Redundancy & outstanding debt

chadlebowski

I've recently been made redundant and need advice on how to manage my debt to four outstanding credit balances, ranging from a few hundred to over a thousand; the total amount roughly £5000. The repayments were tough but manageable when I was earning, but, as I'm currently on benefit, I won't be able to reduce the debt.
I've called the credit companies and they advised (or rather said) nothing could be done until the accounts were in arrears, and once that happens I can go through the collections dept. I obviously don't plan on remaining unemployed; can't imagine defaulting is the best way forward...
Should I assimilate all debts and default on one card? I know I should shop arround, but have been denied credit in the past few months and am stuck with the balances.

Thanks in advance for any help.

Moggles_2

Should I assimilate all debts and default on one card?

If you did this, your credit rating would take a hammering and that would affect your finances and ability to get credit for years, long after you were back in full-time employment. While you're meeting the minimum payments, your credit rating remains unaffected.

While unemployed, you're not really in a position to get the best balance transfer deals on credit cards - as I think you realise - so I would concentrate on finding another job first.

Meanwhile, you may be able to reduce your costs using credit cards you already hold. For details, see Martin's *Credit Card Shuffle*article

http://www.moneysavingexpert.com/car...-card-interest

Merlinexcalibur

I obviously don't plan on remaining unemployed

Well, then, let's go with scenario which logically fits the current employment market. And plan for the future. You cannot say - no one can - you will gain employment in the next 6 weeks, six months. Very highly qualified people, engineers, nurses and so forth can find themselves out of work for an indefinite period of time. Unless you plan to diversify into another area of employment, away from what your normal work is. As unemployment is new to you ... it's a new experience. I'm just saying 'don't put your eggs all in one basket'. Plenty out there are in your position right now.

As you wanted advice on how to manage your debts? Up to you if you listen, take this advice. But to avoid falling in to the many obvious pitfalls - of which there are numerous - which creditors/debt collecting agencies (who WILL appear soon once you fall behind or make an offer of minimum or even token payment per month) is to phone the Consumer Credit Counselling Services. I am only speaking from common sense here, but don't go paying one of those companies who promise to clear your debts all in one go. They will take advantage of anyone in your situation, particularly if you have a mortgage and any assets. They are all and PURELY about making money off you. And nothing they will advise you to do cannot be gained from CCCS or CAB for that matter for free.

In some instances, but depending on whether you have £100 disposable income left pcm, CCCS will put you on a debt management plan. They will also contact each of your creditors on your behalf and advise them of your situation and make an offer. I would say, and this was said to me by one of their call takers once, that creditors are more than often better behaved if you go with someone like CCCS because they are well recognised by creditors and that you are taking the correct steps to come to an arrangement. You are not, for example, running away from your debts but facing them head on.

I'm just giving you a potential option and suggestions. On how to deal with the debt more proactively. It is essential that you get some advice or further help ASAP on this. Don't leave it weeks or months is what I am saying. Because that is when the situation will get worse and, possibly, beyond control.

LongTermLurker

Did you get any redundancy payment or have any savings? If so, it would make sense to pay off the debt with the highest interest rate first, or if your finances don't stretch to the full amount, could you pay off one of your cards in its entirity? Even paying off a lower-interest card, while not being most cost-effective in terms of interest, you'd have one less company on your back if/when you default.

If not, have you anything of value you could ebay? It's amazing how many £00s you can claw back by selling your (good quality/wanted) "rubbish"