urgent hlp required

intherightplace

Hello, this is my first post. I have been reading this board for a while now and am amazed at the wealth of knowledge and support on theis site. Thank you.

My problem is that my OH and myself have 2 personal loans and various credit cards that total 55K. We have a mortgage of 225k. All of our cc are nearly maxed. This is because we have done things 'the wrong way round'.

When we bought and renovated our house, basically we spent the money we made on our previous house sale and much more beside on renovating our current property. This has hovever meant that we have 70K equity in the house. However our 'lightbulb' moment came when we realised how foolish we had been. We are barely able to make the mimumum repayments on ccs.

I have searched this site and it seems one of the golden rules seems to be not to get a secured loan under any circumstances. Neverthless I have spoken to Loans.co.uk who adise me that they have found a broker who is prepared to lend us 55K to consolidate all our loans and ccs. This would be at a rate of 10.2% over the next 16 years. We talked about PPI and thanks to readings posts on this site I was informed enough to ask questions. The first monthly figure the quoted me was £707 per month, the second (once I had asked for the figure not to include PPI was £568 per month. We talked about the idea of secured debt and the chap assured me that this is the way lots of people are going because as he pointed out, with unsecured debt they can still take your assets or bailiffs can come to collect outstanding debt.

From our point of view 568 per month compared to the current £1400 per month we are spending on ninimum payments seems like a reasonable idea. We would look at going for a project based onrepaying the secured loan back within 5 years. Is this really such a bad way to go?

We have 2 egg loans that are currently at 6.7% and 7.7 but the lender says we have to pay them and all of our ccs off with this consolidation. Can they insist (we would be replacing a 6.7% loan with a 10.2 one wouldn't we?) Is there another way, bearing in mind that if we cleared off some of our ccs we would then be able to use the 0% balance transfer deals on ccs-obviously we are unable to do that at the moment as we are all maxed out!

Is it better idea to go for an IVA? Please help as I have the paperwork for the secured loan comng tomorrow and I am very tempted to sign.

SOA

Outgoings

Mortgage £800 interest only 25 years to run just statrted
council tax £120
water £ 35
electricity £ 40
gas £ 50
BT £ 44
mobiles £ 70
Life insurance £ 31
House ins £ 45
groceries £200
car tax x 2 £ 20
car ins £58
Diesal £175
Dinner money £ 40
family exps £40
kids a/schs £40

TOTAL £ 1731

OTHER
egg loan me 14865 6.7% monthly 308 had 3month repay break
egg loan oh 17399 7.7% monthly 390
MBNA 8900 24.9% monthly 243 (inc ppc)
bacrd me 4700 19.9% monthly 120
bcard oh 8750 19.9% monthly 150
egg me 3800 ? monthly 100
egg house 3800 ? monthly 100
egg oh 2600 ? monthly 45

TOTAL £1456

Personal Income

Oh 1480 every 4 weeks
me 1038 until 05/06 then u/ployed (fixed term contract)
wftc 162 monthly
child benefit 23 monthly

TOTAL £ 2703



Is there anyone out there that can help us?

earwig

hi phone ccs today i know bailifs cant come round your house unless they a court order as for the rest im not sure but i would think that dmp would be better than a another loan phone ccs or payplan or go to cab before you sign anything and they will tell you your rights unsecerd credit is treated the low piorority so your crediter would be more likley to take a dmp or iva hope this helps

magentadreamer

I would suggest you talked to either payplan or CCCS. taking out another loan might lower your payments but it's secured on your house and you could end up losing that. Also you state you are losing your job, your outgoings before debt repayments is more than your OH's income as it is, to add a secure debt into the pot when you come May you are going to lose your debt is the height of folly.

I notice you only have an interest only mortgage but no other means eg endowment etc to pay off the loan.

I would also take a look at your household expenditure and see what you can dump etc eg phones £70 a month, cut back your food bill etc all this will free up some money.

Don't sign the loan agreement as if you don't get a job straight away you are going to end up creating more debt to pay off the loan.

Anniek1969

Definately don't go for the loan you would be repaying over £100000 in total and be careful not to fall into the trap I fell into a few years ago, the secured loan I took out had a large penalty for repaying early and the interest was calculated on a monthly basis meaning that it could go up as well as down so if interest rates went up drastically then not only would your mortgage go up but so would the secured loan.

I took out a consolidation loan about 8 years ago over 4 years and luckily interest rates were not too bad at the time but don't think I'd risk it again. If you go to cccs or payplan you might be repying things over a long time but you won't be paying ridiculous amounts of interest.

Just try and see the bigger picture, you will be paying back almost double what you borrowed and you won't be able to sell your house while you still have the secured loan without their permission, of course they'll tell you it's a great deal just look at how much their making out of it. Talk to someone from cccs or payplan they're not out to make money from you and they'll give you free advice on what's best for you.

