What would you do in my position??

bingbong_3

My situation is this: -

My business is closing down with debts of £25000. HSBC have offered me a loan at the REDUCED rate of 12.1% over 12 years meaning I pay £325pm.

I have applied for 2 other loans and although my credit rating is good I have been refused these. I think this is because I am only 3 weeks into employment again. My wife takes home £1500 net and I take home £1200 net. Our outgoings are approx £2375 per month.

I think I may be able to overpay my debt as I start to earn some commission at work. So it is possible I could be throwing an extra £500 - £600 per month potentially.

The flip side of this is that as a household we will have no savings and no emergency fund.

Do you forfeit the credit rating and get a DMP and have the interest frozen ( potentially ) or bite the bullet and pay the interest and get it paid off asap.
If you had a DMP and started earning more money what happens then? Can they take it off you?

Thanks in anticipation ( again ).

kevker

Were you trading as a limited company or as a sole trader?

bingbong_3

Sadly - I am sole trader.

I can however see where you are coming from.

bingbong_3

anymore advice anyone?

inmypocketnottheirs

Do you have equity in your house? £325 per month for 12 years is quite some commitment. Is your £25k all to one creditor, could you get someone, i.e. accountant/solicitor to negotiate the debt downward. Obviously you are trying to do the right thing and pay every one off, but life is not always that generous. I would look at ways of borrowing more competitively or better still reducing the debt burden. Can you give an idea as to who your creditors are and how much you owe them??

bingbong_3

yes my debt is with hsbc. i have today also been offered a loan with cooperative bank. sadly I applied at 5.9% and they have offered me at 9.8% due to my credit rating ( which is good ).

That means paying them £395 pm for 7 years.

Regards,

Dan

headchef

If you agree a DMP and your earnings increase then it is only fair that the creditors expect to be paid more, as every so often your account will be reviewed (say every 6 months). You will be paying off the debts more quickly as a result, which is good. They won't take the DMP away, and the good news is, the longer you are on a DMP the more likely it is for creditors to offer Full & Final settlements - they will ask you for so much pence in the pound, therefore decreasing the amount you pay back overall. The down side is, of course, that you need the readies to be able to settle, but with some diligent financial planning you can save along the way: 'Oh look we haven't used all that money that we set aside over this last 5 years for car maintenance and appliance breakdowns...'
Personally I wounldn't increase your indebtidness (sp?) but then I have entered into a DMP and feel relieved that the amounts I owe are not increasing but ever so slowly going down (hope to speed it up of course). For most people on here, having DMPs, IVAs, etc has turned a negative into a positive - believe it or not! We feel more in control and have something to aim for!
Please also post your SOA on here too as there are sooo many ways to cut back without feeling the pinch.

headchef

Having another look at your amount for outgoings it would seem at face value that you can afford the loan, but this only make me urge you even more to post a thorough breakdown of incomings and outgoings! Most people who post on here have the opposite problem of not having enough at the end of the month, but I'm thinking - have you budgeted for absolutely everything you should and will the amount you think you have not be there in reality when it comes to paying your debts?!