Credit Cards Vicious Circle

Deefa

We hope some-one can help with our dilemma. We’ll try to keep it short(ish).

I am employed as an airline pilot and as such earn a pretty good wage. However almost 2 ½ years ago I had a medical problem which kept me off work for almost a year. Whilst we had insurance it didn’t cover all the bills and we had to use the cards to exist. In addition, we had inherited a large amount of debt on my wife’s cards when I married her (which I knew about and were manageable at that time). But being off work so long meant we have not been able to cope financially and my wife has gone into debt management. We cannot go bankrupt because of my salary level and the same with debt management for me. Because of our problems the card companies kept increasing the interest rate and one that started at about 21% has just increased it again and now is about 43%!!!

We are now (I think) on top of things financially and we are starting to get there. The medical problem is very unlikely to reoccur. However whilst we can afford at least the minimum payments on all the cards it is disheartening to pay £250 each month and see the debt decrease by only £30 due to the extreme levels of interest.

The vicious circle is that the best way to pay off the cards would be to get a loan. But because we now have bad credit we are unable to get a loan from any normal provider. We have even offered to pay double their usual rate. They can see the stupidity of the situation that we can make the payments but “the computer say no”. We live in rented accommodation so cannot remortgage. At this rate it will take over 12 years to clear the cards but about 4 if we could find funds elsewhere at a sensible rate.

Sorry for rabbiting on, but if anyone has thoughts or possible solutions we would be really grateful to hear them.

Regards

Deefa

dealer_wins

I can only suggest cutting down as much as possible and pay every penny you can towards reducing the debts.

BoGoF

You can reject the rate increase but that means you can no longer use the cards. Don't know if that would cause problems for you? I think you have 30 days from the notification of the increase to reject it. It should tell you on the notification.

In all honesty your options appear limited. You are financially linked to your wife on your credit file so the fact she is on debt management also damages your rating.

Tixy

Your wife's DMP - is this with a charity or with a fee charging company? If she is paying a fee every month then I woulld suggest she switches to a free provider.

How long is her DMP forecast to last? If its less than 12 years then presumably once paid off you will then be able to put more towards your cards each month?

I guess you are both used to living on a budget minimising your outgoings etc as a result of her being on a DMP. But it might still be worth posting on the debt free wannabe section of the forum and posting up a statement of affairs to see if posters can spot any places you could save money / get things cheaper etc so you can throw more towards your debts.

As said you need to opt out of rate rises - and certainly out of the latest one to 43% (you have 60days to do so).