Stupidly in debt and need help to find best way out please!

stupidlyindebt

Me again... I'm sorry if all these questions make me difficult to help, but it helps me to get them off my chest...

On the issue of consolidated debt:

I read on the snowball calculator site that 'consolidation generally a bad idea. If you're in debt, it's because you spend more than you earn, and it's all too easy to get a consolidation loan, pay off your current debts, and because your monthly outlay is less, you feel you have more spending power and run up new, extra debts.'

For me, I don't think this applies. I normally live within my means, except for planned borrowing (eg the loan to renovate the house which served the purpose of increasing the value of the house by more than the amount of the loan+ interest). I'm not a wild spender; I've just managed my responsibilities badly at a difficult time. Last month I spent only 2/3 of my income on 'real' things like payments and living expenses. The rest was eaten up by bank charges that at the time I was stupidly not aware of. (I have looked briefly at the reclaim bank charges site and will return and deal with that matter once this crisi is over...)

Therefore, for me, unless there is a better/easier option, I think that consolidation might be a short-term evil that would do me some immediate good. As far as the long-term goes, I will vow to plough my 'bank charges' budget into my mortgage like a good girl and damn well check my account frequently WHATEVER else is going on in my life. Does anyone disagree strongly with this? If so, I'm open to other ideas.

As far as the matter of secured loans goes, an extra £8000 of secured debt shouldn't make me any more vulnerable to losing my home than my current £90k mortgage does. As long as I go into this with my eyes open and am vigilant to the end? Again, I'm open to others' thoughts on this.

livinginhope

stupidlyindebt wrote:

Although I was ill I took no time off from work and no one really knows how run-down I was feeling. I am able to work from home, and I got very wrapped up in work, at the expense of my health and everything else. My job is safe and I have learned my lesson and booked some leave to get myself straight. In any case I have income protection cover, which would kick in in the event of illness.

Although my debts are comparable with others who have gone down the Paypal/CCSS route, my circumstances are different in that I earn a good salary and I took the initial loan to renovate a house - I have increased the value of the house by more than the loan, so I do not feel 'hard done by' or that anything has crept up on me.


xx

Hi SID,just wondered if you could clarify something,you said you got into trouble due to illness,but you said you didn't take time off ?has anything else happened?
Also you say your circumstances are different,well they are very similar to many on here,if your outgoings exceed your incomings you end up with problem debt regardless how much you earn
My first course of action would be to open a bank account with another unconnected bank and get all DDs and SOs paid out of that,get your salary paid into it,that way your bank (at the mo) cannot take any of your money and all bills are paid
Try not to worry about things,the peeps on here will help you out

stupidlyindebt

livinginhope wrote:

Hi SID,just wondered if you could clarify something,you said you got into trouble due to illness,but you said you didn't take time off ?has anything else happened?
Also you say your circumstances are different,well they are very similar to many on here,if your outgoings exceed your incomings you end up with problem debt regardless how much you earn
My first course of action would be to open a bank account with another unconnected bank and get all DDs and SOs paid out of that,get your salary paid into it,that way your bank (at the mo) cannot take any of your money and all bills are paid
Try not to worry about things,the peeps on here will help you out

I was suffering with a virus and was very stressed with family matters - I saw my GP but chose not to take time off work, just dragged myself in most days, worked at home a bit and got through it by avoiding everything apart from work and the family matters. It was really tough and I think I was silly, looking back, but hopefully I won't do it again.:o

I guess, what I mean by saying that my circumstances are different is that there if I had been vigilant and not incurred bank charges/ incurred the wrath of the credit card company which caused the bank to pull my overdraft, then I had enough coming in to meet all my repayments with money left over. But I was, admittedly playing a dangerous game, running a loan and a credit card and an overdraft - all in the name of renovating a house. If I hadn't fallen ill, then I could have managed it, but I recognise that this was all brought on entirely by my own foolishness. I don't mean to deny that - I'm just being realistic when I say that, if I can find a way of getting credit, then I have the means to pay it off. The lenders I have a pproached so far have agreed that my income is sufficient - I just have to pay the penalty for having been so unreliable in the recent past.

I will indeed open another bank account (not least, in preparation for reclaiming bank charges), but without another salary payment until 31 August, I am still going to have to face facts and deal with the more imminent debt problem

Thank you for taking the time out to help me xx

livinginhope

Thanks for making me understand SID,I can be a bit dim sometimes
Hindsight is a very powerfull thing and we all look back on what has happened to us and think,why didn't we do this or that,or if only,but now is what counts and you need to look into the future now and not the past
I still,as others have said,would avoid any extra credit,have you tried to arrange a payment plan with your creditors to square up? if you are earning in excess of your outgoings I don't think they should have a problem,give it a go!

chevalier

HI there
This must be a very frustrating thing for you. I know that it is not ideal, but could you borrow the money off your parents. They know that they will get it back, and it would save you have to take any more debt on from a business lender.
Best of luck
chev

stupidlyindebt

My only creditor is my bank and they are demanding instant repayment and have taken most of my last salary in charges. In terms of other 'creditors' I am now behind on monthly utilities payments and my car is no longer insured to drive. But the arm-twisting issue with the bank is that they will not help me or permit me to make payments to ANYONE unless I either go down their debt consolidation route, or get money from elsewhere.

stupidlyindebt

chevalier wrote:

I know that it is not ideal, but could you borrow the money off your parents.

I'm afraid I have no one to loan money from privately

kathfisch

I've been thinking about it but I'm still not sure what your best course of action would be

If you were to open a new account, get your money paid into it on the 31st and have all your SO, DD etc transferred to that account (after the 31st), you'd get no money coming in. Can you afford to live until then? If your insurance isn't going to be valid, or you can't pay other essential things then this is not a possibility. Do you have any means of raising money before then? Something you could sell perhaps?

If you won't have the money to live (ignoring your creditors for the mo) before your next payment (which obviously shouldn't go to your overdrawn account cos it'll be swallowed) then the consolidation does seem to be a solution. If you're sure that you're ok now, that the situation won't repeat itself, that you're not overstretching yourself financially, then perhaps you should consider it. But I don't want to say go for it cos I'm not sure... bit like you I just can't see any other way out of your present situation.

stupidlyindebt

I have taken a deep breath and a close look at my accounts. I am currently awaiting a call back to make an application for a secured loan, using advice on best lenders/brokers from Martin's advice pages. One more credit search shouldn't make a world of difference to my credit record - and I need to know what a secured loan would cost over the full term of the agreement, in order to compare it to the option of snowballing my current debt. Given that my credit card APR is 14.9% (eek!) then it may actually work out cheaper to take a secured loan.

I want to find a manageable solution to my current problem, so that I can free myself up to work out a sensible budget and set up a decent accounting system that I will keep a close eye on from now on.

I think that, for me, the problem has not been specifically about money, the problem has arisen because I don't yet deal well with life crises generally - I just bury my head in the sand. On this occasion, I have taken a financial hit as a consequence. But I need to focus my attention on getting a better balance between work and life in general and so, although I may not be taking the most financially astute decision in consolidating these debts, I think that I am making the best 'balanced' decision that I can take, given these circumstances.

Thanks very, very much for the advice so far. I will come back with an update later on...

kathfisch

Definitely, a balance is what's needed. You need to take care of yourself and make sure the situation doesn't repeat itself. Whilst you don't want to do anything too expensive financially, it far more important to take the pressure off yourself and be sure that you are ok, even if that means a bit of a higher interest rate or whatever. Think carefully about a secured loan though, that will lead to much worse consequences if you have trouble with payments in the future (god forbid).

x