cant cope with debt....please help

SNAKEY2_2

situation

income which I clear = £800

expenditure:

HSBC Bank Loan = £269.96+£49.98 insurance...33 lots to pay off....apr 9.9%

HSBC Credit Card = £3898....owe.....this month was £117 payment, £55 interest+£30.55 payment protection 1.527%apr a month

Store cards:

USC= £890...Not sure what interest rate is on top of this
NEXT= £450....Same applies

Car Insurance = £64 + petrol per month £140

as you can see this is a dilemma....please please can anyone help/advise.......
would really appreciate your times....thank you

Debt_Free_Chick

Sorry if you saw my first reply, but I looked at your message again and decided to edit it.

Your total income is £800 and you "clear" it. Do you mean that this includes paying at least the minimum on your debts? Or do you clear £800 and then have nothing to pay your debts.

Can you give some more information? Do you live at home? Pay rent/mortgage or other bils?

Post some more information and we can help

DFC

Malestrom

Its a little unclear what your outgoings are - it would be better if you could provide us with more details. You could fill out Martins budget planner which will give a more accurate idea of your situation. It takes a while but you only have to do it once.

How much do you pay USC and Next per month and what is the minimum payment they ask for? (we can work out the APR from that)

Does your car cost you £140 for petrol AND insurance, or is it £140 petrol PLUS £64 insurance?

How long is your HSBC card at 1.5% APR for?

Is your income £800 after rent, food and other living expenses? If not, can you give costs for those. Are you up to date with all payments on your debts and do you feel able to make the current payments or are you struggling?

Basically, the more information you can provide, the more help we can give.

nearlyrich

As D_F_C says it would be helpful to know how you spend the rest of your £800. Do you pay rent or board?
Is the loan flexible or would you be penalised for paying it off sooner?
Is your job secure, do you really need payment protection?
Would it pay out in any case because many of them don't.

Have you seen the Budget Planner HERE ?

How much do you pay on your store cards each month?

Lots of questions for you SNAKEY but you have come to the right place.

SNAKEY2_2

please excuse me.

I earn a total of £1000 just over and after tax I get paid £800 into my current account. This is all then spent on the debts I have. I am currently 22 and live at home with parents.

I pay out £140 a month on petrol and then an extra £64 on insurance.

not too sure if I would get penalised for paying off my HSBC loan,will find that out. I took the loan out in Novmber 2003. For a total of £10750. Over 4 years. have made 14 payments up until now. each payment a month for the loan is £319.94(£49.98 being payment protection).the apr is calculated at 9.9%.

the credit card at this moment in time has a limit of £4000. I owe £3898 exact(after these latest payments were made). My last payments were.
1st feb min balance payment = £117
4th feb payment protector = £30.55
4th feb interest at 1.527 per month = £55
my statement for this says next min payment £116.but then I am assuming I will then be charged payment protection and interest again.?


my next store card has a balance outstanding of £454.08 and they require the next payment by 2nd march which is £42.51.my last payment was made on the 31st jan for 153.82
I got charged a service charge of 11.39..is this the interest

my usc store card has a balance outstanding of £912.79 and my next payment is due for the 20th of feb which is £45.13.I got charged two service charges on this on the 19th jan....it says 2.2% service charge.one for $4.97+the other for £15.25.

hope this is a little clearer...please bear with me

many thanks

Debt_Free_Chick

hope this is a little clearer...please bear with me

No problem - just let us take a look

Debt_Free_Chick

OK I can't do the formatting for a table (have looked in FAQ - can anyone help?) but your situation looks like this

Income £800

Expenses £
Petrol 140
Insurance 64
Total 204

Surplus income £596

Debt - Min Payments
HSBC Loan 320
HSBC CC 116
Next 43
USC 45

Total 524

So you have enough to run your car and pay the minimum on your debts. You can't, however, tax your car, pay for an MOT, pay any maintenance or repairs, go out, give your parents any lodging ..... etc.....

Your debt is a total of (about) £13000. This means that you have spent money as if you had earned a bonus £17000!

I know this sounds harsh, but the first lesson of dealing with your debt is to understand that you have spent much more than you have earned. You've simply spent money that you didn't have!

Do you not pay your parents any board/lodging? Do you have a mobile phone? Pay for your internet connection etc ..... Have you really included all your necessary expenses?

