Debt!

sammyboy70

I am after some advice (not Judgement) I know I have been irresponsible and over the course of about 10 yrs I have amassed about 32 Grand of unsecured debt. I manage the payments, just. the question is this I am soon to receive enough to clear the debt but this is about 6 mths away. The debt is the debt and some of it must be interest. is there anything I can do to reduce the amount of debt between now and paying it off in 6 mths? short of paying it off if you know what I mean. A new car is needed as the old one is on it's last legs and I need to replace it. If I am unable to save some of the money then as soon as I pay off the debt I will have to take out a new loan as a car is a must living in the country, work school and shopping etc.

A bit longwinded but that's the question. I think I know the answer to be honest. A lesson learned.

RachelS

It looks like you're already worried about getting into debt again. Is there any way you could reduce your spending so you can save for a car now or pay off some of the debt before your windfall comes in? If you post an SOA on here people will help you work out where to save.

fatbelly

Have you defaulted on any of the agreements?

That is, are you still paying the contractual amounts and minimum payments, or have these 'debts' been subject to special arrangements or been pased on to debt collection agencies?

sammyboy70

Yes, minimum payments get made every month, i have never missed a payment on anything. No debt agencies involved.

What is an SOA? Is it a list of the debts and all outgoings?

Londonboy_3

Between now and then it sounds like it is just a case of servicing the debt and avoiding late payment charges etc. Once it is paid off I would be very careful about getting new debt to fund a car. Due to the downturn in the economy many cars are coming onto the market very cheaply as people try and get some cash in. A good solid car that will last for 2/3 years can be bought on ebay or similar for less than 1k. The size of the debt you are servicing must mean that you pay out close to £1k in minimum payments every month.

As such I would:

1. Service the debt on time between now and your lump sum coming in
2. Pay off all the debt and cancel/ cut up any credit cards straight after you do this
3. Keep the old car running for 2 months and save the money you were spending on debt repayment
4. if your current car is 'dead' then take it to a scrap dealer as scrap prices are high - a family size car you might get 2/300 quid for it
5. Buy a car for circa 1k from ebay/ pistonheads/ gumtree with as long MOT/ tax and as newer tyres as possible.

fatbelly

sammyboy70 wrote: »

What is an SOA? Is it a list of the debts and all outgoings?

http://www.makesenseofcards.com/soacalc.html

Remember to 'format for mse'

sammyboy70

If i was to get a debt agency involved in order to reduce the debt between now and when i am able to pay it off what would be the longterm consequences? doing this would potentially save me about 8 to 10 thou. Am i right in saying this would hammer my credit rating which would dog me for years? I am not in my forever home and will need to move in a few years.