Consolidation Loan

DebtSpiral_2

Hi. Over recent years I have gone through a financially difficult ,and in truth overextended, period that has resulted in two very significant defaulted credit cards with a combined balance of £18k.

Getting to this position has been my fault but also has been made worse by the likes of MBNA applying 38% interest (from an opening 6%) and refusing to reduce it. The vast majority of this debt is in fact interest!! I will never have a credit card again. They have brought nothing but misery.

To service this debt I am paying out more than £550 a month and remain 'defaulted' all the while I do. It will be years before I get these paid off. I really want to get back on an even keel and without access to private funds I feel I need a loan to clear the defaulted amount and start paying off this balance.

The two 'debt collection' companies that currently hold the balance are singularly unhelpful in dealing with my problems and if anything seen keen to keep me defaulted as long as possible.

I am a home owner with some limited equity in my house but a straight mortgage extension is not possible due to my poor credit history.

Can anyone advise me on companies that may provide lines to people with my credit background? Are the 'Homeowner' type loans a bad thing? Any pros or cons I should know about?

Any advice gratefully received!

jason1231972

Homeowner loans (secured loans) pros:

- Usually relatively easy to qualify for in comparison to personal loans (this does not mean you will qualify yourself - your credit history appears too poor on the surface of it)
- Usually lower interest rates than personal loans

Cons:

- Higher rates than mortgages, also as with anything, a variable rate could see a spike in repayment amounts further down the line - interest rate terms should be thoroughly scrutinised upfront.
- You owe them your house if/when all goes wrong

Click here.

Tixy

How long ago did you originally default on the cards? What default dates are entered on your credit file.

The record of the debts and the defaults will remain on your file for 6years from the original default date and after that point they will drop off your file permanently.

Should you manage to pay off a defaulted debt before the 6year period it will then still be shown for the remainder of the 6years, but as a satisfied default.

So whilst you say that the debt collection companies seem to want to keep you defaulted for as long as possible - in reality there is a set time period these debts will appear on your credit file.

Regarding the debts - are the debt collection companies charging interest? If so have you written and asked them to consider freezing interest & charges?

How much is your house currently worth?
How much is your mortgage?
How limited is the 'limited equity'?

DCFC79

Did transfering the credit form your MBNA card not help then ? as per your thread from 2005.

DebtSpiral_2

Limited equity is about £50k. Default was a year ago and while I recognise it will be on my file for a while I'd rather it at least said it was a satisfied default rather than outstanding.

Of the debt collection agencies one has frozen interest and charges while the other is actually demanding full payment and not 'agreeing' to a payment schedule (even though I am actually paying) while still charging interest.

In truth I am heartily sick of dealing with these people and just want to pay them off and out of my and my families life.

Thanks for your interest and comments.

Caz3121

Even without the default and a squeaky clean credit score I think this would still be a challenge. £18k in debt and looking for another £18k loan (although you want to pay one off with the other they do not really consider this as you don'e 'have' to) which would result in the lenders eyes as total debt of £36k which would likely need a £72k salary to qualify

somethingcorporate

With such a recent default I find it very unlikely that you will get any kind of loan.

Tixy

I wouldn't go down the route of trying for a secured loan - especially as part of the current debt is interest free. (I doubt you would get one anyway with the recent default and level of debt).

In terms of the second debt - good that you are still paying them regardless of what they will say they will accept. How long have you been dealing with this agency? If you just stick to the payments they should eventually accept them.

In terms of being fed up with dealing with them - are they harrasing you? are they telephoning you?
If so there are templates to send to ensure all communication is in writing.
If they are pressursing you to increase repayments or borrow from elsewhere to repay the debt etc then you could try a letter of complaint to them quoting the relevant clauses of the OFT debt collection guidelines that they are breaking - UPDATED OFT Guidance on Debt Collection - READ IF YOU ARE BEING HASSLED UNFAIRLY
(they almost always break several when dealing with debtors)