loan for credit cards

sussexlass

My son is in a complete mess with credit card debts, cannot become bankrupt as he will loose his job and has had an iva refused. He is in a key worker house on part rent/part buy scheme but has been told there are no buyers for key worker houses at the moment.
I am looking at getting a loan to clear most of the debts as his health is now suffering badly from all the stress.
The credit Cards and amounts are
Capital One £2585
Lloyds TSB £10324
MBNA £8646
EGG £3006
Barclaycard £4566
Smile £396
Does he ask for a settlement figure on each debt? Will they reduce the total amount? Do I just pay off the highest interest cards?
Any other ideas would be gratefully received.
Thanks

joolz43

Please only consider this route if ALL of the debt will be paid, All of the cards will be cut up and never used again and your son can comfortably make the repayments. A better option would be to start at the beginning and get him to look at all of his outgoings, prioritise and then to think about some kind of debt management scheme.

A loan seems like an excellent idea (or it did when money was cheap) but unless you are someone who will not borrow more money on cards while still paying back the original debt then you should be very cautious about this approach.

Good luck

Fire_Fox

Sorry to hear your son's health is suffering - many of us have been there and come out stronger for dealing with our debts. Has he got the support of his family doctor? Has he been offered any treatment - medication, counselling, exercise on prescription?

What will happen if your son becomes unable to pay the loan, say through illness injury or redundancy, can you afford to? Once the debt is transferred to you legally it is your debt. Is your son able to do a Debt Management Plan? He should discuss this with CCCS or Payplan which are both free debt charities. What is going to change in his life to stop him running up further debt, does he have a plan to reduce his outgoings or increase his income? Is he able to come on this website and fill in one of these:
http://www.makesenseofcards.com/soacalc.html

Tixy

Hi and well done for trying to help your son.

I would suggest that you don't get a consolidation loan on his behalf for a a various reasons.
1) if the debt is in your name and he loses his job he will be unable to repay the debts which could leave you in a difficult situation as if you are not able to pay it could affect your credit rating and subsequently your ability to get a good mortgage deal etc.
2) by consolidating debts the repayments are usually over a much longer term and so although the interest is a lower APR as it is over a longer period of time often it can cost more in the long run.
3) whilst its good to help him, I think you need to assist him in helping himself as he needs to learn to change his spending habits and not run up more debt.

Many people on here have gone down the consolidation route only to run up more credit cards/overdrafts in a few years and end up in twice the amount of debt they started with.

Has he done a detailed financial statement of affairs? This is the first step so you can see if he can live within his means moving forward. It will also show how much he has left after essential spending to pay towards these unsecured debts.

Why was the IVA refused? Which company did he use? Was it becasue the creditors did not agree to it? It may be that he will be able to do a debt managment plan, which will not affect his job but will take a huge amount of stress off him. Has he or you spoken to one of the free debts advice services? Speak to either CCCS, Payplan, Citizens Advice, national debtline. On a DMP it is often the case (although not guaranteed) that creditors will freeze interest so this could end up cheaper than you getting a consolidation loan.

Work through a SOA with him (we use this format as it includes everything) - http://www.makesenseofcards.com/soacalc.html
Once written down it may be clearer to see a way forward. If not get him to post the results on here and we may be able to suggest where he can save money, what he may need to cut back on, how to prioritise his expenses and the best way to tackle his debt.

You both also need to consider/discuss what has made him run up £30k of debt in the first place to ensure that this does not happen again.

Hope this helps.

sussexlass

Thanks for your helpfull post Tixy.

Yes I can cover the repayments ( I have finished my mortgage and have savings).
An IVA was refused by one credit card company. I have looked at the CCCS web site and will talk with him about a debt management plan.
Thanks for all your comments, I am not panicking as much as before.

BeautyandtheBeast_3

sussexlass wrote: »

Thanks for your helpfull post Tixy.

Yes I can cover the repayments ( I have finished my mortgage and have savings).
An IVA was refused by one credit card company. I have looked at the CCCS web site and will talk with him about a debt management plan.
Thanks for all your comments, I am not panicking as much as before.

I just wanted to say that you are a really kind mum for doing this for your son. Big hugs xxxxx:A

dancingfairy

Just to agree with what has already been said really:
It's really great that he obviously has your support , but you do need to be careful because however much he wants to change and you want to help by bailing him out - it might not solve the problem if he is living beyond his means and also if he is unable to repay the debt then it is then your debt (if the loan is in your name) and this can rip families apart.
Do do a thorough budget and remember to include all the one off costs and divide by 12 and do get free professional help as mentioned above.
Good Luck - you can both do this.
df