Is it always best to pay the highest apr first?, help me clear some debt

BigCraigJohn

Hi everyone, my heads well and truely out of the sand, after hitting maxed everything, everything in arrears and general depair I just pulled myself together a bit. I was considering bankruptcy 3 months ago so I'm proud of myself for getting this far.
Just wondered whats my best plan of action for the following.
Heres a run down of my debts, as you will see everything has pretty much maxed out but ive caught most up. I have moved back home with my parents and they are putting me up for free on condition I get my head down and clear some debts. I'm self employed so SOA is pretty much impossible in less than 3 hours but I do know have some spare cash to make a bit of progress. I genuinely spend nothing other than essential business expenses and living essentials. Ive not been out in 4 months unless i'm driving and get petrol money.
Please note I am not paying the Capital one at present, something really had to give and i'm pretty sure the agreements unenforceable but we'll deal with that as it happens but in the meantime I need to make some progress and clear some of these for good then atleast if in a few months I can maybe consider a full and final on the cap 1 but as youll see the apr on that is outragious on such a high balance, I had paid £3500 in 12 months to only knock £30 off the balance.
I have worked out I can manage £500 towards the debts easily but maybe more on a good month.
I do have a few charges I think I can reclaim especially on the Lloyds as thats from 98 and had ppi. I thing I did want to know was can I reclaim £12 charges as there are over £600 on the Citi, Ulster and Egg from the last 18 months alone.


Lloyds tsb: £2750(2500 limit though), 1 month in arrears apr 27.9 (min about £60 month), wouldnt freeze interest even to let me get below limit

Citicard: £3950(4k limit), was 2 months in arrears but now on 6 month deal of zero interest and £60 a month payments. Long term apr 24.9 although I know doubt guess this will shoot up once the agreement ends.

Ulster card £1750(1750 limit), up to date, apr 19.9 (min about £50 month)

Egg card £1175(1250 limit), up to date but card closed on interest hike opt out apr 19.9 (min about £40 month)

Capital 1 £9800 (9000 limit), 3 months in arrears, think it defaulted once but I cleared although it will likely default again shortly, apr 35.9 and ive stopped paying, I think the agreement is iffy so i'm gonna try my chances, long term aim maybe make a f&f when it get to dca. Was paying £300+ per month min payment. Totally beyond rescue and is imo never going to be touched with that balance and apr.

So theres about £300 extra to pay towards the 4. My gut instinct tells me to pay it all on the Lloyds, but then I can help but think that the citicard might go berserk because of this takeover and my increased risk. Just wondered what people think?. I dont want to be stuck at my parents for too long as i'm 29 but figure this is the only way other than BR.

Thanks

Nargleblast

Hello BCJ, generally the most financial savvy way of debt clearing is to list your debts in order of APR, highest first. The cards with the less than highest APR, you just pay the minimum monthly payment as detailed on the statement, no more. Then the card with the highest APR you pay the minimum payment plus whatever else you can afford. When that one gets cleared you pay all the extra cash to the next on the list and so on. Martin Lewis explains it better than I can in his Moneysaving Diet book. If you can't make even the minimum payments on the cards then you could consider taking out a 0% deal on a new card and shifting some of the debt to that, but you might not get accepted bearing in mind your defaults. Certainly I think you should now destroy all the cards if you haven't done so already as the temptation to use them is always there. Tough solution I know, but you don't have a regular paid job so cannot do a definite forecast of what income you will have coming in. You could try a debt management plan, but you would need to talk to some organisation like CCCS or Payplan about that. Either way, your credit rating is zilch for the next few years, so may have little choice other than to stay with your parents.

BigCraigJohn

Hi thanks for responding, high apr it is then .
I wouldnt even think of applying for another card i'm sure I wouldnt get 1 and to be fair the reason ive ran up so much was consolodation anyway. Although ive grown up now a lot and dont think i'd do it again. After all most of my debt stems back to when I was at college about 7 years ago, couple of failed investments then just borrowing more than I needed. I'm pretty sure ive paid back everything I borrowed though and as I said i'm an adult now where I was a child then.
I think I could realistically pay off the Lloyds card in 6 months.
I had considered the dmp but I dont think they'd touch it with me playing the unenforceable debt card.
Dont think i'll be thinking of buying a house any time soon, would just be nice to have my own place again(rented), be living on money not credit and just move on with life.

Oneday77

I would really consider the DMP at least initially. I am with the CCCS and they have been great. If your credit rating is shot you have absolutely nothing to lose.
I will be honest the CCCS don't mind un-enforceabilies, it's just they won't stop making payments to creditors that are un-enforceable. If you go down the DMP route you can work out how much you can spare every month and then save the extras that come in to make F&Fs.
Try the CCCS website and use their debt wizard. At least some companies will stop interest initially at least.
Use the templates on Never-In-Doubts thread to start the ball rolling if you haven't already, my Carp1 CCA was missing

Nargleblast

Yes, BCJ, consolidation often leads to more debt in the long run - I learnt the hard way about that one! If you set your sights on clearing the Lloyds debt in 6 months, that is a doable goal and not so far in the future that you get fed up! Mark each month off on the calendar as you make each payment, then set a target for the next debt and so on. In the meantime look at some of the other boards for ideas on how to live well on a reduced income. That will teach you new habits for when you are finally debt free, and you will be less likely to run up debt again.

