What is my best course of action?

Ekim

Hi,

First of all I would like to say what a great site this is! So much great information.

Any way my situation, I got a credit card (HSBC) at the age of 18 with a £1000 credit limit, after a short time I found myself at the limit. This wasn't a problem as I was able to keep control of the repayments. I joined University and the credit limit was raised to £2000, this was done automatically I didn't request it!

After time again I had maxed it out. After some more time the bank had raised the credit limit to £9500. Foolishly I didn't stop spending and I couldn't cope with the monthly minimum repayments. I wasn't earning at the time, due to being a student, and was surprised that I was ever allowed to get in to as much debt as the bank pushed me in to.

Around Christmas last year I gave up trying to pay back the minimum repayments, I simply didn't have the money to pay them back whilst also affording to eat! Eventually the bank defaulted the account and ended up freezing my overdraft which is what I had been living off at the time. I managed to get them to unfreeze the account and I agreed to begin paying back around £200 a month, which after interest means I am paying £40 off a month.

During the time the overdraft was frozen I cancelled all my direct debits as I was getting charged a lot cause obvouisly the bank weren't paying them. One of these was an Egg Card I had and after cancelling them I forgot about them, even when my overdraft came back in to play. Egg defaulted the account and passed it to a debt collection agency. I have now paid this off in full but as you could imagine my credit rating has gone to pot!

I have graduated now and have a job in London on 17k a year. However paying the £200 to the credit card each month and affording rent isn't a nice prospect. I am currently living on my brother's living room floor but will be moving out soon and will be looking at spending £400 to £500 on rent alone.

I don't know what I should be doing about this credit card bill if I carry on like I am I will never get it paid off! I have looked in to services like CCCS but don't really understand what they will do for me. I also looked in to doing a balance transfer to a lower rate but there's no way I can get any credit.

Any how, thanks for reading so far. What would everyone here suggest my best bet is to get out of debt.

[Deleted User]

If I have read this correctly you only have the one credit card bill now for which you are paying £200 pcm but only £40 is coming off the debt?

If so - I suggest you contact the credit card company and ask them to freeze the interest. Tell them you are having problems paying. They may ask to see an income/expenditure statement from you so you need to make a list of what income you have and what you are currently paying out for. Include EVERYTHING on your list.

Then see what you can chop from your list as non essential. Be ruthless. From what you have left, see what you could reasonable afford to offer the credit card company as a monthly payment. Then knock a bit off as they will try to talk you up.

If you don't feel you can deal with this, visit your local Citizens Advice who will be able to help you. Take with you all details of your income and expenditure plus details of your debt i.e account numbers etc..

Staying on your brothers floor for a bit longer might not be good for your back but it will help you pay the debt off quicker if you (and he) can put up with that.

moozie_2

Welcome to the forum Ekim.

Great advice from Deleted_User :T

It will help your situation if you could stay a bit longer in your brother's accomodation. Do contact the credit card company and be prepared for a fight. They are not going to stop the interest easily unless the account is defaulted.

You may want to post a statement of affairs on here - listing all your income, outgoings and debts - and we'll help you cut back if possible so you have more money to throw at the debt.

CCCS/CAB/Payplan/National debtline should all be able to advise you and support you while you are dealing with this debt. They are absolutely free and are very highly recommended.

Good luck!

Careful_girl

Hi Ekim,
I think it is a great idea to post here the people here will help you, they are amazing and you can feel part of the clan either the people here have or have had debt problems. You are right in my opinion to try to get some debt management advice, try Citizens Advice but again loads of the posters here know more about this than me. You will get lots of ideas from the "nerds" as Martin kindly:rolleyes: calls them.
Welcome to DFW and the very best of luck.
CG:j

CLAPTON

slightly confused

you have a HSBC credit card? with a balance of ..... , and an interest rate of ....... , and am currently repaying ......? ..has this beeen defaulted or what?

and also a HSBC overdraft of ....., interest rate of ...., and paying off.. and has it been defaulted?

what do your credit records on the 3 agencies look like.

