Advice Needed On Debt Reduction

Dochas

Hi to all, I'm a new member and need some advice.

This website has been a god-send for me and my wife who for the last five years have built up debts through the usual ways which have seen us go through some pretty dark times!

This website has made us see the light at the end of the tunnel and we are adament that this year we are going to take huge steps to be debt free.
Here is our rather long-winded situation

Here is our current situation
Me:
MBNA Credit card on its limit £2600 @ 17.9%
Tesco Credit card on its limit £2000 @ 15.9%

My Wife:
MBNA Credit card over it's limit £3200 @17.9%
Bank of Scotland Credit card on it's limit £3000 @ 17.9%

It is both the MBNA cards that are crippiling us with huge interest which means our minimum monthly payment is less than the interest which means our balance is rising all the time , therefore incuring overlimit fees!

Both of us:
Bank of Scotland Joint loan £11,000 over 7yrs @£223.23 per month @8.9%
Total payable £18,750

Total debt £29,550

As regards the loan, in the last couple of days I received a settlement figure from the bank of £10,625. Thanks to advice of this website, they offered to restructure it @6.9% provided I top up by £1,000

I thought this wasn't too bad as we could use the extra money to reduce the credit cards especially as the monthly payment on the loan only went up by 13pence!!

They have since declined with the lady saying 'she's not sure, but we will send you a letter' - which I am annoyed about as they don't seem to want to help us reduce our debt. They will not let us apply for just the settlement figure so I will go elsewhere (after a letter of complaint). We can currently get a quote of £10,625 over 4yrs rather than 7yrs which saves us nearly £4,000!!!!

I don't think we would get approved for balance transfers with other credit card companies so we where going to write and ask that they offer us a balance transfer offer/lower interest rate. We have been with MBNA for
5 yrs and have twice settled huge debts on both cards and have always paid on time which we hope to use against them or threaten to go elsewhere. Will this work and how should we word the letters, should we send them seperatley or together??

Any advice would be greatly appreciated.

Galstonian

It sounds like you have fairly comprehensively answered most of the questions that people come here with and also come up with a pretty sound plan of action:
- stop increasing your debts
- get them onto the lowest rates you can
- pay them off

Lenders can be fickle at times so it is probably best not to try and second guess them - they may simply reduce your rates with no questions asked or they might make it like pulling teeth.

You may find that spending £2 to get your credit reports from Equifax and Experian might help too, you'll see what you look like to the lenders and be able to check the accuracy of all data held on you.

Have a look at the loans and debt free wannabe boards, they may be able to offer more help over there.

On another site I subscribe to they often refer to this as the "lightbulb moment", it sounds like you've had yours, after that its just a matter of time.

Best of luck.

Dochas

Thanks for the reply - I know we are on the right road and feel optimistic about the year ahead eventhough it will mean pestering all our creditors until we are blue in the face and all thanks have to go to this website. Thanks everyone.

robnye

this might sound obvious, but have you trawled through your monthyl expenses to see if you could reduce any thing, ie insurance/telephone etc.

that way you would raise money to enable yo to increase your payments

jonesMUFCforever

Quote from post above
''It is both the MBNA cards that are crippiling us with huge interest which means our minimum monthly payment is less than the interest which means our balance is rising all the time , therefore incuring overlimit fees!''

I know that MBNA can be expensive but there is something wrong here. If you pay the minumum payment every month this should reduce the debt (albeit very very slowly).
Are you sure that the payments are made on time? If it says payment to be made by say 10th of the month you have to pay it at a bank at least 4 working days before this for it to reach them. It might be that you are not allowing for this and incurring late payment fees as well as interest.
If this is not the case I would telephone them as something is very wrong!

ERIC

Reaper

If you haven't already then have a read on the main site where Martin has put a lot of advice about debt. Start with this one.

In the future it will help if you can get your debts onto lower interest rates. Although you are struggling to do this now it will help later if you can avoid doing anything to harm your credit rating. Therefore try to get the card which is over it's limit down + pay at least the minimum payments on all your cards if you can.

Speaking (free) to a debt advice group is a useful resource. Contact details are under "Debt Counselling" on the link above. They can often negotiate on your behalf with your lenders to give you breathing space. Their only condition is that you are serious about tackling your debt, which I believe you are.

That should get you started. After that if you have any questions the "Wanabee Debt Free" board is the best place to ask where you will find you are not alone.