Oh My God, Amex Just Killed Me

misspoppy

Hi

I'm sorry to say but I don't think its ethical to allow some to have £25k of debt with no visible means of repayment, the banks don't know your plans. I think your plans are quite precarious especially with your health issues.

I think it might be worth thinking about selling your home as it is, paying off your debts and buying somewhere finished with the proceeds. Then concentrate on getting well and then you can continue with your plans debt free and healthy.

angelavdavis

Hi Rob and welcome to MSE,

I must admit to being a bit confused by your post.

I thought you said you have moved away from the endowment mortgage to a repayment. Why are you still paying into the endowment plan? How much is the endowment worth if you cash it in? Surely this would be the solution to getting the money to finish the house or reducing your debts?

I am concerned also by your comment:

Robflh wrote:

The car insurance, food and the road tax can be paid for with the credit card.

You shouldn't be using your credit card for these type of transactions as you are currently spending more than you earn and building up these debts take your minimum payments up even more and you can't afford to pay these! You have been able to achieve 0% deals because your credit rating is good, but this will change if you miss these payments!

As you pointed out in your first post:

Robflh wrote:

...eventually I will run out of credit.

You are already practically up to your limit on all your cards. How did you propose to make the minimum repayments had Amex not reduced the limit by £3k and you had continue spending the money?

Robflh wrote: »

Then of course lodgers are not the most reliable kind of income.

Exactly! What would happen if they didn't pay their rent one month or you couldn't get new lodgers? You would be really stuck!

I also agree on the cable. Cut down on the phone calls too to reduce this.

Sorry Rob if my post seems a bit harsh but I think a wake-up call might be needed here. You are putting yourself under pressure when you should be busy building up your strength.

mrsmortenharket

Umm, I am sorry but I think you should sell your house now.


You have no means to pay back a card & £3000 limit it loads when you are in Incapacity Benefits.

Unfortunatly, looking at your SOM the house selling needs to be sooner rather than later. maybe you will have to rent as well.

Hopefully then at least you will be debt free.

Owning a house is not the be all & end all

Lisa

briona

Hi Rob

I have read this post a couple of times, whilst considering whether or not to reply. Please be assured that I am not trying to upset/offend you (or anyone else). It is my opinion and only that... so feel free to disregard it.

From your brief SOA, it's clear that you are already spending more money than you have coming in and already owe £24,500. Whilst in theory, your plan to become debt free is laudable, in practice, do you really think you're going to get a (serviceable) mortgage whilst claiming benefits?

And assuming there was someone who'd lend to you, at a not-too astronomical rate, how much profit do you realistically expect to make from selling your current house that would allow you (and I quote) "to pay off several of the credit cards" AND put down a deposit for the next property?

You've mentioned also that you're unable to work following a nervous breakdown, so – and apologies if this sounds harsh – what makes you think you could project manage a stressful renovation project without further damage to your mental health?

Finally, the bit I find most incomprehensible is the blame being laid at Amex's door for "killing you by reducing your credit limit". People constantly accuse the banks and financial groups of irresponsible lending – and even sue them for as much – but then turn on them for "worsening" their situation when they try to act responsibly.

Given your current financial situation, there is NO way I would even consider getting into further debt. Property renovation today is not the "easy money" it was in earlier years – there's no guarantee you would be able to sell the house and once you've sold one/two houses, have you considered where you're going to live?

Please, please give your plans some serious thought BEFORE committing to further debt.

Briona

Inactive

I would say that was a very carefully thought out post briona, which I would agree with in it's entirety.

Robflh

myrnahaz
There are lots of little things that are not on a SOA (Sundries) and things always get missed like my house insurance. That is another £10 a month.

The extra money that the lodgers pay, covers most of the Cable TV and having it makes it that little bit easier to get lodgers.

A lower interest rate would not alter the minimum payment that is required each month and this is what is causing the short fall.

If I sell the house as it is, partly renovated, I would have to knock thousands off the asking price.

You miss the point. Buying a house for £150k and spending 15K on renovating it, means the house will be worth around £190k when I sell it. That makes a profit of £25K and I would have been debt free.

As I receive the full council tax benefit and do not have to pay council tax, it seemed silly to list it in with my income and then list it as outgoings. For the same reason I have not included the mortgage relief payments, just the £80 of the £200 mortgage payment that I have to pay each month.

misspoppy
Until recently, credit card companies and banks have been accused of gross negligence because they have been giving high credit limits and large loans to anybody. Recently, increasing numbers of people that have got in to serious financial difficulties because of this and a large number of them have used an IVA as a way out of it.

As an IVA can get up to 80% of your debt written off, Credit card companies and banks have been loosing a lot of money. To reduce this loss they are reviewing and reducing credit card limits, while banks are getting tougher on lending money.

Due to the house renovation work, in the last eighteen months the outstanding debt on my credit cards has risen sharply. Before that, I could make the monthly payments with ease.

If you check my SOA you will see that I have a net income of around 10K per year. As I do not pay tax, that is around a £12,000 Gross income and that does not include my mortgage relief payments or my council tax benefit. They would make it over £13,000

My original budget for the work on the house also included the money I would need to make the minimum payments each month until the house was sold.

