Debt

Evylempryss

Hi

I'm 25 years old, I earn 29K a year, I live in London. I'm £10k in debt in the UK on 3 credit cards and then another £50k in the US which includes university loans etc and which I hjave ot send about £400 to the US for every month. My credit in the UK is very poor, but is much better in the US.

Basically I want to go back to the US within the next 2 years and want to pay off my debts by then. I'm not sure the best way to go about this. I'm paying 15% interest on the largest of my credit cards which is maxed out at 7.5K. I pay more than the minimum, but the interest is killing me. It's about £70-80 a month and I pay them £130.

I also have the problem of paying too much in my repayments and then having to use this credit card to live for part of the month because I run out of money. (The other 2 I cut up and can't use).

Can I just declare bancruptcy and go back to the US and then return in 7 years if I want to? Should I take out a loan and pay the card off? I'm not good with money (clearly). I don't own a house and don't want to at the moment so mortgages or not being able to get one don't matter to me. I just want them gone so I can get back on my feet.


Thanks
Karly

Tixy

Hi Karly and welcome
Bankruptcy is a big step and may not be necessary or appropriate in your situation.
I'd suggest you complete a detailed statement of affairs using this link -http://www.makesenseofcards.com/soacalc.html
to fully explain your current position. If you choose 'format for MSE' you can post on to here.
Obviously if you are having to use cards each month then you are spending more than you have coming in. It would be better if you could come to some agreement with your creditors to reduce your repayments rather than having a never ending cycle of credit.

Hopefully we may be able to suggest some ways you can save money or where you can cut down to make your debts affordable.

Evylempryss

Statement of Affairs and Personal Balance Sheet

Household Information
Number of adults in household........... 1
Number of children in household......... 0
Number of cars owned.................... 0

Monthly Income Details
Monthly income after tax................ 1830
Partners monthly income after tax....... 0
Benefits................................ 0
Other income............................ 0
Total monthly income.................... 1830

Monthly Expense Details
Mortgage................................ 0
Secured/HP loan repayments.............. 0
Rent.................................... 542
Management charge (leasehold property).. 0
Council tax............................. 34
Electricity............................. 5
Gas..................................... 20
Oil..................................... 0
Water rates............................. 16
Telephone (land line)................... 0
Mobile phone............................ 46
TV Licence.............................. 0
Satellite/Cable TV...................... 0
Internet Services....................... 11
Groceries etc. ......................... 200
Clothing................................ 60
Petrol/diesel........................... 0
Road tax................................ 0
Car Insurance........................... 0
Car maintenance (including MOT)......... 0
Car parking............................. 0
Other travel............................ 100
Childcare/nursery....................... 0
Other child related expenses............ 0
Medical (prescriptions, dentist etc).... 0
Pet insurance/vet bills................. 0
Buildings insurance..................... 0
Contents insurance...................... 0
Life assurance ......................... 0
Other insurance......................... 0
Presents (birthday, christmas etc)...... 0
Haircuts................................ 0
Entertainment........................... 100
Holiday................................. 0
Emergency fund.......................... 0
Total monthly expenses.................. 1134


Assets
Cash.................................... 0
House value (Gross)..................... 0
Shares and bonds........................ 0
Car(s).................................. 0
Other assets............................ 2000
Total Assets............................ 2000

No Secured nor Hire Purchase Debts

Unsecured Debts
Description....................Debt......Monthly...APR
Halifax CC.....................7465......150.......15
Natwest CC.....................916.......25........0
Virgin CC......................378.......22........7.9
To the USA.....................25000.....370.......0
Owe to Grandparents............1500......100.......0
Owe to Friends.................120.......50........0
Total unsecured debts..........35379.....717.......-


Monthly Budget Summary
Total monthly income.................... 1,830
Expenses (including HP & secured debts). 1,134
Available for debt repayments........... 696
Monthly UNsecured debt repayments....... 717
Amount short for making debt repayments. -21

Personal Balance Sheet Summary
Total assets (things you own)........... 2,000
Total HP & Secured debt................. -0
Total Unsecured debt.................... -35,379
Net Assets.............................. -33,379

jwil

Hi Karly,

Just a couple of things I have noticed:

If you get rid of your clothing spend, you will have a small surplus each month. Can you live out of your wardrobe for a while?

Also, can you reduce your mobile costs, and you should be able to half your food costs - have a look at the old style boards for inspiration.

Presumably you only have a couple of months until your friends debt is paid, so then you'll have an extra £50 per month to throw at your credit card.

Best of luck with it!

Jwil

bargainbetty

Hi Karly,

Could you speak to your providers at Natwest and Virgin, and find out if they would up your balance if you did a low-life-of-balance transfer from the larger card? You would still owe the money, but would spend a lot less in interest payments.

In these days of international finance, you don't want a bankruptcy notice on your file anywhere - even if you come back in seven years, you might find it still bites you on the a**.

Maybe you could look at selling off some old stuff on Ebay, or at boot sales - go to clothing swaps if you must have 'new' things, or visit the charity shops in the upmarket areas - my flatmate picked up four Hugo Boss shirts for a tenner.

If you are using a card to live on, then why not cut up the expensive one and ask for a duplicate of the cheaper one? Look at the purchases rate, and see which would be most sensible for you to use. Obviously, avoid it altogether if you can, but when stuff happens that would be a smarter option!

Either way, try to forget the bankruptcy thing, and you might find that with a bad credit rating you would end up with a high interest loan too. See if you can re-jig what you have first.

Good luck x

bargainbetty

By the way, what is the £2000 in assets? If you have savings, think carefully about how much they earn you, compared to what a debt is costing you.

Maybe use it to clear a smaller card for a balance transfer?