Credit Card Debt & Struggling to Pay!!

moneysavvy35

Hello Everyone

I am after some advice for my partner. He has 3 credit cards totally about £6,500. He also has quite a large loan which he took out for a car, which he is paying off for with no real worry.

I am abit concerned about his Credit Card debts though. He is struggling to pay these at the moment. He is only paying the very mininum on all of them, and on top of this the cards that he has taken out have reached the stage where the interest free period has know gone and the payment have shot up:eek:. Ideally he would like to shift his debts but he has been turned down by 2 companies recently. The last card he got was to shift debts but the problem was the company didn't give him a high enought credit limit to shift them all. So now he is in the vicious circle of paying just the minimum but also getting whacked with hefty interest rates

I am trying to help him sort out his problems but kind of don't know where to start - I have told him to contact the C/C to see if they can accept lower monthly payments will they do this? In the meantime what else can he do to help himself get out of this mess? Ultimately he needs to be able to pay lower fees per month just to try and sort himself out...can anyone please tell me how to start the process or give me some advice on what he can do?

His credit rating I don't think is very good, although he pays every month - its just the mininum.
He has debt for a personal loan for a car but this is OK
He can't seem to get a new credit card and if he the credit limit wouldn't be enough.
Thanks very much

tealady

Hi
The first thing he needs to do is stoapplying for more debt. Two reasons, one he cannot afford what debt he has and two the searches will show up and could affect his credit rating.
Then he needs to complete an SOA (sticky at the top) in order to set a realistic budget.
I am sorry if this sounds harsh but that may be the only way to a debt free life, it may not be easy but it will be worthwhile.

moneysavvy35

tealady wrote: »

Hi
The first thing he needs to do is stoapplying for more debt. Two reasons, one he cannot afford what debt he has and two the searches will show up and could affect his credit rating.
Then he needs to complete an SOA (sticky at the top) in order to set a realistic budget.
I am sorry if this sounds harsh but that may be the only way to a debt free life, it may not be easy but it will be worthwhile.

Hi thanks for your response. I like harsh I have been talking to him for ages about it. 1thing though I wouldn't say he is applying for more debt. His simply looking for a new credit card/loan or whatever is a means of consolidating and trying to get something so his monthly fees can be lowered. He has not spent on any of these cards for over 1.5yrs. They were also used as means of having interest free payments but now the free interest period has expired. But anyway I here your point as they have turned him down twice. I shall ask him to fill out the soa. Do you think writing to the cc companies asking them to lower the payments will help?

bargainbetty

moneysavvy35 wrote: »

1thing though I wouldn't say he is applying for more debt. His simply looking for a new credit card/loan or whatever is a means of consolidating and trying to get something so his monthly fees can be lowered.

Do you think writing to the cc companies asking them to lower the payments will help?

As far as the banks/credit card companies are concerned, he IS asking for more debt. They cannot be sure that he will do a balance transfer rather than just fill up the card... lots of people have done both over the years! Look at his total debt/available credit compared to his income - if it is nearly or more than 50%, he is likely to struggle getting any more.

Honestly, he could call them and ask for better rates, but unless he is in default (wrecking his credit for six years) they are unlikely to agree. Why would they? He is paying the bill. Request that the accounts be closed - he won't be able to spend any more money, but they won't be able to increase his interest rates any more either.

Do the SOA, see where he can save money to throw at his debt.
Find out the interest rates, and throw every spare penny at the highest interest debt.
Sell on eBay, Amazon, car boot sales, through family, clear out every last scrap of old junk and put every penny towards the highest rate debt.
Start a penny jar and pay that into his account every week - same thing, slap it against the debt.
When that debt is clear, contact the card provider and ask for a low-life-of-balance deal (easier to get than 0%). Empty the next highest rate card onto that, and so on...

Good luck x

dreamdreamer

1thing though I wouldn't say he is applying for more debt. His simply looking for a new credit card/loan or whatever is a means of consolidating and trying to get something so his monthly fees can be lowered. He has not spent on any of these cards for over 1.5yrs.

The trouble is the credit companies look at your available credit, if he is struggling to pay minimums on £6,500 of debt, when he applies for more, the credit company will think "Well, he can't manage £6k, if we give him another £6k consolidation card/loan and he re-spends the £6k on the credit cards, he'll default and we'll never get it back". Unfortunately many MANY people do this so the CC companies are understandably wary.

moneysavvy35

Thanks for explaining that....I see what you mean.