Looking for advice

arteta1878

Hi,

I was hoping to find a bit of advice from somebody on here, I am in a bit if a quandry and currently wondering what would be the best route to go forward.

In summary, I have a loan which I took out with the RBS, repayments are very high, and I am struggling to cope juggling my money every month.

I have a mortgage, and luckily am on an interest only tracker so my re-payments have been very low for a while now, but my 3 year fixed term ends in March, and my interest rate will go up, so obviously my mortgage payment will increase too. I paid a £12,000 deposit on a property I purchased for £120,000, but I expect that will not be worth the same now, so I expect my deposit is practically worthless!

I cannot re-negotiate a new mortgage, as I am now self employed and do not have the extra money obviously to enable me to have another self cert mortgage with my mortgage company.

I have all of my bills and direct debits set up in my RBS account, apart from my mortgage which is coming from my Halifax account.

I am seriously considering moving all of my DDs and standing orders to my Halifax account, and letting my RBS account go into default to enable me to cope and manage my money better by starting again.

It is the loan that is killing me, so if I go into default are they likely to agree a monthly repayment fee once the account has gone into default and the interest has been stopped?

I am quite sick about all of this, as I have been with the RBS for nearly 10 years now and they have been very good to me in the past.

However, I now have a 6 month old daughter and I feel that starting again is the only option at the moment.

What are the likely consequences if I do this? The loan is unsecured, so I know my property is safe, but I am just wondering if this would be a completely foolish thing to do and if there other ways I could look at this.

Any help would be greatly appreciated.

Tixy

Hi arteta

I can see the logic you are applying in your idea above but RBS will not be happy if you continue to pay all your other creditors correctly and just default on theirs.

Usually to get any creditor to agree to freeze interest you have to show that you are treating all creditors fairly, so if you can't afford all the payments you pro-rata what you can afford to each creditor. Unfortunatley the reality is that you then may have several defaults on your credit file rather than just 2 from RBS.

Have you drawn up a detailed budget to see exactly how much you do have left for unsecured debt repayments? This is a good starting point. If you use this format - http://www.makesenseofcards.com/soacalc.html - and post the results here you will probably find people have other ideas of ways you can improve the situation, and whether its possible to get through this without incurring defaults (which will make it hard to get a good deal on your mortgage in future).

arteta1878

Hi Tixy,

Thank you for replying, and I can see what you are saying, but being self employed my income varies from month to month, so I cannot actually do an accurate income and expenditure audit of my finances.

Tixy

Well I would suggest you still do an detailed version of your household expenditure, and for your income look at an average income (after all business costs) over the last 12 months, and your lowest monthly income to compare to your expenditure.

MrsTinks

Can I just point out that an unsecured loan can be "secured" on your property if you default and the lender goes for a CCJ? It's not an over night process granted but it CAN happen and I think you need to be aware of that...
Do the SOA and let's have a look at where you are. Is there the possibility of returning to a "normal" job for the time being to bring you a set monthly income? would you earn more or less by doing this?

debtdesperado

Have you contacted RBS regarding the loan and asked if you could apply for a new loan to pay off the existing loan, and then repay the new loan over a longer period?

The interest rate will probably be higher, and because you're taking it for a longer period you'll pay more overall, but if it's the difference beween sinking and swimming (or defaulting and having all that stress) it's a way out?

arteta1878

debtdesperado wrote: »

Have you contacted RBS regarding the loan and asked if you could apply for a new loan to pay off the existing loan, and then repay the new loan over a longer period?

The interest rate will probably be higher, and because you're taking it for a longer period you'll pay more overall, but if it's the difference beween sinking and swimming (or defaulting and having all that stress) it's a way out?

I am already on the maximum period they do for personal loans which is 7 years. I am about a year and a half into it, so no manouvre there unfortunately.

arteta1878

MrsTine wrote: »

Can I just point out that an unsecured loan can be "secured" on your property if you default and the lender goes for a CCJ? It's not an over night process granted but it CAN happen and I think you need to be aware of that...
Do the SOA and let's have a look at where you are. Is there the possibility of returning to a "normal" job for the time being to bring you a set monthly income? would you earn more or less by doing this?

I am currently looking for employment, but am not in a terrible place I suppose. I took 2 part time jobs before Christmas which I am going to keep as they are both evening jobs.

Can they still apply for a CCJ even if I offer them say £200 a month or something similar?

Tixy

arteta1878 wrote: »

Can they still apply for a CCJ even if I offer them say £200 a month or something similar?

Unfortunatley they can, if you pay anything less than the original contracted agreement they can choose to take you to court. Whether they will is a different matter. They may, it would depend on all sort of things such as if they feel they are being treated fairly, if they feel you are paying back all you can afford (not spending on fancy luxuries for example), how much the total amount owed is, what sort of day the person who decides is having (!) etc etc.

If they did try to get a CCJ then you ask the court to allow you to repay in installments and if you did not keep up with the court ordered monthly repayment then they could apply for a charging order

debtdesperado

I would still speak to them and ask about taking out a new loan - it's always worth checking the figures to see if your current balance spread over 7 years might be worth doing!

arteta1878

I will ask them how much the current balance spread over the maximum term will be, hopefully could make things easier, but not too sure it would be a lot less.