Me_Myself_2

Friends have set up a personal DMP (did it themselves with my help) and all creditors have frozen the interest and reducaed the payments due. Some may take years to pay off, but in three years time, will be in a position to throw much more at them and hope to be 'free' in five years.

A few persistant letters made them see sense! One (Egg) refused intiially and defaulted, but then accepted just under 2/3 of the balance as a f&f a few weeks later. All the others have been a lot better, but have pushed to get as much as possible. lloyds are accepting their figures for three CCs and at that rate, they'll still be paying in 100 yrs. As they bank with them for business, they've probably got an idea that they have other loans and may be waiting for them to stop.

Be persistent!

tyllwyd

Taking a loan of 55K over 16 years is a HUGE commitment. And as someone else said, if your mortgage is interest only, what plans do you have to save to pay it off? I also noticed that your job is ending in a couple of months - are you confident of finding another job quickly to replace the income?

I think you should look at every other option before signing for the loan. Dump the phones, cut back on BT to the minimum, try to cut back on things like diesel and throw every penny into your cards to try to snowball them.

My feeling is that if you can't afford to live in your current house, maybe you should face up to it and consider moving rather than living your life with this debt hanging over you.

CLAPTON

Dont sign the loan agreement yet ... a few extra days will not make any difference in the scheme of things. Give yourself time to think about all the options.

Firstly : sell the house...currently you are 'really' only renting the house from the building society as you are paying no capital and have no chance of doing so for years. This has the benefit of clearing all your debts and gives you the chance to start again. Very disappointing and upsetting but you could rent for a while and find a cheaper house based on your ability to pay. By then you would know whether you are re-emplyed and be in a better situation to decide the future. You could then afford a reasonable lifestyle and have no debt worries.

Secondly : your loan option: you can borrow £55,000..however as soon as you borrow this money your debt has gone up a significant amount...check with the company and read the small print and determine the redemption amounts due if you are eventually forced to sell the house...it probably wont be £55k any more.
So if you eventually need to sell up, you will be even worse off as you will have to pay the redemption amount off rather than the £55k.
Unless you gain substantial re-emplyment you in any case cannot afford this option. Although there is some scope to shave money off your budget overall it is too low as there is no provision for any of the 'normal' emergencies of life, cars breaking down, applicances packing up, tiles falling off roofs and also you realistically need to going out sometimes have the occasional holiday, kids also become more expensive...etc etc.

Thirdly : debt management ...i would suggest you talk to CCCS/Payplan/CAB to get a view. But you are probably talking about 5 years...if things go badly you may still have to sell the house and you're wasted all the repayment money and also the years of worry.

My view is that your best option is to sell, clear the debts and start debt free. Ok you wont be living in such a nice house but in all other ways you'll be better off...able to afford all the normal things without putting it all on CC.

best of luck what ever you decide.

intherightplace

Thanks so much everyone. I knew I was in the right place, for the support alone. Waht is a dpm? If it is a debt Management plan and I do this, I assume I just phone all of tht companies we owe to and explain the situation? Is this better than a secured debt? I guess it is judging from your responses. If we do this, what effect does it have on our credit rating? Is there a standard format for writing such an initial letter? Thanks again for your help. i am sure the constructive nature of guidance has saved many people from making bad decsions.

intherightplace

Thanks so much everyone. I knew I was in the right place, for the support alone. Waht is a dpm? If it is a debt Management plan and I do this, I assume I just phone all of tht companies we owe to and explain the situation? Is this better than a secured debt? I guess it is judging from your responses. If we do this, what effect does it have on our credit rating? Is there a standard format for writing such an initial letter? Thanks again for your help. i am sure the constructive nature of guidance has saved many people from making bad decsions.

intherightplace

Can someone tell me if there is a sort of 'order' in which you do things?

does it go dmp, IVA Bancruptcy in that order and also if I have to go for 55k loan do the company have the right to make us consolidate all of the outstanding debt? I have received the paperwork today and it does not state it on there. I was just thiinking of the 2 egg loans at lower rates!

Tondella

hi intherightplace, thanks for posting. A dmp is indeed a debt management plan. Hopefully the order is DMP>debtfree without the need for an IVA or bankruptcy. You need not organise a debt management plan by yourself. There are two charitable companies: CCCS and Payplan, who are experienced in negotiating with debtors and putting a realistic and workable plan together for you. They will look at your incomings and outgoings and give you a realistic assessment of whether you can repay the debts on a debt management plan or whether IVA or bankruptcy is a more realistic option. I urge you to get in touch with one of these companies before committing the loan.

As for the loan company insisting that you consolidate all debts with them, well ... they would do that wouldn't they as it means you owe more money to them. I'm not sure how well their insistence would hold up legally, but they might say that, given your current level of debt, they couldn't as responsible lenders agree a loan with you unless you reassured them that the loan was for consolidation, and not additional debt. Please do speak to one of these debt management companies before you do anything with the loan. Someone will always be willing to sell you a consolidation loan so a week or so of waiting and considering your options cannot hurt your situation.