Considering DMP and other options

mikeg1

My position is that I have considerable credit cards debts (£35k) that I am very ashamsed off, and I have at last faced the issues. I have posted some time ago - got some very helpful feedback but stupidly did nothing about it. Now I have faced all the figures (which was hard work) and spent time considering all the implications or options.

I have spoken to CCCS twice now, once as an itroduction and second to go through finances for which they have presented a budget for consideration. I have to decide whether to go with this or not.

My other options are to sell he house and downsize. We do hold at least £70k equity, but have simply not been able to raise a remortage against this even though repayments would be half of what we are paying the card companies. (if only we could find a solution for this !)

The 3rd option (which I have posted in the mortgage forum) is that of a 2nd property that my wife is on the deeds of as 50% ownership. This has no mortgage, and we are looking to see if there is any way to raise funds against this. I guess the issue here will be we do not live in it (it is rented) and her mother that hold the other 50% has no real income apart from basic pension and 50% rent proceed.

If being totally honest I feel very guilty about the CCCS, as we have been so naieve in getting into the mess we are.

I have some flexibility with credits cards to transfer some balances, but wonder if here I am just delaying the enevitable.

Also a question (sorry there have been a few) is before I go into CCCS would it be help against me if I do move some balances around.

Is it worth me approaching my card companies and asking them to reduce the interest rates stating either we are reaching the stage where we will not be able to make payments - or suggesting if they do not lower them we will move (which in practise we cannot do I know). Lastly - would the above requests affect our credit rating (which I know will go once/if we commit to a DMP).

sorry for all the questions, and thanks again for all of those that have already replied.

HappyMJ

Never secure an unsecured debt....

Post an SOA. 1 year ago you were in 30k of debt and now you are in 35k of debt. You need to cut spending and quickly.

saltnvinegar

Hi Mike

First thing is to stop feeling ashamed. You've made a mistake thats all. The important thing now is you're dealing with things and taking responsibility which should be applauded.

Let go of that stigma that debt is something to be ashamed about. Its not. The only thing that will do is give leverage to your creditors over you and you don't want that.

What did CCCS recommend to you? Did they recommend a DMP?

The good news is it looks like you have several options, some of which would clear your debt immediately. Your choice I think ultimately will come down to what you're comfortable doing.

You're right though stating that juggling your balances around is going to delay the inevitable. I wouldn't say don't do it (as it depends on how you intend on repaying your debts. If for example you have sufficient flexibility in your SOA to repay your debts then moving balances to a 0% card makes sense to help you repay them) however if you're just robbing peter to pay paul its not going to work.

I also think that if you were to juggle balances around and then immediately enter a DMP your creditors may not be quite so willing to freeze interest or agree to the DMP in the first place. If you enter a DMP then this will invariably affect your credit rating as your creditors will default you. Again a lot of people worry about this but if you have no intention of getting credit again then it shouldn't (other than the remortgaging issue which leads nicely onto.....)

I guess you can't remortgage because of your credit score? Or is there other things that are an issue? £70k is a lot of equity in your house so I would have thought mortgage companies would have been biting your hands off. (btw not I'm not trying to be critical here, just need to understand circumstances to advise a little better)

How do you feel about downsizing? Is where you live your 'forever' home? This is why I stated your decision may come down to what you are comfortable with.

Personally if your wife/mothers house is mortgage free I would want to keep it that way only because personally I wouldn't feel comfortable putting security on a house for an issue that is mine (but that is really my personal view). Your wifes mother may be absolutely fine with you doing it, and if you're happy with it, its an option.

Again, personally, I would look at the downsizing option. You would be debt free, have £35k free as a deposit for another house (or more depending on how far you downsize) and potentially end up with savings in the bank. Your wife has 50% equity, still mortgage free, in a house you are earning income from.

The important thing is once you get yourself to that position (whichever route you take) make sure you don't fall back into the nasty debt cycle.

Good luck

SnV

NorthernLas

Feeling ashamed and guilty does not help, it keeps you stuck.

It is great that you have been back in touch with CCCS and you have a better idea on your budget.

There will be lots of solutions, but only you will know what will work for you. If you post an SOA using http://www.makesenseofcards.com/soacalc.html, people will be able to suggest things that you might not have thought about.

goingforward_3

For 18 months we robbed peter to pay paul.. or looking at it another way juggled the credit cards... in that 18 mths we paid in excess of £20K to our creditors and took maybe £3k of the balance owed.. Should we have done the DMP 18 mths ago instead of struggling on YES 100%.

However whats done is done ... yes we did feel guilty entering into the DMP but at least this way the creditors will get back every single penny we owe them... they wouldnt have done had we gone down the IVA or Bankruptcy route. Ok they wont get interest out of me (hopefully) but i think most have had more than there fair share in recent years lol.

I tried negiotating with the credit card companies to lower interest and got nowhere, yet so far everyone has agreed to freeze interest on the DMP now the CCCS are involved.

Credit rating is shot to pieces i think but then it would have been anyway had i continued with late payments and going over the overdraft and to be perfectly honest i dont want credit again anyway as thats what got us into this mess in the first place.

mikeg1

goingforward your example does make think about this option, and DMP might still be an option to look at.
I do note the common line here about paying off unsecured loans with secured ones, but also have to consider what might be wright for us.

Thinking forward we have also the following which I have posted elsewhere, regarding remortgaging with a buy to let on a property my wife owns (well she is 50% of deads) with her mother.

"An update after good advise from this board (thanks), I have today visited an idependant mortgage adviser who have discussed rates offered by TMW of 4.99% fixed for 2 years for £40k. This would not need any proof of either my wifes or mother in laws earnings. Just confirmation of rent income. This has now given me chance to at last get a good nights sleep. We might still move and raise capital that way to clear some debts (I know the suggested option), but we would like to keep our home and might be able to with loan repayments that today are under 40% are the huge credit card repayments we have. At least we have options to consider now. Thanks to all for input. ".

Lots of thinking over the next few days then.

Thanks again to all.