25k consolidatory loan needed - no chance?

big_gus

Hi all.

Please be patient as I am asking for advice from those who know - rather than holier than thou criticism for the mess I'm in.

I have around 30k on credit cards. There is good reason for this but it doesn't add to the post so I won't go into it. I currently pay around £750 per month in interest and, of course, the loan is not being repaid and the outstanding amount is not going down.

How possible is it to get a loan to pay off the majority of the cards (Ocean Finance, Abbey, I don't know where to start??) to consolidate all these payments into one? I can afford (just about) the £750 per month, but want it to be reducing the debt....rather than going down the drain.

Even a loan of, say, 10k would help. But preferably I'd like to borrow as much as I can to pay off as much as I can. I AM NOT ASKING FOR EXTRA BORROWING. This is to pay off current debts and repay those debts, rather than the interest acrued.

My situation is this: I own my own business, the last two years accounts show a 67k turnover with 38k net profit and last year a 67k turnover with 40k net profit. I also own a second property which has just been valued at 350k with a mortgage of 288k. (Selling the property is not an option at present, again for reasons that I won't go into. Although, obviously, there will be people screaming SELL THE HOUSE).

So the questions I am hoping to have answered are; will anyone contemplate giving me a consolidatory loan... and how much of the 30k would it be for? Or would attempting to apply for two loans of, say, 15k from different people be a better idea?

Sorry for babbling, I'm stuck and don't really know what to do.
Thanks for any help,
Gus

StuTheDon

Hi Gus,

You are not going to get a consolidation loan for £25k because any lender will see you as £30k on cards, plus £25k loan - £55k debt. On profits of £23k that is just not going to happen. You only have two options that I can see:

1) Try to remortgage the property if you cant sell it to realise some equity to pay off your high APR debts. There is rarely the best option, since you will pay more in the long term.
2) Negotiate with your credit card companies to see if any are willing to freeze interest for a while or focus on the cards with higher APR.

I know you said you cant sell it, but the correct and cheapest solution here is to sell that property.

Stu

StuTheDon

Forgot to mention, and I am sorry that this is probably not what you want to hear, but with that level on debt on your salary (profit) you are unlikely to get any additional loan full stop. The best bet would be your own bank - if they refuse dont try elsewhere as they wont accept it either.

Best of luck.

dancingfairy

O.k so you earn 38/40k a year, you have 30k and you want to consolidate. I know you have stated quite clearly that you want the loan for consolidation but frankly I don't think anyone except those with extortionate interest rates that won't help anyway will touch you Sadly debt free wannabe has been littered with those that have consolidated, run the debt up, consolidated again, run the debt up , etc - some doing it 3 or more times. You of course may now have a firm grip on the figures and be different but I just can't see a bank being convinced somewhow - they will look at it as earns 38k, owes 30k and wants and extra ....
I would assume that a) most of the decisions will be made by a computer and not a human and
b) given the recession/credit crunch they will be more relunctant than they were before.

Sorry.
What I would suggest is trying to shuffle the debt to minimse the interest you are paying if you ahve spare capacity on any cards, cutting back on as many of your outgoings as possible, and trying to get extra money is as best you can - ie carbooting/ebaying etc. I don't think there is going to be an easy answer Obviously if you can't manage the minimums then you will have to consider defaulting and contacting a debt charity such as National Debtline, CCCS or your local CAB for assistance.
df

big_gus

Stu, thanks for taking the time to reply. I'm not sure I made myself clear here.... the money borrowed would be to pay off the cards. My current debt on cards is 30k. If I borrowed 30k I would use it it to pay off those cards. Therefore the debt would still remain at 30k but with the company who give me the loan (I'd then be paying THEM each month, but the debt would be reducing rather than what's happening at present).

StuTheDon

Gus - sorry but they dont see it like that. You say you would use the loan to pay of the cards, but you would have no obligation to do so. So they see your total exposure as £30k plus the £25k you want.

Dabooka

Firstly, I think you need to understand that you WOULD be asking for further borrowing; I think they'll be plenty of people pointing out that the bank (or whoever) would have no way for sure that the loan would be used for consolidation or you wouldn't reuse the released credit again.

I think you'd have more luck of the DFW board, but could you consider taking some of the equity out of the house? Have you had any rate increases lately you could reject (keeping the lower figure although you'd in effect lose the credit facility) which might help somewhat.

I still think going over to DFW with a SOA is the best step forward though; £30k is a hell of a lump of cash to find.

Stu above has cross posted.

Good luck

iolanthe07

I AM NOT ASKING FOR EXTRA BORROWING.

Maybe, but that is not how a lender would see it. They will see it as extra borrowing because they have no guarantee that you will use it to pay off existing debt.

billymadbiker

Look for the best/lowest apr loan that you can find, look at your own bank etc.
Apply to borrow 2k or so which you should get providing you have kept all payments up to date etc.
Once/if you get the 2k pay it off the highest apr card balance.
Call that card provider (or do it on-line) and reduce the credit limit of the card to just over the remaining balance.

Allow 1mth after doing this then apply for another 2k loan at low apr repeating over and over..

You then need to have a good look at your finances and make sure you know where you stand with regard to the total you can afford to repay on loans per mth vs what you will still have outstanding on minimum payments on cc's.

At this stage you will hopefully either have offers for low apr-for-life transfers from one of your cards or you can close the cleared cards and apply for 0% ones.

The_mangler

Im in exactly the same boat OP, except Im a full time carer with a disabled husband and no extra income. I am just about managing to pay off interest on cards (again, the reasons for amassing such debts are credible but not important to this debate). I have asked my own bank for a 25k consolidation loan, I even told them they could send the money direct to the credit card companies but no can do. Im now reduced to looking at bankruptcy so nobody gets their money back - can nobody see how this makes financial sense??

CLAPTON

The_mangler wrote: »

Im in exactly the same boat OP, except Im a full time carer with a disabled husband and no extra income. I am just about managing to pay off interest on cards (again, the reasons for amassing such debts are credible but not important to this debate). I have asked my own bank for a 25k consolidation loan, I even told them they could send the money direct to the credit card companies but no can do. Im now reduced to looking at bankruptcy so nobody gets their money back - can nobody see how this makes financial sense??

if your existing 25k worth of debts were already with your bank then it might make some sense for them to refinance the debts

however, if those 25k worth of debts were with other banks then they would be totally mad to take over the debts as you are clearly struggling and are likely to default