Big debts - considering my options. help please!

col45

I’m considering my options. Making high repayments but mostly not making any progress. Currently £900 to be repaid per month, leaving £1000 to live on (rent is £700). No wonder I’ve run out of money! All unsecured debts and I have no assets. On the credit cards and Cahoot flexiloan I am paying minimum payments. He HSBC loan is fine – the interest is at a sensible rate and it will be paid off in 2 years. The MBNA card was hiked to an extortionate rate but they ‘kindly’ reduced it to 22% for 1 year.

The list
HSBC loan £7,300, about 8% fixed at £300 per month
Cahoot flexi loan £9,000, 20%, £225 per month minimum
MBNA Credit Card £12,000, 22% (‘should be’ 30%), £250 per month by arrangement for a year then who knows what.
HSBC Credit Card, £4,000, 20%, paid at £100 per month
And a couple of smaller credit cards totalling £1,500

Obviously things will improve when the HSBC loan is repaid in about 2 years. Otherwise I am just treading water and am now clear that I can’t afford this level of repayments. I can afford £650 I reckon at my current income. As you can see the figures are rough and I am working on an SOA and will post it.

Have researched different options including DMP, IVA and BR. Neither of them ‘scare’ me but my preference is probably in the order I list them. I know a bit about each but pick up differing reports about which would be best for me. Having to work half a week to repay creditors is the most depressing thing and I dislike the idea of being ‘trapped’ into a job where I have to earn at a certain level.

Any pointers gratefully received!

Eric_Pisch

Its going to take you the best part of 6 years to pay that off especially with the high interest rates, which is the time a BR lasts for

the mbna card will take 9 years 9 months to pay if no factors are changed

with 34k owed and no house i would be considering BR

col45

Thanks.

Also I see that in 5 years I could "comfortably?" pay off the £34K debt - if interest and charges were frozen. Given that one of the creditors are MBNA I know the chances of that are slim. I would prefer that to bankruptcy ansd would prefer to pay what I could afford. But I don't think I'm getting anywhere - and not likely to anytime soon.

Despite saying I wasn't scared of bankruptcy I am beginning to realise that's not completely true.

Tixy

Have you looked at the snowball calculator Col? www.whatsthecost.com This will allow you to work out when your debts will be paid in full based on repaying the £900 and the current interest rates.

How is your credit rating? I'm wondering if you would be able to do a balance transfer to a lower rate card for part of MBNA or perhaps the HSBC card? Or get a lower rate loan instead of that high cahoot loan.

Also (and I know this might sound odd) but have you asked HSBC if the will reduce the interest rate at all - I know there are a few people who have had success with this (particularly if you bank with them as well). Even a few %s will help.

You are right to be scared of bankruptcy - it may be the way to go but not something to be approached lightly.

If you choose a DMP (or whatever you choose) make sure you only use one of the free debt advice organisations - never use one that will charge a fee -http://www.moneysavingexpert.com/loans/debt-help-plan#help

gfplux

I see your rent is £700 out of a monthly salary of £1700. At 41% this is quite high have you thought of moving to a cheaper place?
You also say this leaves £300 each month to live on. Do you know what you spend this on?
Good Luck

col45

I will look a reducing my rent - but it includes bills and council tax. For London that's not bad at all.

Net pay is about £1,900. I have a good idea what I spend the balance on and will finish my SOA soon.

Travel is £135 per month and it's much too far to get the bus.

I assume that Bankruptcy will not be the best deal for the creditors. I guess I'm warming towards a DMP but it will not be much use unless interest is cut to single figures or even zero. I can cope with a 5 year arrangement. I'm interested in tips on how I might approach the creditors.

Thanks

col45

I have decided to try a DMP and am awaiting a pack from CCCS. Having said that If I am subsequntly advised differently |I will consider and IVA or even Bankruptcy. I know there will be tough times ahead but I am quite positive about it. Will be making token payments for a couple of months until DMP is up and running. Need to do this to provide a small cash buffer. Months of paying more than I can afford has left things very difficult. Also looking to increase income and save money etc.