30k on credict cards - advice needed! Debt management plan?

cl34

Hi.

Looking for some advice… My fianc! and I have managed to rack up credit card debts of about £34k between us. Monthly repayments are now in the region of £700-£800. Which we can meet. However, we aren’t paying anything off and are being clobbered by interest rates in the region of 20% +

We are homeowners and have had a mortgage for about 10 years. Monthly expenditure on this is about £900.

We have combined income of about 3k a month after deductions. Meaning we don’t have much money to spare at the end of the month and we seem to be stuck in a spiral of debt which we are not making any inroads on. We never miss a payment but the payments aren’t getting us anywhere. Frequently by the end of the month we have to buy food on a credit card – thus worsening the debt and meaning we’re stuck in a vicious circle. No savings. No equity in our home. No expensive possessions to sell. We’ve trimmed our expenditure and budgeted etc.

We have tried getting low interest personal loans from tescos and Sainsbury for £15k each which would have meant we’d be able to pay off about £300 each a month and clear the debt within 5 years. However we were declined. Despite having a good credit score when checked on the Experian thing this website recommends.

So really we are asking for advice / HELP!!!!

What should we do?

Above all else we do not want to risk our home.

On 1 hand 1 could just keep muddling along, paying off the minimum payments and getting by. But we are cheesed off with doing this and being skint every month.

What are our chances of getting a personal loan (s) over 5-6 years to cover the debt? If we could move it onto a lower interest rate and actually have a structured way of paying if off we’d could see light at the end of the tunnel. However, having been declined by tesco & sains what are our chances of getting a loan at a decent rate? (around 7.9%)

We looked into IVAs but they sound scary and surely this would put our home at risk?

Same goes for a loan secured on our home?

A debt management plan whereby a counselling service negotiates with creditors to freeze your interest / arrange a debt managment plan sounds a possibility? However, what are the future implications for this? Does it affect your future credit rating? I never want credit cards again but we will want to take out mortgages in the future. Will being put on a formal debt management plan count against us when we come to arrange mortgages in the future?

Any advice / help would be greatly appreciated especially from people who have been / are in a similar boat.

Thanks

CL

Tixy

Hi

A debt management plan will seriously affect your credit ratings for at least the next 6years so if you need to remortgage in that time span then yes it will affect it.
Basically a debt management plan is suitable for people who cannot meet their monthly minimum repayments on their debts (without using further credit).

Best way for you to see your full financial position and for us to be able to advise would be for you to complete a full financial statement of affairs using this link - http://www.makesenseofcards.com/soacalc.html - and post the results on here.

People maybe able to suggest other changes, ways to decrease your outgoings without need a DMP. If you did consider a DMP then only ever use one of the charites who will not charge you for the service - https://forums.moneysavingexpert.com/discussion/2077631

gfplux

Hello cl54,
Nowhere in your long original posting do you mention budgeting!
You have to get in to the mind set of only spending what you can afford. ie Income £3000 less mortgage £900 less minimum payments £800 = £1300 left to spend MAXIMUM each month. If you want to reduce the debt then you have to BUDGET to spend less than £1300 and throw this surplus at the debt. - Simple.
Good Luck

Verbatim

Well done on realizing there's a problem before your house is at risk.
Any chance you could transfer at least some of the debt onto a 0% credit card?
The key thing is to understand exactly what and when your committments are due and to save 1/12th of the amount each month so that when the insurance/MOT/car tax etc is due you have the money saved and it doesn't go on a credit card. As gfplux says, you need to budget down to every last penny. Meal plan, aim to buy as little as possible with the aim of freeing up as much as you can to pay off the highest apr debt first.
It does get easier and once you've made some inroads the better financial deals to help pay it off at lower interest rates will become available to you again.