Dilema -what to do?

AngelMom

Hi all, I have been reading these posts for a while and hope you will be able to offer advice.

We have a debt of £27,000 all loans, credit cards and overdrafts all on really low interest rates (apart from overdrafts) or 0% or low life time balances as we have shopped around for best deals. As yet we have not defaulted on any payment and have made at least minimal monthly payments each month until now. I have checked my credit history and it is excellent.

We have completed a budget with Debtline who say we have £160 per month to pay our debts of £704 (excluding mortgage). We have been cutting back on any excessive expenditure and I have taken on more work to help. We were considering a DMP but it will take 14+ years to pay off. According to the info I have read this will be on our credit history for upto 18 years as it goes in 6 year cycles. I pressume this means we will be unable to apply for a remortgage etc at some later date for example until 18 years is up.

We have also looked at further borrowing with Firstplus at 7.7% APR variable but have been rather scarred that they could reposses our home if we default at some point in the future if interest rates rise etc, transferring unsecured debts to a secured debt.

We have also considered selling our family home as we have around £20K in equity and going into rented accomodation until we are back on an even keele but fear that we will never be able to buy again and could end up in rented forever. We have looked in to shared ownership at a later date maybe??

We have looked at IVA but again have been told that potentially we could be forced by our creditors to release capital in our home at a later date (presume this means sell up??).

Have we thought of everything? Would bankruptcy be easier? Is there anything else to consider? Which option do you think is more favourable long term. We have had so many sleepless nights about this and would really appreciate a few extra pairs of eyes on this one. Many thanks all :A

xx

madduck

Gut reaction would be to avoid consolidation at all costs. Many of us on the board have been there (some of us more than once), bought the teeshirt, etc. Consolidation, without addressing the overall cause of your debt, can most often lead to disaster.

It would be useful if you could post an SOA (basically a list of your income, outgoings, debts, interest rates, minimum payments, etc) that way the wise bods on the board can give you advice and support. Hopefully pointing out where you might be able to save some case, what options you have, etc.

Also, you might want to consider approaching one of the debt charities - CCCS, Payplan etc for advice and support. Links at the top of the page.

Re length of DMPs, don't be put off too much by the relatively long duration you might be facing. When I first started on mine 2 years ago I was looking at about 11 years on it. With savings, increases in salary, etc., I'm now looking at having it paid off in about 3 years from now. That is with a nearly £60k debt!

You can get remortgages whilst on a DMP, likelihood is though that you might have to go to a specialist broker and may have to pay a slightly higher rate. Many of us on DMPs though have mortgages. I have found the DMP to be a lifesaver. Yes, I don't have loads of cash to throw about, but I've got enough to live on and it has taught me to budget. For the first time in my adult life my debt burden is reducing every year. Never thought I would be able to do it, but if I can, anyone can!

Jules

You should be able to remortgage/renegociate with your exsisting company without any problems.

I have just renegociated a much better deal with the Woolwich, and after bearing my soul to the mortgage consultant and telling her about our DMP she informed me that as I was an exsisting customer they wouldn't be doing a credit check and therefore I had no need to tell her about the DMP. Oh well you live and learn.

As far as the DMP is concerned, it was they best thing we ever did. Yes it might take a while to clear eveything but I am finally in control of our finances not the other way round. You will find, as madduck has said, the term of the DMP will reduce with pay rises etc so don't be put of by this.

Don't know much about IVA's but I don't think they make you sell up, they may ask you to release the equity by a remortgage though.

Bankruptcy would be a very last resort especially as you own your own home, it would be sold and I think with your level of debt it wouldn't be an option, just my opinion though.

I wouldn't worry too much about your credit rating either, I know I don't want any more credit ever and am quite happy that mine is shot to pieces.

Good luck with whatever you decide, you will get loads of help and info on this site and if you post a SOA the guys on here will give you brilliant advice on saving money.

AngelMom

Thank you I have printed off your replies for my hubby and I to discuss, its good to get the advice of someone thats been there and you have been really helpful. I shall go away and write my SOA and post it a little later for you to have a look.

Many thanks :beer:

Angel x:A