Trying to get her Debt Free - Advice needed

JammyJim

Hi Guys,

Long time browser on this site, but after lots of thinking, I have decided to join up and ask for advice.

Basically my girlfriend has built up a massive debt over different credit cards, and store cards, and now seems to have got her self in a difficult hole to get out of.

She has 2 credit cards
Nationwide £5539 (Limit £5600) 30%apr
Halifax £3590 (Limit £3600) 30%apr

And 2 store cards
Next £642 (Limit £1500)
House of Fraser £226 (Limit £550)

Overall she's paying off nearly £800 a month of her pay to just cover the minimum payments, and not getting anywhere really in terms of paying off this debt.

Went into a branch of Nationwide today, trying to get a loan of 10k to just pay off the above cards, which will allow her to live, pay for fuel to get to work and what not, but was declined a loan upon credit checks.

The man we spoke to was nice, and offered some friendly advice saying that it was probably declined due to the fact of all the cards she has with them more or less maxed out, saying all her credit rating will lay within these cards, and there is no more space to get any other sort of loan, but suggested we try and get a loan through Halifax, but we wanted to ask on here first, as trying for loans over and over again will make her already dented credit rating worse.

Not sure what else to try really.... Advice and help is much appreciated.

ghostmadlittlemiss

Tbh, consolidation loans tend to be frowned on around here as many members have got them in the past and then run up the cards again, pushing themselves into an unmanageable situation in terms of keeping up repayments. Also, as you've already discovered, getting a loan with that number of cards outstanding is highly unlikely to happen. Pop us up a Statement of Affairs for your girlfriend and we'll see what we can do to help her cut back. Is the £800 a month just the minimum payments? If not, have a look on this site and see which is the best way to distribute the extra money to pay off the cards quicker. If the £800 is just the minimum payment, work on the SOA first and we'll go from there. Good luck and let us know how you both get on.
Kayleigh

RAS

Hi

The answer does not lie in a consolidation loan; these almost always (85% of the time anyway) lead to people building up even more debt on top of the loan.

With those APRs (And you do need to find out how much the store cards are) it is going to be very difficult to get the debt reduced quickly (if she is paying 3% minimum payments then at 36% APR she will never pay off the debt).

She needs to come on here and do a Statement of Affairs so people can work out whether this is a solvable problem or whether she needs to speak to a debt charity.

With respect to the credits cards, have either put up the rate recently? If so, has she spent anything more on that card since the rate increased?

What she needs to work out is how and why she has got into this sort of debt, ootherwise any short-term solution will fail.

Is she leading a champagne life style on a cava salary, or even a beer and skittle lifestyle on a bread and water income? or does she have a latte habit (costs £2 each time but over a year that amounts to £500) Or is she running a car which she cannot afford, all sorts of things make problems.

JammyJim

She wont be putting any more money on cards, as I'll be taking them off her and cutting them up... she's very shaken over everything, and just wants to get out of this debt. I'll get her to write out a SOA and post it up asap.

JammyJim

RAS wrote: »

Is she leading a champagne life style on a cava salary, or even a beer and skittle lifestyle on a bread and water income? or does she have a latte habit (costs £2 each time but over a year that amounts to £500) Or is she running a car which she cannot afford, all sorts of things make problems.

She was (a few years ago) living the champagne lifestyle, of expensive handbags, shoes and clothes. She kept her debt hidden, even to myself, until recently she told me how much in debt she actually was, and have put a stop to all the spending and putting things on cards.

RAS

JammyJim wrote: »

She was (a few years ago) living the champagne lifestyle, of expensive handbags, shoes and clothes. She kept her debt hidden, even to myself, until recently she told me how much in debt she actually was, and have put a stop to all the spending and putting things on cards.

Ok, so does she have any of this stuff still around? If so, she needs to start by identifying anything she no longer uses of needs and flogging it on e-bay, amazon or doing a car boot sale.

Once she knocks a bit off the debt, things will start to improve.

