why is everyone so anti consolidation?

debtfree1day

Sea

you mean the DMP company managed to freeze interests?

I registered with CCCS onlien and they just toild me to snowball (think thats right) meaning I go for the highest interest rate 1st...aprt from the fact that will take 8 yrs 9 months, it ignore the fact I have loans to pay each month so cant not pay the £670 to alpf which is 6.6% and instead aim it at virgin (21%)

confused and headache

lisa

kathfisch

debtfree1day wrote: »

Sea

you mean the DMP company managed to freeze interests?

I registered with CCCS onlien and they just toild me to snowball (think thats right) meaning I go for the highest interest rate 1st...aprt from the fact that will take 8 yrs 9 months, it ignore the fact I have loans to pay each month so cant not pay the £670 to alpf which is 6.6% and instead aim it at virgin (21%)

confused and headache

lisa

Lisa The first question is, can you manage all your minimum payments? After essential and reasonable living expenses etc, do you physically have the money to pay the minimums, including all loans etc?

If yes, then you need to make minimum payments and then use the excess to snowball... pay off whichever is the highest interest rate (except obviously some loans you can't overpay).

If no, then you need a DMP (through CCCS or another charity or administered yourself) as a way of negotiating reduced payments and/or freezing of interest. You'd need to provide a statement of affairs showing all your incomings and outgoings in order to convince your creditors that you need the interest frozen.

Have you put together a Statement of Affairs for people to give you feedback on? There's a template in one of the threads "stuck" to the top of this board - "First Time Posters" its called.

Kath

Edit: I see you have posted an SOA etc before. I can see its a tricky situation you're in. Think long and hard about consolidation though, you need to be sure your spending is under control. Why not try a few months of serious cutting back and make dfw your hobby (as martin said yesterday on the radio ) and see how you go. Its not an overnight thing, it takes time to break your spending habits and re-learn how to live within your means, but it can be done!

angelavdavis

Hi Lisa,

Apologies for the long post but here goes.
I am sure others on here will put it more eloquently than I!
I would like to think that sharing my experience might help someone avoid making the same mistakes.
My personal reason for never recommending consolidation is that I have gone down that route twice (once through taking out a loan and once through remortgaging). However, neither experience changed my mindset of spending more than I earned! As a result, I ended up building up more debt by spending on my credit cards again. My original debt was only £5k at the beginning, by my lbm it had grown to £18k :eek: thanks to my attempts at consolidation!

I was lucky though - I had the earning potential that meant I could increase my income, I had a good credit rating which meant I could tart my card balances, and probably more crucially, my lbm moment came before it got out of hand (the combination of these gave me more options than most).

Many people who get themselves into debt aren't disciplined enough not to use the credit cards again! Cutting back and learning your lesson might be the only way to teach yourself the pain of frittering your cash! That was me!!!! Not everyone is the same though.

My opinion is that consolidation is a pretty serious option to take - particularly secured. They are restrictive because of this fact - usually you can't overpay a consolidation loan for example - they are there only to make more money for the lender from individuals who haven't been able to manage their money properly - so everything is in the lender's favour.

chevalier

Hi there
Have a look at https://www.whatsthecost.co.uk. This has a snowball calculator on it. You put in all of your debts, apr's and repayments. It then gives you a debt free date, and also advice on what to pay off first.

However if you are really stuggling to make ends meet then a DMP is probably the way forward. If CCCS weren't helpful, perhaps you could look at Payplan's site. They do have slightly different criteria.

As regards consolidation. You have to think in what if's. Ie what if house prices start to go down and you have secured a loan on your property. You get negative equity and then you are stuck if you need to move for some reason.

If you have equity in your house, have you thought about selling it and realising the equity this way? Even allowing for paying rent for a while, I bet this would be less than the extra interest you would pay on a consolidation loan.

best of luck
chev

blackangeluk

I agree with the majority of the posters who say that consolidation is not the way to go. I have remortgaged our current house but I simply didn't learn my lesson re spending habits. Once I consolidated, the debts started all over again.

I am able to remortgage to repay my current debts but I will not have learnt anything apart from I can borrow my way out of it. I am cutting back, budgeting, selling anything that moves and walking away from shops and thinking do I really need to buy that? The shift in my mindset has been quite amazing!

I will be extremely satisfied when I have paid the debts off without putting it on the house My other reason is I have two children and this house is their security and I do not want to gamble with it. Currently if either me or my DH lost our jobs long term one of us could pay the mortgage and basic bills. If we lumped our debts onto the mortgage and then lost our jobs we couldn't afford the increased mortgage.

If you are struggling with the minimum payments I would contact payment plans as others have suggested but if you can manage them and a little bit more, than visit https://www.whatsthecost.com and see how best to repay them.

You do however have to do what is right for your situation knowing the risks. Good luck and hope this all works out for you.

debtfree1day

thanks chev

thats the calculator which is telling 8.5 yrs and thats assuming that we could pay off the expensive debts (i.e 20%) and ignores that we have to pay the 6 + 8% loans first as they are fixed and we cannot make a 'minimum' payment

turning it round and paying the smaller ones, I cannot make the min payments on the CC so will end up with CCJ's and Defaults etc etc, unless I do some form of consolidation

will try payplan next

lisa

supersavershal

My other half and I consolidated a couple of years ago.It worked for us, but you do have to change your attitude to spending.We did keep a cc each and have not up until now run it up (we have used it, but paid it off within a couple of months).You really really have to be disciplined.What did it for us is the fact we like money in our pockets and a good amount of disposable income because we live a good lifestyle.Everyone has different lifestyles and we would have been in hell if we had to scrimp and save each month with nothing to show for flogging ourselves to death at work.Now we have a manageable monthly payment (yes I know wel pay more interest) but we are happy now.If I want to spend £400 of my disposable income on a frock and shoes I can if my car breaks down I use it for that.I also have savings now.I dont think consolidation works for everyone but it did for us.It might have helped that even with consolidation we still have a good amount of equity in our home.And my home is not my childrens inheritance (they can earn their own money) it is ours to sell in later years to fund our lifestyle, we will buy a caravan.its only bricks and mortar.We work hard we play hard.:p

debtfree1day

just quick note to say thanks to you all

the mortgage company are sending valuer out Tues so the first question of would they even lend us the money will be answered

if it is a yes my other half and I have agreed we not progress for at least14 days whilst we consider the best forward.

Have talked about a middle way....instead of consolidating 50k of 74 k debt, instead consildate 25k, leaving some equity, and providing enough to clear 1 loan and 2 expensive credit cards - mortgage over longer period so total payments reducing till we dig ourselves out of this mess

lisa
xxxx

hypno06

The main thing is that you are not rushing into something that you later regret. Perhaps you could put in the figures for the possible additional mortgages into the snowball calculator and see what you will have to pay back over the term. That could help you decide how much, if at all, you add to the mortgage.

I agree though that if you have to consolidate, that you do the "meet part way" thing.

Good luck, whatever you decide to do, and keep posting to get rid of that debt in total!!

Bunnyinthelights

I consolidated myself into over £50k of debt...

I concur with everything everyone says above-my Lightbulb moment nearly ended my marriage...I was in serious denial about my debt and how I got into it. Good luck and think long and hard about your choices.

Bunny