Consolidation Catch 22?

rupe4073

Hi, this my first post, I hope someone can help.

My spouse has approx £20K of CC debt, I have none. The 2 cards are up to their limits. We want to consolidate this debt into a loan as we are sick and tired of all the money we are paying each month in interest, money which could be going towards our pensions, our children's education etc etc. We have no problem managing the debts each month. We have now been informed by one of the two creditors that my partner's interest rate is about to go up so the necessity to consolidate is more important than before. The problem is that my partners credit report shows current borrowing at a high level, therefore we (as we are linked re credit checks) neither of us cannot apply for further borrowing even though any borrowing would be to consolidate and not increase our overall debt. So it seems our choices are limited to: selling our house and paying off the debt, paying the debt each month for the next 15 yrs or going into some sort of debt management plan.

Any thoughts as to what we could do - it's driving us crazy.

Many thanks.

dazla

I'm in exactly the same position as u..tho my cc debts are nr £25.000. I tried to get a consolidation loan but was also turned down for the same reason, I was told its about affordability at the time u apply for the loan. Also, the loan company have no guarentee that u will use the money to pay off the credit cards. I am seriously considering a DMP, tho really don;t want to do it, but can't see any other way out...just to let u know, your not alone in this situation, if thats any consolation

CH27

Consolidation Loans are not a good idea.

Focus all your spare cash on paying of the cards with the highest interest rates first.

Stop spending on the cards & preferably cut them up.

jonesMUFCforever

Both of you are basically saying the same thing - ie we have debt which is manageable if only we could get another loan to clear it.
This however does not work in reality as you are both living beyond your means.

Both of you should immediately go over to the debt free board and write out a statement of affairs.
If you can't borrow anymore you need to look at the debt from another angle.

Get rid of all outgoings that are not 100% necessary - if you have to get rid of Sky TV so be it in 12 months you will have saved £600 which can go towards your debt etc etc.

Billy-no-Money

Check the letter telling you the interest rate is going up - you should be able to 'reject' the rise, on condition that you stop using the card and continue repaying it.

Take a look here: http://www.moneysavingexpert.com/reclaim/credit-card-interest-rate-increases


I did this with Capital One when they increased my rate from 10.8% to 24.9% a couple of years ago - I had it frozen at 10.8 and have been repaying ever since (it's now about a third of the original balance). The same minimum payment rules continue to apply, e.g. for Cap 1 it's 3% of balance I think.

I echo the advice to avoid consolidation if you can - if you're managing the minimum card payments now, and can get the interest rate frozen, carry on making the same payment (i.e. NOT the minimum), and throw any extra cash at the card with the highest interest rate (snowballing).

dazla

jonesMUFCforever wrote: »

Both of you are basically saying the same thing - ie we have debt which is manageable if only we could get another loan to clear it.
This however does not work in reality as you are both living beyond your means.

Both of you should immediately go over to the debt free board and write out a statement of affairs.
If you can't borrow anymore you need to look at the debt from another angle.

Get rid of all outgoings that are not 100% necessary - if you have to get rid of Sky TV so be it in 12 months you will have saved £600 which can go towards your debt etc etc.

I'm not actually living beyond my means, I have £50.00 a month left to live on and pay for food, i have all ready cut back on non-essential things, a change in my circumstances has lead me into this position

jonesMUFCforever

dazla wrote: »

I'm not actually living beyond my means, I have £50.00 a month left to live on and pay for food, i have all ready cut back on non-essential things, a change in my circumstances has lead me into this position

Would you like to re-write your post and at the same time take a reality check?
If you only have £50 to live on per month and this includes what you eat then you are way way way in too deep.

You are in serious trouble and I would suggest professional advice from CAB or one of the other debt charities.

dazla

No thanks , I do not need to re-post, and do not need to take a reality check thank you, i am well aware of the position I am in !

CH27

dazla wrote: »

I'm not actually living beyond my means, I have £50.00 a month left to live on and pay for food, i have all ready cut back on non-essential things, a change in my circumstances has lead me into this position

Post your SOA on the Debtfree boards & people will be happy to run a neutral eye over it.

rupe4073

I'm curious as to why we should not consolidate. It makes perfect sense financially as we would have a fixed payment each month, a fixed term and a better interest rate. If we take the option to freeze the interest rate/close the account (which has been offered) it will take a lot longer to clear the debt and will cost us more. I am assuming this advice maybe be based on the scenario that we keep the cards and build up the debt again - therefore good advice - this is a trap we have fallen into before. I meant to add that if we consolidated we would close the CC accounts and destroy the cards. I understand that no lender can force us to pay off the debt with the loan and close the accounts so therefore in their eyes we would increase our overall debt but there must be a way doing this surely. We had a face to face interview with one of our banks to explain that if we could get a loan we would use the money to pay off and close the accounts but they said that our current borrowing would still be taken into account on application which seems potty to us so after an hour of discussion we didn't bother to apply as we knew we would be refused. We are not living beyond our means we are simply trying to get a better financial deal on this debt.

YorkshireBoy

rupe4073 wrote: »

My spouse has approx £20K of CC debt, I have none.

Any particular reason why you don't apply for a card yourself and transfer some of her debt to your card?