[Deleted User]

Hi hope this helps - as advised above, if you are struggling contact one of the debt charities.
1) Pay the minimum on everything (except what you are disputing)
So that would be: Lloyds tsb - £60
Citicard - £60
Ulster card - £50
Egg card - £40

TOTAL MINIMUM: £210
AVAILABLE LEFT: £290

2) As you are currently over your agreed limit here, I would suggest you get it Lloyds tsb: £2750 (2500 limit though) within the agreed limit before you start paying anything extra on anything else. Given the amount you are over currently is £250 you’ll be able to get this within the agreed limit in a month (unless they are charging you further for not staying within the agreed limit), then maybe 2 months.

3) Once you have got back within the agreed limits for each of the debts – start paying off those that have the highest APR’s. This might help http://www.whatsthecost.com/snowball.aspx

BigCraigJohn

Thank you very much everyone for responding.

So Oneday 77 you are saying that they just dont like stopping payments to unenforceable debts if they are in place but if you never actually started with them in the plan they would probably be ok? I guess problems could arise if I started paying more to certain creditors
I'm in on NIDs thread, just awaiting on response to the t&c they sent me with a copy of my signature so hoping theres something not right there

Nargleblast I agree, I think unless you really stick at it and actually understand what you are doing that consolodation will leave you worse off. You can only do it for so long till the fuse burns out and you have to face the reality that youve made no progress or even gone backwards.

Thanks Domino9 will have a look on that site, was looking for something similar the other day.
I would say i'm now in control with the Cap 1 out of the equation and the moving home, but i'd really like to make some progress on the numbers not just making the minimums.


Oh yes can anyone confirm which charges are reclaimable?, can I reclaim the £12?, the eggs are £16 so i'll certainly try there and there are Lloyds going back to £35

longhauladdict

Hiya

I would visit the reclaiming bank charges thread for further help, but just to let you know that for all of my cards I have reclaimed charges (approx £1000) and they all stated that they would refund only the difference of old charges and the lower new £12 charge. I wrote back to each and stated that I was not happy and wanted the full amount, low and behold every single creditor has offered the full amount (including the £12 charge!).
Also I added contractual interest to each charge, not just the 8% that a court would award (up to 32%) in some cases and I got the full contractual interest rate back each time- definitely worth it when some charges are 6 years old and 32% is obviously much much better than 8%!!!!
If you need any help please PM me or check out the thread xx

BigCraigJohn

longhauladdict you say you got the £12 back, but were any of these accounts that were opened after the 2006 oft advisory thing where they said £12 was fair? I can understand that with the like of the lloyds account there will be a fair few £35 which when added up may of in the long term caused the £12 + there are probably a good grands worth here.

Guess theres no harm in trying and they are not going to want to go to court and justify these charges.


Ive just realised ive got a closed Abbey/mbna account as I found an old statement from 2005. Guess what £70 of charges and £18 ppi on 1 statement alone:eek:
SAR off to them aswell I think

Oneday77

BigCraigJohn wrote: »

Thank you very much everyone for responding.

So Oneday 77 you are saying that they just dont like stopping payments to unenforceable debts if they are in place but if you never actually started with them in the plan they would probably be ok? I guess problems could arise if I started paying more to certain creditors
I'm in on NIDs thread, just awaiting on response to the t&c they sent me with a copy of my signature so hoping theres something not right there

Your supposed to declare all debt balances. Tbh my Cap1 debt was found out to be unenforceable after I joined but I do see the point of including it.
Hopefully I will be out my DMP in the next 6 weeks due to a change in circumstances, not debt free though, but I would still recommend the CCCS even if it is to get some good nights sleep without the worry of phone calls and chutty letters from creditors.

BigCraigJohn

Tbh I should care a lot more than I do, everyone says I should worry more. I guess after worrying when I was younger and making my self ill I came to realise its only money, it wont kill me(unless I let it), I cant go to prison and ive nothing to take from me. Whats my worst case?, I end up bankrupt or get a ccj and pay it back at £1 a week.

I'm going to see what happens, as I said while I live back with parents I can easily afford everything(minus Capone) so will try my hardest to reduce the others down. Business is very good now compared to last year so i'm feeling very positive about where things are going.
I guess my aim is to get my enforceable debts to a level where I can afford to move out again asap or even better completely paid off. So glad now though that I didnt dive in and go bankrupt.
I'm going to give it till the end of the year, by which time I want to be well on the way to paying the Citicard off and with the Lloyds paid off in full.
Everything is chopped up, i'd like to keep hold of the Ulster long term but want to close the rest.