Best Option for Credit Card Debt

Clive_India

Hello All

I recently posted about a Credit Card debt I have because my provider MBNA have decided to increase the minimum payment rules (adding 1% of the balance to the bill as the principle instead of £5). Now this means I can't pay the minimum payment as this would take me over what I currently have coming in.

The basic outline of my circumstances are, I'm unemployed (6 months) on JSA of 65.25(ish) a week (about 260(ish) a month), previously my minimum payment on a £9000 debt (28% APR) was about £240 a month, which I could afford to pay (due to living with the folks) but this increase means I won't be able to. Now I've checked my credit rating with experian which is 821, which I believe is good and I have no previous marks on my credit history, as this change in payment take effect this month.

What would be the best way to try and settle my payment with MBNA until I can get a job which might only take a few weeks/months, which if the following should I try or avoid

1. Companies that I can take out a debt considation loan out with to reduce payments and make them more stable

2. Making token payments until I get a job then pay back as much as possible to help clear the debt quicker

3. Enrole in a Debt Management Plan (DMP) to get it under control

4. Or any other ideas you guys and gals can think of

The problem I have is that from what I've read options 2 and 3 leave marks on your credit history of varying length (no real answer out there) and make it hard to get new credit, now I know that clearing the debt is more important, but if I get a new job and then after a few months I want to move and rent a place nearer to work, then how would this effect me considering most landlords and rental companys like to run Credit Checks, and some people might just look at that and not want to know the reasons behind it (mini-rant: just like everything these days).

So what would be the best option to deal with them for something I hope would only be a temporary issue, but I would like to find a solution that has as little effect as possible on my credit score.

PS I live in Scotland if that has any bearing on contacting any companies

Any ideas would be helpful

Tixy

Hi

1) very unlikely to be an option, lenders won't generally give loans to people who are unemployed.
3) do you just have the one debt? if so most DMPs that are run by the third parties -including the charity ones -generally tend to deal with people who have more than 3 debts. You could do effectiveley a self-administered DMP though.
2) could be an option but see my suggestion below first.

Regarding your credit rating, some credit card providers will mark your an account with an arrangement to pay, others will mark a default as soon as you have missed (or paid less) for 2-3months.

What I would be tempted to try first is to phone up the card company, explain your situation and that you expect it to improve soon. Ask them if you can come to an arrangement with them to pay lower payments for 6months without it affecting your credit rating. Quite a lot of people have been successful in doing this and if you think you stand a realistic chance of being able to find work and go back to full payments after the 6months its worth a try.

Usually if you cannot go back to full payments after 6months they will issue you with a default on your credit file (which stays on for 6years from the date its entered and makes getting credit difficult for those 6years).

Clive_India

Thanks for the reply

I have contacted "them" (my new nickname for MBNA) about my circumstances and they didn't really sound like they wanted to help me out with my offer (which would probably work out to be around 75%+ ish of the minimum payment) of making smaller payments within terms that would suit both of us.

But they did suggest as you have mentioned that I could either do a form of DMP with them or pay what I can afford to pay per month, both the man said could mark my credit file with something (either way I think its going to get marked with something anyway). I had already contacted them before I saw your reply but it did sound similar to what they suggested anyway. From what I remember of the call I think if I entered into a DMP with them it would mark my file straight away but I think if I could pay what I could until circumstances change then it might not unless it did go on for a while.

I do expect my employment situation to get better soon anyway as employment seems to be on the way up around my area (plus I've got an interview on Thursday (fingers crossed)). So thanks for your help.