Best way to sort out my finanical situation?

TheSpade

Hi,

I'm currently unemployed and with quite a bit of debt, the monthly payments are killing me and what's more the interest I'm paying means I rarely make any progress on paying any of these off.

So I currently have:
A credit card that is maxed out at £2,700
An overdraft maxed out at £1,500
A loan for around £880
A second overdraft maxed out at £2,000

I pay:
£80 a month or thereabouts to the CC, £40 is taken from that for interest and another £35 or so for 'merchandise interest'.

I pay around £20 a month in interest towards my first overdraft.

The loan payment is around £35 with £30 of that been taking for interest.

The second overdraft I pay a very small amount of less than £5 per month.

The payments are all coming from different places at different times of the month, with all different charges for interest, merchandise interest etc that I just get confused and can't keep up with it.

I need a way to get things more organised and especially get the CC paid off because it's going nowhere with such ludicrously high interest charges.

I have a credit rating of '456' which is considered 'good' and not too far away from excellent.

I had considered trying to get a loan, pay everything off which will stop these ridicolously high monthly merchande interest payments etc (which is basically just throwing money away) and then I'd just have one single monthly payment towards the loan making it much easier to manage for me. I am unemployed though so can't see any bank lending me the cash, also considered Zopa but they may be just as strict and I don't think they're too highly regarded round here?

What are my options here? All recommendations considered.

Thanks.

pink_princess

A loan is the last thing you need .:eek:


I'm not very clued up on debt advice but hopefully someone who does know will be along soon.

Good luck x

Culex

TheSpade wrote: »

I had considered trying to get a loan, pay everything off which will stop these ridicolously high monthly merchande interest payments etc (which is basically just throwing money away) and then I'd just have one single monthly payment towards the loan making it much easier to manage for me.

You are Carol Vorderperson and I claim the News Chronicle prize!

TheSpade

No idea what you're on about.

Culex

TheSpade wrote: »

No idea what you're on about.

Have you never seen the adverts that starred Carol Vorderman in which she endorsed consolidation loans?

cobblers_boy

Personally I would suggest the following:

1. Stop trying to get more credit
2. Post a Statement of Affairs using a sticky from the top of the bard
3. Let the experts on here review your statement and then suggest some real and life changing ways of clearing your debt.

Borrowing more to pay less that will cost you more is not the solution.

CB

Hannah_10

So you're unemployed but making £140 a month repayments? If you're unemployed and in receipt of benefits you can officially afford £4 a month (one for each creditor). If you're not in receipt of benefit you may still only be obliged to make £1 a month repayments to each creditor, it depends what your exact situation is. We would need to see an SOA for that.

TheSpade

Hannah_10 wrote: »

So you're unemployed but making £140 a month repayments? If you're unemployed and in receipt of benefits you can officially afford £4 a month (one for each creditor). If you're not in receipt of benefit you may still only be obliged to make £1 a month repayments to each creditor, it depends what your exact situation is. We would need to see an SOA for that.

I am unemployed and claiming JSA.

Is it legal requirement that if you are unemployed each of your creditors has to accept £1 a month?

Does this affect my credit rating?

What does SOA stand for?

Superbiatch

TheSpade wrote: »

What does SOA stand for?

Its a statement of affairs which shows all your incoming and outgoing finances. Link to it is on the debtfreewannabe forum posted by southernscouser (links don't work on here) and it will give us an idea of your situation and if any savings can be made Just fill it in and post it on here.

jamesd

TheSpade wrote: »

I am unemployed though so can't see any bank lending me the cash, also considered Zopa but they may be just as strict and I don't think they're too highly regarded round here?

Zopa is OK if you can get a better rate there than elsewhere. Usually credit card 0% deals beat Zopa and anyone who can qualify for a loan from Zopa has a good chance of one of those credit card deals, thogh maybe using a few to get to the limit needed for the loan. Some glitches with direct debits occasionally and the odd thing specific to their view of me but it's mostly no better or worse than other lenders.

Less true for investing by lending money, though - too many more profitable options around.

You can forget Zopa. No job or pension income means no chance of you being accepted.

TheSpade wrote: »

I'm currently unemployed

You'd only get a loan by lying unless you have serious income from some source, like investments. Crimes like that aren't a good idea.

If you don't have the savings and income to cover this long term your best option will be to contact CCCS or one of the other debt advice charities so that they can seek to arrange token payments of £1 a month and suspension of interest until your situation improves.

Things like this will show up as an arrangement on your credit record, somewhat better than lots of missed payments.

A court will not award a creditor more in payments than you can afford unless you just don't provide the court with a statement of your affairs. That means that there's no point in a creditor taking you to court when you've offered and are paying as much as you can afford.

You don't strictly have to do this via a debt advice charity, you can set it up on your own. But some creditors will not cooperate without that sort of intervention. If you want to do it yourself your first step should be to phone each creditor telling them that you're unemployed and don't have the income to continue paying at the full rate and are seeking the agreement of all of your creditors to accept a temporary arrangement of token payments of £1 a month until your situation improves. If all don't agree it's time for CCCS or similar.

One or more may try to tell you that you should use savings or borrow from friends or others. Decline, pointing out that even if you could, that's not a financially responsible thing to be doing at the moment.

One or more might mention court. If so, just point out to them that you know that a court would not order higher payments than you can afford, so do they really want to waste their time and money and the court's time when you'll just report your situation to the court so affordable payments can be made. If any perseveres after that you might also politely ask them to review what the fair debt collection rules say about threatening court proceedings not being appropriate as a threatening tactic to try to coerce payment. If they still persevere, ask them to confirm that they have noted your situation and ask them if they wish to decline to accept your offer of £1 a month. Even if they decline, make that payment - very important that you do to show that you are serious.

When contacted by debt relief organisations and told that they are working with you, creditors are required to stop debt collection activities for at least a month to give time to get tht organising done. The charity would then take a single payment off you and send it on to each creditor.

You can also try asking each creditor to change the day that payments are due to the same day to make it easier for you to manage them.

Culex

jamesd wrote: »

TheSpade wrote: »

I'm currently unemployed

Crimes like that aren't a good idea.

:p:p:p:p

jamesd wrote: »

One or more [creditors] may try to tell you that you should ... borrow from friends or others. Decline, pointing out that even if you could, that's not a financially responsible thing to be doing at the moment.

It also contravenes the OFT guidance on debt collection but, with the Office of Faffing and Twaddling once more in hibernation, DCAs seem to reverted to type and do much as they please.

jamesd wrote: »

One or more might mention court. If so, just point out to them that you know that a court would not order higher payments than you can afford, so do they really want to waste their time and money and the court's time when you'll just report your situation to the court so affordable payments can be made. If any perseveres after that you might also politely ask them to review what the fair debt collection rules say about threatening court proceedings not being appropriate as a threatening tactic to try to coerce payment. If they still persevere, ask them to confirm that they have noted your situation and ask them if they wish to decline to accept your offer of £1 a month. Even if they decline, make that payment - very important that you do to show that you are serious.

That is very good advice; if you can get their bank details, it would be wise to set up standing order(s) from a bank account which you keep topped up sufficiently to cover those payments. Do not use the bank account for anything else; do not use a bank to whom you owe money or they'll grab the contents of the account as part payment of the debt and do not set up direct debits or the creditor(s) will try - and fail - to recover all the debt.

jamesd wrote: »

When contacted by debt relief organisations and told that they are working with you, creditors are required to stop debt collection activities for at least a month to give time to get tht organising done. The charity would then take a single payment off you and send it on to each creditor.

That is what they are supposed to do; see my comments above concerning the OFT.