If yes, then you could consider a Debt Management Plan. You will need to cut up all your credit cards and have absolutely no spare money. I would suggest that you probably need to sell your car too - sorry

You'll need to do a budget setting out your necessary expenses, especially what you have to pay your parents. After your necessary expenses, you'll have some money left over. You need to pro-rata this to split it between your creditors e.g. HSBC loan is approx 60% of your total debt, so they get 60% of your surplus etc ... If your creditors agree to freeze all the interest and if you really do have £500 a month to pay against your debts (and I doubt that figure) then you could pay this off in just over 2 years.

Alternatively, you could consider going bankrupt. This way, if you have NO assets, your debts will be written off. But you'll probably lose your car, unless it's absolutely essential for your work. And you won't be able to get any debt (credit) for at least 6 years. But this should give you the chance to learn about budgeting & saving and only buying what you can afford.

Visit this website. Click on Debt Advice, then England & Wales, then Self Help Pack. This will talk you through a Debt Management Plan - it's better than me trotting out the detail here.

https://www.nationaldebtline.co.uk

Then go back to Debt Advice and from the Factsheets select the one about Bankruptcy. Have a good read through and see if it's for you.

Sorry mate, but you're in a bit of a pickle and only drastic action will sort it out.

Post back with any questions.

HTH
DFC

mussgo

great advice form DFC ..

You need to think long and had about this and see if you spend extra cash , that you dont think about...... magazines....coffees ....lippie ...the odd impulse buy that stacks up. You can spend several pounds a week on lunches with out thinking! be ruthless.

Personally i do without payment protection. Not had it in yearrs. Check the t's and c's and see if its worth having. It probably wont cover you for heaps of stuff.

could you increase your income? Another job? Part-time job? Evening /weekends? Is your pay likely to go up soon?

Yes, AFAIK, the minimimun payment on your CC would then be added to PP and interest.
It takes years to pay ofo a CC at the minimun amount. Can you stick it in the freezer or cut it up meantime?

good luck, now you now the problem its far easier to fight.
M

nearlyrich

Hi Snakey

This is what I would do in your position :

Ring HSBC and ask if there is any penalty for paying off the loan early, then ask if they can reduce the interest rate on your loan. They can't shoot you for asking;) and they may be keen to keep your business (currently loans for £10500 over 4 years are at an interest rate of 5.9 to 6.4%).Find out when the 1.5% interest ends, and what it will be when it ends. Then cancel the payment protection on both the loan and the credit card, it never pays out when you need it and it is costing you £80 per month which is 10% of your net income.

Sit down with your Mum and Dad and tell them you have a debt problem, sounds scary? I'm a mum and I know I would rather my children told me if they were in debt than tried to sort it out alone. You might be lucky and get some help (Interest free loan to pay off one or both storecards with repayment deferred till you have more disposable income would be good?)

I guess you have the loan to pay for your car? Could you sell the car and buy something cheaper? You are spending £35 per week on petrol, is this necessary? Could you reduce it by sharing the commute to work with a colleague?

I also guess the storecard debts are for clothes, shoes etc from USC and Next, have you got anything you can take back that you haven't worn? Have you got anything to sell on Ebay, DVDs, CDs, books, designer clothes you don't wear etc? Cut up all the cards, they are the most expensive way to spend money USC is about 30% APR and I am sure Next is much the same.:eek: Your HSBC card is close to the credit limit and you are only paying minimum each month.

Do you deserve a payrise? Ask for it.... Could you earn more in the job you are doing? Could you manage a couple of evenings working in a pub?

It looks like a lot of debt and I'm not pretending it isn't but if you had been at college for 3 years you would be lucky to owe less than £15K ( I know it is a lower interest rate). You are moving in the right direction and I wish you luck with getting sorted, keep posting and let us know how you get on with the bank etc.

SNAKEY2_2

thankyou very much for all your times.....will do my best to get out of this...will keep you informed....thanks again

robnye

snakey2:

plenty of good advice already mentioned above,

as a first port of call, I agree that you should cancel payment protection on both the credit card and the loan.

secondly, stop using the store cards....... make do with what you have..... and stop using the credit card (for now).. what are the interest rate son teh store cards and the credit card... i presume the credit card is the lowest, once you have stopped the payment protection, throw the money saved at the card with the highest interest rate

over the next 4 weeks, keep a diary of everything you spend, you will be amazed at the silly things you spend money on, it will also help you stop and think 'do i really need/want that' before you actually spend money.

tell your parents.... a problem shared is nto always a problem halved, but knowing that you have people close who can help you with ideas.

look at getting a part time job..... bar work , shelf filling at supermarket... etc

keep your chin up, to recognise you have a debt problem is a good step to take.