The Boss checking in for some debt advice please

The_Boss

Hi all.

This year has turned into a nightmare for me. The amount of work I do was slashed significantly in March, meaning less money coming in. I had moved in with my girlfriend last November having bought a place together, but with my name not on the mortgage. Unfortunately we broke up at the start of July and I'm going to take a massive loss on the £14k I invested (she refuses to offer me more than £9k). I built up large debts trying to keep afloat when my work situation deteriorated.

Anyway, I'm at my parents now and they refuse to take any payments which is nice. I'm figuring on staying here till the end of the year and moving in with friends early next year - so thats some savings right away. Here are my current debts.

NatWest overdraft : £1.4k
Barclaycard : £1300 - 0% for another 6 months, £1.6k limit
MBNA : £2300, no promo rate, £3k limit
Morgan Stanley : £1850, no promo rate, £2k limit
Halifax : £2150, no promo rate, £2.25k limit
NatWest : £2990, one month 0% left, £3.4k limit
Blackhorse Car loan : £159 per month, 0% finance, finishes August 2008.

I am to become debt free by August 2008.

Before the move last year, I closed loads of cards and massively reduced credit limits - and it seems to have shattered my credit score with companies. I've had 3 rejections in a row now so I'm leaving it till the new year and trying to do the best I can to clear my debts before applying again. I'm not touching the car loan due to the 0% finance, but have no strategy for the rest.

MBNA wrote asking me to call them to discuss my account because they could save me money on balance transfers. Thats a good place to start, but I cant pay that off anytime soon. Any other ideas as far as strategy goes? I am due £320 on the 16th of September, £1000 or so on the 21st and another £200 on the 30th September.

chocaholic110

I think I read somewhere that while closing unused accounts is good, reducing credit limits on accounts that are still in debt are not so good because it makes it look as though you are only capable of managing a low limit and then you have run it up to the hilt, if you know what I mean. Your debts are almost at their limits or at least that's what it looks like to lenders.

As to which debts to pay off first, sort them into a list with the highest APR at the top and the lowest at the bottom. Work out how much you can afford to pay each month. Then pay just the minimum payment on all but the top one, and pay everything else you can towards the top credit card thus reducing the one with the highest rate first. When that is paid off put all the spare money towards the next one on the list. That way you should pay the least interest on what you owe.
Hope this makes some sense

moozie_2

Hello The Boss and welcome to the forum

It is very hard to offer you any advice without the APRs on your debts. It would be helpful if you could post a full statement of affairs (soa) and then I am sure plenty of good advice will be posted for you. Here is what I mean by full soa: http://forums.moneysavingexpert.com/showthread.html?t=107280

Best of luck and please post again soon

The_Boss

To be honest, they are all around the same level - lowest being halifax at 14.9% apr and highest being MBNA at 17.9%

Problem is, that while Halifax has the lowest, they are the most likely to give a low rate balance transfer for life, so its catch 22.

Are any companies likely to accept me calling up and asking to change the current apr?

The overdraft is at 19%. but it doesnt appear on my credit report - so I've been deliberately paying more off on cards in the hope of getting a new card. Also, because the interest is calculated daily, I can wait till the last minute to pay my credit cards (i.e. a week before they are due).

Verbatim

People have succeeded in getting APRs reduced by phoning and asking. I'm looking for a new 'tarting' vehicle for next month and have been offered a deal from a cc I haven't used in a while. I rang up and asked to be put thro' to the closure team. The guy there said they cld always offer better deals than customer service and that if I tried in a few weeks there might be a better offer.

moozie_2

Another thing you could do, is use this calculator to find out which order you could be paying your debts off for maximum savings on interest. This is the link: http://www.whatsthecost.com/snowball.aspx

Although the overdraft may not appear on your credit report, it doesn't mean you shouldn't prioritise it. 19% is very very high and banks can request overdrafts are paid off very quickly so in that sense, they are riskier than credit cards/loans.

Hope this helps.