In a black hole with card debt

HOPEFUL-HEATHER

Hiii. Can anyone advise or help at all.
I popped in to see a lovely friend tonight and we ended up talking about money, or lack of it.
My friend confided that shes getting in deep and way over her head with all her card debts and is at the stage where she daren't look at them any more and shes not even that sure which cards shes got now. She said she was talking to someone in work today and they told her to, (im not sure of the correct term here) put all the debt on one loan but you end up blacklisted, does anyone know this term?
Ive told her I'll go round her house next week and well make a table of all her incomings and outgoings and see if we can do something with her debt.
Even though Im quite good at living on a tight budget myself I havnt the foggiest about card debt.
Do you think she should apply for a new card or a loan (im with Zopa), and pay them all off with the new loan so its all on one card?
Any help would be great or even if you can advise someone for her to talk to for help.
Thanks for any help. x

[Deleted User]

Is your friend currently managing to make all of her minimum payments each month? If so then it's possibly not quite so bad as it looks, depending on the total amount of card debt. What's her total card debt?

If she's managing to make her payments then her credit rating may not be too badly damaged and if her total debt isnt huge then by far the best thing for her to do is to apply for a balance transfer Card - the barclaycard platinum balance transfer is currently the best deal. This would allow her to consolidate her debt onto one card at 0% interest for up to 22 months. Then it would be a simple case of taking the total amount, dividing by 22 and paying that amount off each months. (and ensuring that she closes most of her other cards to avoid simply racking up more debt!)

If the current debt is too much to put onto one card (I'd say that more that £5-6k is likely to be the biggest limit shed be able to get) then she could still do this to cover as much of the debt as possible. Then she could pay the minimum off the balance transfer card each month (she'd have 22 months breathing space) while paying off the other cards one at a time - ensure she understands the interest rates for each card and focus on paying the highest off first. She will still have to make the minimum payment on the others each month.

If she is unable to get a good balance transfer card then possibly a consolidation load from her bank would be the bets bet but this will depend on what kind of interest rate she can get. Again, she needs to understand that she can't simply start spending on the cards again. She should close them when she can but keep one or at most two open as simply cancelling everything won't do her credit rating much good. To maintain a good rating she should spend on the card but pay off in full each month - basically using it instead of a debit card.

Hope this helps.

[Deleted User]

Oh and should she decide to get a loan to cover all the cards there's no reason she would be blacklisted but the balance transferr credit card would likely be cheaper..

jo-bo

If she cannot even look at her debts then she has probably missed a few payments and would struggle to find a loan provider. You would be best o move this question to the debt free wannabe board were I'm sure that you'll get a lot of help and advice.
With regards to seeking help she would be best to contact CCCS as they give free advice, try to steer clear of any of the debt management companies that charge fees. HTH

somethingcorporate

Unless there is a compelling reason to consolidate (better rate) then having one single repayment is no better than having a lot of smaller payments. It often just gives people a lot of available credit and before they know it they have twice as much debt.

Get your friend to complete an SOA and post it on the DFW board and let them help out.

jamesd

HOPEFUL-HEATHER wrote: »

She said she was talking to someone in work today and they told her to, (im not sure of the correct term here) put all the debt on one loan but you end up blacklisted, does anyone know this term?

There isn't a loan like that but it resembles what happens if a debt management plan is set up. All the payments go to the charity like CCCS that is handling the repayments and passes the money on to each creditor. The creditors will mark the credit records to say that the loans are in an arrangement and that will make it hard to get credit for a while after all of the loans are repaid.

The advantage of such a scheme is that the payments will be arranged to be affordable or the charity will advise an IVA instead, to force creditors to accept less money if no voluntary deal can be arranged.

HOPEFUL-HEATHER

Can I say a big thankyou for all your helpful information. :T
Obviously we wont know the situation till we sit down and go over her finances and although Im quite good living frugally myself, I havn'nt the foggiest about card debt so your info is invaluable. x :A