Some advice reducing payments.......

Silvergun_Superman

Hi, I'm hoping someone might be able to give me a bit of advice, here goes..........

basically I've spent the last seven years working in a job where I don't get paid very much, and I've spent money really recklessly, racking up some pretty big debts on credit cards. In addition, I've consolidated debts a couple of times with loans. Currently I owe one credit card just over £5000, and have 17 months left on a loan, totalling £2563. Not huge by some people's standards, but I only earn around £700 a month. Up until recently I also had another credit card with a debt of £3500, which my parents loaned me the money for to pay it off.

My parents are not exactly rich, and they (understandably) want me to start paying them back as of next month. Therefore they are increasing my rent to cover the cost, as they don't see me paying them back otherwise. Their opinion is that the creditors have made enough money from interest out of me, and I need to negotiate with them, rather than keep going to my parents to bail me out for things, i.e car tax, MOT etc.

Before anyone says to get a better job, I'm hoping to train as a teacher next year, but that is going to be dependent on me getting my finances sorted now.

I'm presuming my first step is to write to the credit card company and ask them to freeze my interest, and accept a lower monthly payment? Am I likely to have success if I do the same with the loan company?

Here's a copy of SOA, I don't think there is anything too excessive on there, apart from my mobile phone, which I'm locked into a contract on for another ten months.

Statement of Affairs and Personal Balance Sheet

Household Information
Number of adults in household........... 3
Number of children in household......... 0
Number of cars owned.................... 1

Monthly Income Details
Monthly income after tax................ 690
Partners monthly income after tax....... 0
Benefits................................ 0
Other income............................ 0
Total monthly income.................... 690

Monthly Expense Details
Mortgage................................ 0
Secured/HP loan repayments.............. 0
Rent.................................... 300
Management charge (leasehold property).. 0
Council tax............................. 0
Electricity............................. 0
Gas..................................... 0
Oil..................................... 0
Water rates............................. 0
Telephone (land line)................... 0
Mobile phone............................ 35
TV Licence.............................. 0
Satellite/Cable TV...................... 0
Internet Services....................... 0
Groceries etc. ......................... 100
Clothing................................ 10
Petrol/diesel........................... 50
Road tax................................ 10
Car Insurance........................... 30
Car maintenance (including MOT)......... 20
Car parking............................. 0
Other travel............................ 0
Childcare/nursery....................... 0
Other child related expenses............ 0
Medical (prescriptions, dentist etc).... 15
Pet insurance/vet bills................. 0
Buildings insurance..................... 0
Contents insurance...................... 0
Life assurance ......................... 0
Other insurance......................... 0
Presents (birthday, christmas etc)...... 10
Haircuts................................ 10
Entertainment........................... 0
Holiday................................. 0
Emergency fund.......................... 0
Total monthly expenses.................. 590


Assets
Cash.................................... 0
House value (Gross)..................... 0
Shares and bonds........................ 0
Car(s).................................. 300
Other assets............................ 0
Total Assets............................ 300

No Secured nor Hire Purchase Debts

Unsecured Debts
Description....................Debt......Monthly...APR
MBNA credit card...............5064.17...116.......2.207
Loan...........................2563.94...151.......0
Overdraft......................1200......12........0
Total unsecured debts..........8828.11...279.......-


Monthly Budget Summary
Total monthly income.................... 690
Expenses (including HP & secured debts). 590
Available for debt repayments........... 100
Monthly UNsecured debt repayments....... 279
Amount short for making debt repayments. -179

Personal Balance Sheet Summary
Total assets (things you own)........... 300
Total HP & Secured debt................. -0
Total Unsecured debt.................... -8,828.11
Net Assets.............................. -8,528.11

Silvergun_Superman

Bump!

Sorry to ask again, but payment days are looming and I need to get my letters off asap.

GeorgeUK

It doesn't look too good right now.

The problem with making reduced payments is that it will be on your credit file for 6 years nd you may get defaults - so the chances of you getting credit in that period are not good.

