Can you please give me advice on my debts?

jh2

Hi there,

I'm 20 years old and happen to be in a bit of debt (nothing compared to a lot of people) and i'm now getting stressed more and more because i seem trapped and these debt problems don't seem to be lowering.

I've been working for the past 2 months but have been out of work for about 6 months due to a severe hand injury and being unable to move it. This was when i started getting into all this debt. I probably owe only around the £2000 mark to bills but i owe parents/family and friends about £4000.

My credit history is the worst it can probably get and i really need a loan or something to put all my bills into the one bill because then i can afford to pay it back on a monthly basis. The only reason i want a loan is because i've worked out i wouldn't be able to pay all the bills and my family/friends on a monthly basis even if i had an agreement with each bill asking to pay a smaller amount each month - it just wouldn't be possible.

I guess the only benefit of being in debt at this age is knowing how to solve it if it happens in the future! Unfortunately i have no confidence so i've chose to ignore my debts until now.

I would prefer to hear about any loan companies that would probably give me a small loan but if anyone has any advice that will be great!

I'm Jay by the way sorry i haven't introduced myself

Thank you.

Marisco

Hi Jay, welcome to the boards:) There are a lot of people on here who can help you wade through everything. The first thing you should do is put up a SOA (statement of affairs) I'm not very good with links:o but someone will be around who is!! Then we can have a look at anything that perhaps you haven't thought of to see if there is scope for savings. Its not generally a good idea to get a consolidation loan, although I can see the attraction!! You'll get some good advice on here anyway;)

Tixy

Hi Jay

If your credit rating is poor then you won't get a consolidation loan. Instead you need to work out how much you can afford to pay in total to your creditors each month and then split this amount between them all.

First thing to do is to write out a statement of affairs so you can see your full financial position as it stands now. If you post it up on this thread then you'll get some advice on how best to tackle things.
http://www.makesenseofcards.com/soacalc.html

spursfan14

Hi Jay,

Welcome to the boards! I would suggest that you don't get more credit. Have a look at debt management instead. You have two options when it comes to a debt management plan (DMP). You can go to a free service like CCCS (new to the boards so i can't put links!) and the will give you advice on dealing with your creditors and not charge you. The free services tend to be financially supported by the creditors themselves meaning that advice is potentially not impartial.

The other option is to go with a paid service like Debt Line (new to the boards so i can't put links!)or Gregory Pennington etc. These charge you a monthly subscription but they will talk to creditors on your behalf, taking a lot of the stress out of it. Also they tend to be stand alone businesses so the information will be impartial.

Really, it is horses for courses. Both routes have pros and cons. But a DMP is a good way of getting you out of debt instead of taking out more credit and slipping deeper into debt.

I hope that helps. Best of luck.

Tixy

spursfan14 wrote: »

Hi Jay,

Welcome to the boards! I would suggest that you don't get more credit. Have a look at debt management instead. You have two options when it comes to a debt management plan (DMP). You can go to a free service like CCCS (new to the boards so i can't put links!) and the will give you advice on dealing with your creditors and not charge you. The free services tend to be financially supported by the creditors themselves meaning that advice is potentially not impartial.

The other option is to go with a paid service like Debt Line (new to the boards so i can't put links!)or Gregory Pennington etc. These charge you a monthly subscription but they will talk to creditors on your behalf, taking a lot of the stress out of it. Also they tend to be stand alone businesses so the information will be impartial.

Really, it is horses for courses. Both routes have pros and cons. But a DMP is a good way of getting you out of debt instead of taking out more credit and slipping deeper into debt.

I hope that helps. Best of luck.

CCCS don't just give you advice, they will do a full debt management plan and manage your payments for you just like the paid services (well except CCCS will probably do a better job). There is never any need for anyone to pay for debt management services or to recommend the likes of the companies mentioned above for DMPs.

Its not horses for courses, using a paid service will cost you money and therefore keep you in debt for longer. There are no Pros to paying fees for a DMP.

IMPORTANT - Where to seek professional impartial advice about your debts.

However as the majority of the debts are to family members it is unlikely to be suitable for this poster to do a managed DMP.

spursfan14

Tixy wrote: »

CCCS don't just give you advice, they will do a full debt management plan and manage your payments for you just like the paid services (well except CCCS will probably do a better job). There is never any need for anyone to pay for debt management services or to recommend the likes of the companies mentioned above for DMPs.

Its not horses for courses, using a paid service will cost you money and therefore keep you in debt for longer. There are no Pros to paying fees for a DMP.

Thanks for your response. I would always be concerned about singling out one particular route as a 'one size fits all' for financial planning/management.

There are pros and cons for both the paid and unpaid services in my opinion. On he one hand the CCCS are free and are a very good service. On the other hand they are financially backed by the creditors, which i would guess means they are not 100% consumer focused as they have crossed loyalties.

With the paid services, you do have to pay a management fee every month which means less money is going towards your debts. On they other hand, they tend to be independent businesses which need to be 100% customer focused to stay in business.