BenBen_2

I'm guessing,if you're anything like me, you went over your overdraft limit once or twice (or more). If you did, and you got stung by the charges by your bank for going over (mine charged me £30 a day for 3 days every time), or for direct debits coming out while over your limit, you can try to claim them back.

I'm doing it at the moment and claiming £1,500 approx. You can ask for them to return any fees charged up to 6 years into the past.

With a bit of luck, it will give me a nice little chunk of dosh to throw at my debts.

Check out the Martin Malarky: http://www.moneysavingexpert.com/cgi-bin/viewnews.cgi?newsid1141050760,24632,

Ekim

Hi All,

Thanks for the great advise so far! I claimed back a little while ago my bank charges, which amounted to around £130.

I am currently looking in to claiming back all of the payment protection plan I was signed up to when I originally got the card. The fact that I wasn't in full-time employment didn't bother them so I was paying for something I could have never used.

In terms of living on my brothers living room floor for much longer, I wouldn't be so bothered but as my brother lives with a housemate right now I don't want to outstay my welcome and probably won't be there come the new year.

I'm getting paid (after tax) around £1,110 looking at my credit card statement the interest charges are (for last month):

INTEREST ON PURCHASES AT 1.456% PER MONTH - £110.13
INTEREST ON CASH AT 1.789% PER MONTH - £48.86

The balance on that account now sits at £9,394.11

The overdraft is on £465.65 up to a limit of £1500 but this is interest free as it is part of my graduate package with the bank.

The credit card had defaulted a while back, and as I also hold my bank account with HSBC they defaulted the account too.

In terms of outgoings:

Phone: £30
Gym: £15
Contact Lenses: £15
Travel: £60
Credit Card: £200
Food: £200
Toiletries: £10
Going Out: £50
Contingency: £100

This month I owe £400 to someone, but this is a one-off debt that needs to be paid this month.

Once I get my own place obviously my outgoings are going to get a hell of a lot tighter. I can't make it to CAB to drop-in but is my best bet to give them a ring?

What are the chances of my bank actually freezing my interest.

Thanks for your help so far.

Was thinking the other day I need to put an aim to be debt free so that I know what I am working towards. So if I aim for 3rd March 2011 (Day before my 26th). Perhaps then I'll have all of this out of my hair!

HairyHandofDartmoor

Hi Ekim. You spend a lot on food if that is just for you, I spend £265 a month for 5 of us. Also you could consider cancelling the gym. The money saved could go towards paying off your debt a little quicker. Also there is no mention of utilities. Do you contribute anything towards these?

Ekim

Hi,

My food budget is a little on the high side yes. I am going to start cooking for myself more and will cut this down a lot hopefully. At the moment I pay nothing towards utilities I am lucky that my brother doesn't mind paying for me right now. But soon I know that I will be spending around £500 a month on a flat and bills a month, which is what worries me the most!

The gym is £15 through the PruHealth loophole and I got £115 cashback for it from quidco which I am planning to chuck straight at the debt. So effectively for now the gym is pretty much free (twisted logic I know!)

*edit* looking at food again I think I totally botched my figures up!

I spend £2 for lunch a day at work, then try and spend up to £3 in TESCO on the way home for dinner.

Although this could still be brought down quite a lot.

HairyHandofDartmoor

Make your own lunch and take it in to work, you could save £40 a month doing this! Good luck with doing more cooking.

climbgirl

Hmmm I think you could really find yourself in some trouble here, sorry to be blunt but your figures worry me....If you're only earning £17K, that's just over £1000 a month. And if you're planning on renting soon, then a big chunk of that will be used up with rent and bills, and with the debt on top, that leaves very little to stay afloat.

I think you need to lower your rent estimates a bit and look for somewhere a lot cheaper than 400-500 a month. It's not easy in London, but it's quite possible. I pay 400 a month for a massive double room in a nice flat in zone 2, the other rooms in the house are a lot less than this. Basically, if you can't move in with your folks/brother, I really think you should be aiming for somewhere between 300-400 if you can. It'll help your situation enormously.

The food can drop massively as others have suggested. I eat very well on £80 a month for one person. Also, you just can't afford the gym at the moment, that has to go.