Advice Please

guest999

I work full time, but am having to pay out in bills far more than I earn. Around £180 over each month. Now because I had a bit of savings it's not really bitten in until now, but basically over a 4 week period (as a contractor I get paid weekly) I pay the following:

Council Rent £280 (if a 5 week month £350)
Loan £365.30
C/Card £175
Petrol £200 (I have a daily 48 mile round trip to work)
Phone £13
Account Fee £25
Kids Pocket Money £85
Gas/Electric £160 (we have metres)

A total of £1,303.30

I clear £280 a week. £1,120 over 4 weeks.

Now the loan was taken out in March 2008, and I took out Loan Protection Insurance with it. Reading through the policy document last night I read that I can cancel this.

My loan was for £12,000 and with the loan Protection and interest the total cost was £21,552.70.

The monthly payment of £365.30 is made up according to the credit agreement of

Loan £273.32
LPI Loan £91.98

Great I thought it won't get us totally out of the woods, but if I cancel the loan protection insurance that's £91.98 a month off my bills, and over halfway there. And according to the Loan Protection Policy Document it says I might get a rebate, which based on their scales I worked out to just over £600. Would be nice to have that in the bank I thought. More fool me.

Imagine my surprise when they told me that I was indeed entitled to a rebate of £580.59 (not far out), and this would be taken off the loan. A little disappointed by this, but oh well I'm going to save £91.98 a month.

Imagine my horror when they told me that my repayments would now be £347.09 a month, a saving of £18.21 a month. How can this be? If I'm not paying the Loan Protection Insurance any longer how can it be reduced by so little? Am I being stupid.

I did query this with the bank, and he told me that more of the insurance is paid off at the start of the loan, but surely this is rubbish?

Looking online I noticed the following showing on my loan page:

If you're protecting your repayments with Loan Protection Insurance

Before 4th January 2009, the repayment amount includes your monthly Loan Protection premium, From 4th January 2009, the repayment amount excludes your monthly Loan Protection premium, which will be taken under a separate direct debit from your current account.

If this is the case surely they have changed the terms of the original loan? As I don't remember agreeing to any such change.

Both my credit card and my loan are with my bank. I also have a guaranteed £500 overdraft which I'm up to the hilt on. Basically with account charges I am paying £565 each month and I desperately need help. I cannot afford to pay the loan, which is due next week, as my wages have gone through late this week and this weeks pay and next weeks pay won't go through until the day after the laon is due. My credit card is over it's limit by £76. The bank have been very reluctant to offer any sort of help in the past, except whan I have money, as I did when I took out th loan, and I am at my wits end.

My ideal scenario would be to reduce what I pay to the bank by around half, but I can't see them going for that. But I can't see what else I can do. Sure the kids pocket money might have to go, but in April I will have to find around another £100 a month for council tax.

I am going to go and talk to the bank at the weekend, but I'm not expecting them to offer any realistic or practical help, but in the end I'm just not going to be able to pay the loan and credit card. It's a matter of time.

There is the possiblity of a slight increase in my rate at the beginning of april, but I will only probably amount to another £20 a week, so it won't solve the problem.

My partner doesn't work, but because we have a disabled daughter we receive child tax credit, careers allowance and DVLA, which pays other bills, food and clothing etc. She however has no extra money to be able to help, and is struggling to make ends meet also.

All advice greatfully received.

paddyrg

Giving the kids £20/week can't be helping - can you rein that in a bit? I mean if they're old enough to spend it they are old enough to earn it, even washing neighbours cars, doing lawns, making cakes to sell, whatever? That would free up £85 a month to put towards getting rid of the cards debt (cut up the card first!) which is probably the most expensive debt first, then snowball the rest against the loan. What's the Account Fee? Can you get whatever account that is for less?

Basically I don't think any more credit will help your position, even if you could get it, better to clear the current credit and get back level.

zppp

Your post is very long for starters!!

Insurance is not spread equally over your loan, which is why the rebate is less than you thought it would be. Although it is quoted as an extra monthly payment on top of your loan, on your loan agreement it will be £XX,XXX + £XXXX.XX insurance = £XX,XXX/number of months = repayment. At the start of the loan, the majority of your repayments will be towards the insurance and interest due to the way it is spread on your loan.

Regarding not being able to afford repayments, I suggest you contact them to advise them of your sitatuaion. They may be able to some kind of repayment arrangement, and typicall do this for up to a year or so. If they cannot offer this, or it is longer than a year, I suggest you get independent advice from;

www.cccs.co.uk
www.citizensadvice.org.uk
www.nationaldebtline.co.uk

They may be able to negotiate lower payments on your behalf with your creditors.

dantheman2010

Wow I cant believe you give your kids £85 per month for pocket money! Thats loads. I used to get a fiver a week when I was a kid (about 15 years ago) and my Dad was on very good money back then. Surely you can reduce this.

Also what is the £25 account fee? Is this for a bank account with all the bells and whistles? Just change to a normal bank account if thats the case. Thats £300 a year you spend on that, surely you can get the usual "free" breakdown cover and "free" travel insurance for less than that a year.

When I cancelled the PPI on my old loan they didnt even reduce the monthly amount but they did issue me a nice rebate cheque for it. So not sure what they would do in your case. May give you the money and stick with the payments as they were.

Verbatim

If your regular expenditure is exceeding your income you need to up your income or reduce your expenditure, or a mixture of the two. Sorry to state the obvious. If you post on the debt free wannabe board you'll get more help with that.