Help I'm sinking

eyemouthboy

I'm sure that I am not alone in this scenario. First things first I'm not good with money I admit that and also I tend to hide away from facing the facts that I can't control my spending.

On the only positive side I have not yet missed a payment on any of my loans and cards. But it's getting very close now.

I earn £30k and I take home £1800 per month clear. My bank balance is normally £2000 overdrawn at the end of every month once all of my Direct Debits come out. Everything I earn goes on repayments and my credit cards are all maxing out although I never miss a payment.

I dont even know how many cards and loans I have. I believe it's 6 different deals (3 x loans, 3 x cards) costing me around £1400 per month.

My thoughts are to contact each one and remove my payment protection cover which would save me around £300 a month and increase the repayments. 2 of my loans are due to end mid 2011 which would save me £600 p/month

Or . . do I apply for a larger loan £15k and put my credit cards onto that to clear the balance and close the cards? I guess I could pay this at a faster rate and save money??

I need to make a choice soon before I damage my rating and have fewer options

Help?

heloid

First step: Find out what cards and loans you have, the balance on each, and the APR of each and post it here. We'll then be able to give you proper advise based on facts rather than assumptions.
If you are not sure you know them all consider getting credit reports from Experian and Equifax.

As a start though, make sure you pay minimum on all your loans/cards and put the extra on to the card/loan with the highest APR. This will save you some interest.

eyemouthboy

Thank you, I really mean that!!

Putting this together has almost had me in tears. I'm a 6ft strapping lad who is feeling pretty weak in this situation.

Egg Card 17.9% £2,400
Egg Loan 7.66% £7,200
MBNA Card 16% £7,400
RBS Card 17.2% £4,400
Halifax Card 16.8% £3,300
Halifax Loan 11.2% £7,000

So I owe well over £30k, I'm making the minimum repayments (just) and I do not have anything left to pay any more

Where do I go from here?

WASHER

You come over to the debt free board, and we will advise you, if you are really struggling at this moment, you can contact CCCS, a debt charity, no fee and will not judge you, they will advise you of a possible solution on how to repay this. You are certainly not alone, many many people on the DFW have similar debt to you.

If you want have a look at the CCCS website, and take the debt remedy test, and pop over to the DFW board and post and let us know what it suggested. You will get many replies.

WASHER.x.

WASHER

CONSOLIDATION RARELY WORKS....please do not take out a loan before seeking advice from the CCCS, CAB, or National Debt Line (all free to use)

Dabooka

The first huge step in sorting this has been done mate, so many of us have been there. It's scary putting it down on paper and horrifying when you add it up, but you can't do anything about it until you have.

Now you'll probably need to go over to the the Debt Free Wannabe board and see about posting an SOA, which is a breakdown of your income and expenditure.

ElkyElky

eyemouthboy wrote: »

Thank you, I really mean that!!

Putting this together has almost had me in tears. I'm a 6ft strapping lad who is feeling pretty weak in this situation.

Egg Card 17.9% £2,400
Egg Loan 7.66% £7,200
MBNA Card 16% £7,400
RBS Card 17.2% £4,400
Halifax Card 16.8% £3,300
Halifax Loan 11.2% £7,000

So I owe well over £30k, I'm making the minimum repayments (just) and I do not have anything left to pay any more

Where do I go from here?

First and foremost, you need to treat the problem at the roots. No more spending on the cards. It isn't going to help you if you continue to spend on the cards while making the minimum payments. Even cut up the cards if you have to, so you can focus mainly on repaying.

If you pop over to the Debt Free Wannabe board, http://forums.moneysavingexpert.com/forumdisplay.html?f=76 , there is some really helpful people who can provide you with excellent advice on budgeting. It's important that you try cut costs elsewhere such as groceries/travel/utility bills, so you can pay more towards your debt.

eyemouthboy

I cant thank you all enough. Coming on here was my first step although I realise it is way later than it should have been.

Even the words of kindness and support have been helpful

Thank you

T

izools

First of all, don't worry. Where there's a problem, there's always a solution.

A couple of years ago I did the same as you. I was paying everything on time every time but due to the payments I had to routinely use credit cards for food.

My calculation as of March 2007 came out at £47,000 total unsecured debt, on a £15,000 salary. Suffice it to say I wrote this down on a statement of affairs and marched myself upto court to declare myself bankrupt!

You shouldn't have to do this, however. Your income to debt ratio is sufficient for you to grab this bull by the horns and reign it down.

First thing to note is that none of your creditors will be likely to accept a reduced offer of payment whilst your payments are upto date. Your accounts have to be in arrears before creditors entertain the idea that you may be struggling and need to set up an arrangement.

I can't advise you to stop paying, but if you do, you will be able to get in touch with the respective creditors in house DCA to explain the situation and arrange a payment that is affordable to you and enough to ensure they freeze the interest on your accounts.

Again, I can't suggest you default on any credit agreements, but in my experience some creditors simply will not under any circumstances freeze interest until the account defaults. Once an account does default, the creditor will be even more likely to entertain an offer of reduced payment.

If I were in your situation I would wait for the accounts to fall one month behind and then use the Consumer Credit Counselling Service to arrange a reduced payment plan with them. The interest should be stopped and depending on how much you can offer you may be able to stop the accounts from defaulting, but at this point, I wouldn't worry about that as you should not be considering taking out any form of credit until this debt is cleared anyway.

Really it's up to you what approach you want to take but you have several options:

1. Continue paying at the current rate
2. Propose a reduced payment arrangement in exchange for frozen interest after missing one payment
3. Stop paying and wait for the accounts to default before proposing a reduced payment plan
4. Stop paying and get an IP to propose an IVA after the accounts fall into arrears
5. Stop paying and wait for the accounts to default before proposing an IVA via an IP

The CCCS would be better able to advise which is the best option based on your income and expenditure

Good luck, and keep us posted!

TFD_2

With a reasonable salary and debt of that level, you should be able to clear it.

But hell yeah remove the PPI - this cash is being thrown down the toilet.

You should pay as little as possible on the lowest interest rate cards, and pay the highest interest rate card off first with as much cash as you can throw at it.

If it's your cash flow that is the issue, it might be worth trying to re-jig the loans about - extending term and reducing payment, to allow you to concentrate at paying them off at a rate that suits you better.

I was in a similar position - I still owe a fair chunk of cash, but it's very satisfying to get on top of it, and start paying off, especially if you can do it without damaging your credit rating.

izools

TFD wrote: »

With a reasonable salary and debt of that level, you should be able to clear it.

But hell yeah remove the PPI - this cash is being thrown down the toilet.

You should pay as little as possible on the lowest interest rate cards, and pay the highest interest rate card off first with as much cash as you can throw at it.

If it's your cash flow that is the issue, it might be worth trying to re-jig the loans about - extending term and reducing payment, to allow you to concentrate at paying them off at a rate that suits you better.

I was in a similar position - I still owe a fair chunk of cash, but it's very satisfying to get on top of it, and start paying off, especially if you can do it without damaging your credit rating.

The only thing I would like to add (ducks for cover) is to consider, when deciding the best course of action to take, is what is more important to you. Your quality of life, or your credit rating