Guidance needed

DERV_Monkey

Hi everybody, new to this forum and need a bit of help on what to do first.

Myself and my wife have combined debts of £22215.21

These are split over the following;

Loan 1 - £8117.56
Loan 2 - £5957.65
Credit Card - £2700
Store Card - £500
several overdrafts - £4940

Total monthly income is £1650.82 after tax (my wife is receiving statutory maternity pay)

We have completed a budget and worked out that we can afford repayments of £300 approx. per month after everything else is paid.

Can anybody advise if they were in a similar position what they would do first and for the best?

Thanks in anticipation,

HappyMJ

First? For the best? It's up to you. If you want a clean credit record then make the minimum repayments that have been requested. If you don't mind going into default then split the £300 available equally based on the outstanding balance.

fatbelly

DERV_Monkey wrote: »

Can anybody advise if they were in a similar position what they would do first and for the best?

Thanks in anticipation,

If £300 doesn't cover the contractual repayments then first I'd open a new bank account (unconnected to any of the debts) and use it for all income and essential direct debits. Cancel the direct debits linked to the debts. Walk away from the other overdrafts. Stop paying, and using, the credit cards. Make sure I had caller display on my phone.

Then chuck the whole lot in a debt management plan with cccs.

elaine12022

Is the £300 extra to cover minimum payments on the debts too? If it's extra looks like you could pay off the store card in a couple of months as a start.

spongmonkey

hey, it all depends on the desired outcome.

1. to be debt free asap regardless of damage to your credit rating
2. to preserve your credit rating and pay off the debt gradually
3. be debt free in the near future and do some damage to your credit rating

actions that go along with each of those are:

1. bankruptcy
2. make the minimum payments until you get back on your feet, assuming the £300 covers these and you don't miss payments
3. IVA or debt management plan, IVA would be clear in 5 years, DMP could take longer depending on the deal

There are obviously good and bad points to each, let us know what the plan is and we can probably offer advice. I can personally offer advice on all except the IVA

DERV_Monkey

Hi Guys, thanks for the replies. The £300 we have spare is to cover all loan payments and credit card. We are thinking just to lower the monthly payment by consolidating our 2 loans with one to pay off the loans and cc. I paid off the store card yesterday with the last of my savings, there is now £6 in there! We are thinking to leave the overdrafts for now and just keep chipping away at them over time. Are we doing the right thing?

GAH

From the information you have provided, you won't be able to get a loan to consolidate because of the your current level of debt vs your salary.

Try the snowball calculator (BELOW) which is very help and ascertains what debt you should pay first and gives you a breakdown of your debts.

http://www.whatsthecost.com/snowball.aspx?country=uk


Secondly, if you haven't already done so, complete a Statement of Affairs, there is a sticky at the top of the page, and this may give you an idea where you can make some extra savings to put towards your debt.