Credit card debts that will only rise!!

bluerhino6

Hi I am 32 years old, Never had any debt until my wife left me in Febuary 2009. Since then I have had to set up a new life.

I have taken £17,000 on credit cards with low rates, Egg, Virgin, Barclaycard & Santander.

I unfortunatly defulted on 2 months payments as my direct debits were not set up in time to pay the repayments.

Ideally i want to get a £20,000 loan with repayments of £300 over 5 yeras to get rid of all these. This isnt a problem as I can afford the payments.

Unfortunatly as I am not a homeowner and as I have now had a default, I cannot get this loan.

I am so worried about 6 months down the line when my intest free runs out on the credit cards and I can not afford the increased amounts and I will be unable to get any credit cards to swap the debt as I have defaulted.

I can afford to pay these back but am not being given the chance.

Do you think I should sit down with the bank manager and explain?

Your help would be greatly appreciated!!!

Tixy

bluerhino6 wrote: »

Ideally i want to get a £20,000 loan with repayments of £300 over 5 yeras to get rid of all these. This isnt a problem as I can afford the payments.

A £20k loan over 5years would cost you a lot more than £300 per month. £300 per month would only add up to £18k, never mind any interest you would be charged. You would likely be looking at well over £400. (Eg even at 9% it would be £415)

If you have £17k of debts why would you want a £20k loan? (Even if you could consolidate your debts don't make the common mistake of rounding up what you borrow which will cost you lots in unnecessary interest)

When you say you defaulted do you mean you have actually have a formal default registered on your credit report or do you mean they are showing as missed/late payments on your credit reports? This will make a big difference. But often a default would not be registered until you are 3months late in payments, and never without notifying you first in writing and giving you time to correct it and make a payment.

Unfortunately if you have recent defaults and already have £17k on cards you will be very unlikely to get a £20k loan on top.

I'd be suprised if talking to your bank manager will have any effect on the decision.

Obviously pay as much as you can afford every month off the debts before the promotional deals finish. If you could clear one of the cards in that time then after 2months with a nil balance you might be able to get another promotional deal from the same provider without needing a new credit check. That sounds like your best bet to me.

As well once your promo deals are finished you could look to see if you could get a low life of balance transfer deal with a new provider, but I expect your chances of new credit in the short term will be slim.

Please don't take this the wrong way but £17k is a lot to have run up in 16months or so, are you sure you have a handle on what you are spending now? have you bought anything in that time that you could sell to pay towards the debts? have you prepared a detailed budget to work out the maximum amount you can afford to pay to your cards each month?

It might be useful to look at the snowball calculator www.whatsthecost.com to see the worse case scenario as to how long it will take you to pay off your debts if you pay the £300 you mentioned towards them each month, assuming you cannot get a loan or new cards. It will allow you to enter the promo rates and then the standard APRs so should calculate it correctly. It will also tell you the most efficent order to pay off your debts each month to minimise interest.

bluerhino6

Thanks for your reply.

Yeah 17k in 18 months is alot but I had to pay 7k on solicitors bill, then i had to set up my house. bed, TV, sofa, etc etc etc which all mounts up. Its not like I have just whittled it away. Its gone in to re starting my life.

I have late payments on my account. Not a default. I use experian and have a good credit score.

DarkConvict

If you failed to make your CC payments, then usually the 0% interest will stop.

May i ask why you wanted to start a new life, because running up this amount of debt is going to have a substantial affect on your for along time scuppering happiness in your new life. With £17k of debt and defaults, unless your a high earner you are unlikely to get any type of decent loan. You have funded your new life with someone else's money "credit" which i personally think is not making a new start as you obviously could not afford to do so.

Your best bet here is going to post up an SOA in MSE format - http://www.makesenseofcards.com/soacalc.html

And we will see what room you have in your budget, but getting further credit is not an option I can forsee. If you cannot manage your payments you are likely to have to go onto a debt management plan for several years, or if your income is not high enough go into bankruptcy/IVA.

bluerhino6

I didnt want to start a new life, I had to start a new life! I had no choice and no money! What were my options? Live on the streets?! Divorce can have nasty concequences!!

DarkConvict

£7,000 of fees for divorce seems alot considering you didn't walk away with any assets to start up the new life. Was legal aid not an option to help with the divorce proceedings?

Was renting a furnished flat not an option whilst you got back on your feet, I met someone else when I was renting that did that whilst they were going through divorce.

To help advise you with debts we do need to see an SOA (as above), all we can say is consolidation never really helps and trying to take out sizeable loans in the current climate even with a good rating is not easy.