I really think that both types of service have their place and it really depends on your personal financial circumstances.:)

Tixy wrote: »

well except CCCS will probably do a better job

How do the CCCS do a better job out of interest? I've heard positive things about National Debtline and the citizen's advice, as well as several of the paid DMP companies like Debtline, Gregory Pennington and Harrington Brooks on this forum. What do the CCCS offer that makes them the best?:)

Tixy

spursfan14 wrote: »

Thanks for your response. I would always be concerned about singling out one particular route as a 'one size fits all' for financial planning/management.

There are pros and cons for both the paid and unpaid services in my opinion. On he one hand the CCCS are free and are a very good service. On the other hand they are financially backed by the creditors, which i would guess means they are not 100% consumer focused as they have crossed loyalties.

They do not have crossed loyalties. How much funding they get is not affected by the work they do or the amount of DMPs they advise on or set up. They give their customers unbiased, impartial advice. Paid services are never going to give impartial advice as their fees are dependant on the advice they give.

With the paid services, you do have to pay a management fee every month which means less money is going towards your debts. On they other hand, they tend to be independent businesses which need to be 100% customer focused to stay in business.

Profit focused I would say not customer focused.

I really think that both types of service have their place and it really depends on your personal financial circumstances.:)

If your financial services are such that you need a DMP then they are pretty bad and every penny counts, so pointless throwing money away with these companies.

How do the CCCS do a better job out of interest? I've heard positive things about National Debtline and the citizen's advice, as well as several of the paid DMP companies like Debtline, Gregory Pennington and Harrington Brooks on this forum. What do the CCCS offer that makes them the best?:)

Interesting. In all the time I have posted here I can recall one poster who understood there was a free alternative and yet was happy with a paid DMP company - which happened to be GP. Yet I have read I would think over a hundred of people very unhappy with their paid DMP company.
(oh by the way I am excluding people with a post count of 1 or 2 who are clearly from the commercial companies themselves).

But on balance from all the many posts I've read people who use CCCS rather than paid DMP companies seem to be much happier with the service given.

By the way my post is not inferring that that CCCS are better than national debtline or CAB, they simply offer a different service. I was only comparing CCCS and the paid services you mentioned.

There is one commercial company, who although not officially recommended here some people do seem happy with. That is Payplan who again do not charge the consumer a fee for a DMP. That said they have a mixed level of satisfaction from MSE users.

Hannah_10

About paid debt management companies:
Have a look HERE This lady's paid debt management company have been getting her defaulted every month for three years solid because they are totally incompetant. She's getting into more trouble not less. This is common. Then have a look HERE This lady would need to pay almost £1600 on top of her debts to repay £3700 and it would take her an additional 17 months to do so. They are more expensive than you realise.
They actually can not do a single thing for you that you can not do for yourself. They have no special powers, creditors don't respond well to them (less money for the creditors see) and it can be hard to hold them accountable if they wreck your case.

About Loans:
It's unlikely that you're going to get a loan, if you do then it'll probably be at a bad interest rate. Have a play around with THIS snowball calculator and see what a £6k loan would cost you.

The best rate anyone could get would be 8.8% (see HERE about rates) although you absolutely wont get that low a rate because of your age for one, even if your credit rating is glowing. So for arguements sakes I did a few sums at twice that, 17.6% (which would still be a low rate for you). This is what I got...

If you borrowed £6,000 at 17.6% interest and you had £100 a month to repay with it will take you 139 months (yes really, almost 12 years) and you will have paid £7,897 in interest alone, bringing the total repayed to £13,897 (slightly under fourteen thousand yes, it's not a typo). :eek:

Still though that's cheaper than a paid debt management company taking 20% and a payment of £100 a month. That'd work out at paying £25,146 in total, over 252 months/ 21 years. :eek::eek::eek:

(Figures obtained in seconds from the snowball calculator above.)

Doing It Yourself:
We can tell you how to set up your own DMP. Or National Debtline can (HERE). Or the CAB (HERE). Or the CCCS (HERE). We're debtors ourselves, that's why we come here, or they're charities and their job is to actually help you. A debt management company or loan provider's job is to make money out of you.

If you did it yourself for £100 a month, it'd take you 60 months/ 5 years and cost you nothing extra. In fact we might even be able to help you pay less than that to the bills companies (they're happy sometimes to close the debt with less than the full money if they get it paid in a lump sum, we call this a reduced full and final offer or a F&F for short. People have even been known to get F&F's for 10% of the debt).

The financial industry is on standby to pounce on young people like you and turn what is right now a bit of a problem into a total all out crisis. They did it to me when I was 20 and they will merrily do it to you still Honey. Here I am, at *ahem not telling* years of age only just NOW knowing what I wish I'd known when, like you, I was just about to sign my life over to a bank.

As I said, we can help you, or the charities can help you. The first step either way will be what Tixy told you about, the Statement Of Affairs (SOA).