can then use the money I was paying the debts off with to re save and save more!

Whether I should use it
to clear the 'purchase loans' or
clear some of the Credit Cards and try and do a ballance transfer spread out the remaining debts on the cards.
Clear one of the higher limit credit cards and use this then to 'pay off' the 'purchase loans'.

Assuming of course that I cant get a consolidation loan anywhere (am happy to chuck as much as I have collectivly saved at the consolidation loan if it means clearing it and being debt free in 2 years.

Also assuming the credit card companies will allow me use of the cards again, I have cut them up but accounts still active, I obviously cant spend on them though.


I understand the point that I should treat all my non priority debts fairly but isnt it just as pointless taking out a 'consolidation loan' (if by chance anyone would help us, most likely not) than a DMP as both will stretch the debts out longer when I could be debt free within 2 - 3 years and not 10?!

Any ideas anybody? Trying to find a solution as its Martins rule to clear debts with savings.

Many thanks

rayday2

You could do a bit of both, you could offer full and final and settlements to them all with a letter explaining your situation, any that accept good, any that don't put them onto a DMP.

What I can't understand is that if you are struggling to pay now how you can be debt free in 3 years. Credit cards if you make the minimum payments can take anything from 10-15 years to pay off depending on the terms and interest etc and thats without you never adding to them.

So I am confused and its before my breakfast!

LilacPixie

have a look st the snowball calculator at whatsthecost.com you will need the apr's of the cards and loans.

Personally i would bring all cards to within their limits to avoid the over limit charges. then attack the debt as a whole starting with the highest apr.

GhostHunter_3

Hi Ray sorry I didnt explain myself very well did I? what I meant by being debt free within 2 years was on the 'purchase loans' not the credit cards. As I said ideally if I continued to repay them as I am now they would all be cleared in around 2 years, 1st one comes to an end next few months I think. So if I added them to a DMP it would elongate the amount of time it took to clear them by an additional 8 years (10 years not 2 years). Hope that makes sense? Thanks for the advice.

LP I will take a look something I dont understand attacking debt and APR's but am going to have to learn! Thanks for help.

**Amy**

:hello:

I agree about offering full and final settlements to your credit cards. That may help.

It would also be a good idea to find out the APR on your cards. That way you can work out which would be best paying off first.

x

rayday2

Ahhh I see where you are coming from but the whole point is that you would be totally debt free in that time of everything!

I hate to sound harsh but you may be finding the money to pay the loans but you are struggling with your credit commitments because you are behind with the cards, so overall your credit commitments are over stretched.

I can see how you are seeing it the loans are ok because you are making payments. The only way to avoid a DMP is to boost your income either from yourself or if your husband can help out.

I am not sure if I am right here but if you were to use your savings to pay off the loans and then you still struggle then you have wasted savings you could have had for an emergency. On the other hand if you pay some bits off and never take any further credit out and you can manage the ones left then it would not have been a waste, however if things are still tight and you have used all your savings how you going to finance the next appliance breakdown etc?

Sorry probably confusing you further!

rayday2

Another thing to consider is that if you went on a DMP for a year or so, chances are companies would take full and final settlements and you could pay more off.

Also you would "damage" your credit history (although to be honest you probably have a little anyway) so that helps prevent you from getting in a pickle again.

GhostHunter_3

Damage my credit history :eek: Isnt that something I need to avoid doing?

Many thanks for replies. Will have to speak to hubby sooner or later as winter is coming and income (his side ) will rapidly decrease.

GhostHunter_3

I have to go out now but will check back later thanks everybody.:T

rayday2

GhostHunter wrote: »

Damage my credit history :eek: Isnt that something I need to avoid doing?

Many thanks for replies. Will have to speak to hubby sooner or later as winter is coming and income (his side ) will rapidly decrease.

Well ideally it is but if you are struggling with credit commitments then sometimes a damaged history can be your saviour and stop you getting further out of your depth.

GhostHunter_3

Hi

Sorry for the delay in coming back, one thing led to another then I went away for a lovely weekend to see parents, brother neice and nephew and have a break from worrying.

Anyway am back now and have found out the APR's etc:

If I repaid the debt to all 4 cards to bring them all back into their limit it breaks down like this:

Nationwide £211.
Capital One £155.
Skycard £78.
Aqua £204.

So in total that's £648. to 'stay out of trouble'.

The APR and minimum payments are as follows:

Nationwide APR 17.9% (min payment 3% or £5)

Capital One APR 26.730% (min payment 3% or £5)

Skycard APR 1.527% (min payment 2.51% or £5)

Aqua APR 29.9% (min payment 3% or £5)

As a reminder I have just over £2,000 in savings and would like to spend it wisely.

Thanks again for advice.