JammyJim

Here we go:

Statement of Affairs and Personal Balance Sheet

Household Information
Number of adults in household........... 4
Number of children in household.........
Number of cars owned.................... 1

Monthly Income Details
Monthly income after tax................ 1030
Partners monthly income after tax....... 0
Benefits................................ 0
Other income............................ 0
Total monthly income.................... 1030

Monthly Expense Details
Mortgage................................ 0
Secured/HP loan repayments.............. 270
Rent.................................... 0
Management charge (leasehold property).. 0
Council tax............................. 0
Electricity............................. 0
Gas..................................... 0
Oil..................................... 0
Water rates............................. 0
Telephone (land line)................... 0
Mobile phone............................ 45
TV Licence.............................. 0
Satellite/Cable TV...................... 0
Internet Services....................... 0
Groceries etc. ......................... 150
Clothing................................ 0
Petrol/diesel........................... 200
Road tax................................ 100
Car Insurance........................... 70
Car maintenance (including MOT)......... 0
Car parking............................. 0
Other travel............................ 0
Childcare/nursery....................... 0
Other child related expenses............ 0
Medical (prescriptions, dentist etc).... 0
Pet insurance/vet bills................. 0
Buildings insurance..................... 0
Contents insurance...................... 0
Life assurance ......................... 0
Other insurance......................... 0
Presents (birthday, christmas etc)...... 10
Haircuts................................ 40
Entertainment........................... 0
Holiday................................. 0
Emergency fund.......................... 0
Total monthly expenses.................. 885


Assets
Cash.................................... 0
House value (Gross)..................... 0
Shares and bonds........................ 400
Car(s).................................. 10000
Other assets............................ 0
Total Assets............................ 10400


Secured & HP Debts
Description....................Debt......Monthly...APR
Mortgage...................... 0........(0)........0
Hire Purchase (HP) debt ...... 5745.....(270)......18.7 (I pay half £135 and she pays the other half)
Total secured & HP debts...... 5745......-.........-

Unsecured Debts
Description....................Debt......Monthly...APR
Nationwide CC..................5539.91...160.......29.95
Halifax CC.....................3590.33...100.......29.95
next...........................642.98....60........25.99
house of frazor................513.61....25........29.3
Total unsecured debts..........10286.83..345.......-


Monthly Budget Summary
Total monthly income.................... 1,030
Expenses (including HP & secured debts). 885
Available for debt repayments........... 145
Monthly UNsecured debt repayments....... 345
Amount short for making debt repayments. -200

Personal Balance Sheet Summary
Total assets (things you own)........... 10,400
Total HP & Secured debt................. -5,745
Total Unsecured debt.................... -10,286.83
Net Assets.............................. -5,631.83

Created using the SOA calculator at
Reproduced on Moneysavingexpert with permission, using Firefox browser.

JammyJim

The car is something that cannot go though

miggy

Any chance of down-sizing the car then?

She needs to look at why she spends too (emotional? Other people's expectations? Habit? Anything else?) or this situation will come back.

4 adults in the house - all independent of each other? Are the bills her share of shared bills?

Just wanted to wish you both all the best, I am sure you will get more specific advice on the SOA from people who know more than I do.

KoalaBear_2

First thing I noticed £50 a month for haircuts, iss this really all that important. As other people have said EBAY! Anything she hasn't worn in the last 3/4 months, or handbags get listing.

Also mobile phone, 45 month is rather steep is your gf tied into a contract, try phoning up the company see if they can give her a better deal?

£200 pound for petrol, is that just to get to and from work? I'd suggest trying to cut down as much as possible or is there anyone she can do a car share with?

That's all i can inititally think of. Someone will be along shortly who may be able to suggst something more.

JammyJim

The car is something that we both use, and i myself pay half for (only a year left on the finance), and i pay half the tax, and pay for fuel when I use it.

There is no one in this area to car share with for her to go to work and yes that petrol is just for her to get to work and back (we don't really go out much now)

This is kinda why we/she was looking at getting a personal loan to consolidate all the cards into one place, and one do-able monthly payment (Nationwide one she was trying to get was £250 over 4 years), which will allow her to get out of the hole she has dug. But like the guy said, she's now stuck in a vicious circle where the debt isn't coming down much, and its taking all her monthly salary

Yes all 4 adults in the house are independent (she lives with myself and my family) and does not pay any rent, council tax, just a share of food money a month (£150).