From the looks of it you are spending at least £90pm on a £300 car. Is it going to pass it's MOT? Do you need a car?

Are you able to get a 2nd job? The problem is that your rent is almost half your income so you are always going to be struggling with that. If it is a matter of reducing the amount of interest you pay the creditors, you may have been eligible for a 0% creditcard, but you will need to make sure that you haven't had too many credit checks. You can have about 3 in a 6 month period, but i am not sure that this will be of any use to you now.

I would suggest you contact one of the free debt charities, CCCS or Payplan for advice on how to move forward with this.

I would advise you set up a new basic bank account to get your wages paid into - one that you don't owe any money to so that the bank can't just take your money when it goes into the account.

Writing letters would be the next stage. They don't often stop the interest straight away (if at all) and it is usually better coming from one of the debt charities so the bank knows it is a case of can't pay rather than won't pay.

How were you making the payments before now? Especially with that extra card that your folks paid off?

GeorgeUK

Just a thought, do you have payment protection insurance (PPI) on the loan?
Was this missold?

Silvergun_Superman

Thanks for the reply.

The car is in 'ok' condition mechanically speaking, my dad has helped with some of the repairs. Its low value is partly due to the state of the paint work and interior, big dent on the outside (it was like that when I bought it, promise!!). I need the car to get to work, and will certainly need it if I succesfully manage to get a placement on a teaching course, public transport from where I live is really poor.

A 0% interest card would be ideal, but I've applied a couple of times in the last couple of months and been turned down.

I was surviving on credit cards until I maxed them out, and by not saving for anything like the MOT, tax, presents etc up until a point it was just about manageable, and then I would have to ask for help from my parents. The rent increase starts as of this month.

Silvergun_Superman

GeorgeUK wrote: »

Just a thought, do you have payment protection insurance (PPI) on the loan?
Was this missold?

No I don't.

Silvergun_Superman

closed wrote: »

Do your parents know the extent of your debt, the apr's are missing, and mbna is probably a much higher apr.

Yeah they know, and they're not unreasonable, but they want me to start standing on my own two feet, and I can't blame them for that.

I'm a bit confused reading the interest rates on my mbna account, it says 2.207 on my online banking info and paper statement, clearly it must be more, typically I'm paying around £120, and about £110 of that is interest!

The interest on my overdraft is 1.49%. I'm not exactly sure what it is on the loan - I don't have online banking with Northern Rock.

In terms of getting a second job, I work five days a week in a pretty physical job, and on one of my two days off I've been doing work experience in a school, which is necessary to secure a placement. In the lead up to christmas I will take on any over time (I work in a supermarket).

Silvergun_Superman

Ok that makes sense, so do I just write and ask them what they suggest or work something out by myself?

Mini_Bear

I would try to do as much overtime as you can in the run up to xmas, it will def help you for a few moneths. also do you get extra ££ working sundays?! That would def be the most efficient way to work. i used to work at a supermarket and there were an awful lot of ppl wrkin 7 days a week due to money troubles, so its not unheard of.
I would consider trying to get shift work around your teacher training (when you do go) this will allow you to have a higher income and clear those debts. i kno working mon-fri in a school then sat and sun in a supermarket isnt ideal but i did it for a few yrs, and its a massive incentive to pay your debts and regain your free time!!

Silvergun_Superman

Yeah I'll be taking all the over time I can get. Unfortunately they don't pay extra on sundays anymore. I'm sure they have a rule at work that you can't work seven days in a row, but it's worth looking in to.

Can anyone recommend a bank I can set up a new account with? Are Barclays (my current bank) going to get annoyed if I have my wages paid into another account?

GeorgeUK

If you aren't paying money into the Barclays account, it might go against the terms of your overdraft agreement. Still needs to be done if you can't pay the minimum payments though, otherwise they could just empty your account and leave you with nothing.

I have heard that the post office and co-op have good basic accounts.