For the reason I mentioned earlier, selling the house in its current condition is not an option.

angelavdavis
The endowment is a personal one and has nothing to do with the house. It is only a few years old and if I cash it in now I would get back less then I have paid in. True it would still give me some money but it would only be a stopgap.

This takes a little bit of explaining and I am not the best person to do it. The minimum payment on the credit cards each month is £550 of which £260 is eaten up by the interest. That leaves £290 that will come off the outstanding balance. If I pay for food and other things with my credit cards, up to a maximum of £290, my outstanding debt next month will be the same as it is this month. It will not have gone down but neither will it have gone up.

In the past, I have had plenty of credit and using the above example, as long as I have credit available, I can spend more then the £290. I could have carried on doing this for some years to come. However, I should have said that sometime in the distant future I would run out of credit. Therefore, I decide to renovate my home, sell it and use the profit to pay off most of my debt. This would require almost all the available credit on all my credit cards.

As I am in the last stages of the renovation, I am on my last credit card and the last £3,000 of my renovation budget or I was until Amex killed me. As I mentioned earlier the budget also included the money I would need to keep making my minimum payments each month.

In all the time I have had lodgers at my home I have never had difficulty in getting them. Getting a good one is a different story.

mrsmortenharket
For the reason I mentioned earlier, selling the house in its current condition is not an option.

As for the rest of your post, I think you may have misread my first post.

briona & Inactive
I have already changed my mortgage from an endowment to a repayment. That involved taking out a new one to pay off the old one. Yes, it is on the same property but I have been told that taking out a new one for the same amount on another property and paying off the one on this house, will not be a problem.

As I am in the later stages of the renovation of my current home, I think I can manage the next one and with what I have learnt this time I will be able to do a lot more of the work myself next time.

However, before I started this project I did very carefully consider the extra stress involved. I decided that as I am constantly juggling money to try to make ends meet a bit more stress for a short period of time, to substantially reduce my debts and my stress level, would be well worth it.

True property developing is not a profitable as it once was and the level of tax that has to be paid makes it even worse but if it is your own home you pay no tax on any profit you make. That is as long as you are not buying and selling several houses a year.

I have already mentioned earlier about financial groups being irresponsible with their lending. Amex gave me a £10,500 limit when I had been out of work for a number of years. If two or three years ago they had reduced my limit by £3,000, it would have made no difference to me.

However, I have had that limit since I got the card, I have never gone over my limit, I have never been late with my payments nor have I ever missed a payment. The reason they have reduced my limit is because, other people have not been so careful with their credit cards and have run up debts that they cannot afford to pay. They either have then gone bankrupt or have taken out an IVA.

Either way the credit card companies have lost millions of pounds. On top of that, the credit card companies have been accused of causing the problem by being irresponsible and setting people’s credit limits way above their ability to pay them.

I on the other hand, I am fully aware of my situation. Based on the £6,500 I ended up with from my re mortgage, the amount of available credit I had on my cards and other money I was able to get hold of, I had enough money to renovate my home. I would also have enough money to make the minimum monthly payments until my current house is sold and I had bought another house.

What annoys me the most is that I have not buried my head in the sand and hoped it would all go away, I have formulated a plan that would allow me to pay off most of my current debt, only to have American Express come along and pull the rug from underneath me.

I have tried my best to explain to them the dilemma that they have put me in and why I need my old limit back but I am a very little fish in an extremely large pool.

They have had their fingers burnt and are reducing credit limits because of it, the fact they are going to burn my finger in the process is irrelevant to them. They simple to not care and that is what hurts the most.

wherediditallgo

Rob, I've read everything you've said, & I've tried to understand it. Certain things stand out for me.

• You had a £10,500 limit when you'd been out of work for years. Although you were paying your debts, you didn't clear them & now your limit has been decreased, it's hit you at a point that you can't afford it. The interest payments are hard for you to meet now because you didn't reduce the debt earlier & because you're now living on benefits.
  
• Amex have reduced your limit, but they haven't killed you - their decision has just meant that you can't do what you planned when you planned to do it. As someone else pointed out, they can't be expected to know what plans you had. I think they may have done you a favour - had they not reduced your limit, you would have added more debt to what you've got & you might not have got the price you wanted/expected for the property.
  
• You say that "Due to the house renovation work, in the last eighteen months the outstanding debt on my credit cards has risen sharply. Before that, I could make the monthly payments with ease." That's not quite the case - the outstanding debt on your cards went up because the payments you were making weren't enough to reduce it.
  
• Your way to sort out your existing debts seems to be dependent on "if you get this" & "if that happens", & on getting into more debt & making minimum payments on what you've already got on your plate plus anything else you add to it. Your debt resolution isn't dependent on things you can rely on, & that's a risky basis on which to take on debt in the first place never mind add to an already high & barely managable commitment. It's not the way to deal with it, especially when you also have something like health to take into consideration. I'm not saying that to be nasty - I'm saying that as someone who's had very bad health for the last 4-5 years, & who may have to give up full-time work in the next couple of years. My health issues mean I've had to revise my plans - I'm not happy about it, but I've had to accept it. I think you'd be well advised to do the same.

I know you're aggravated with Amex, but whatever the reasons for them reducing your limit, I think you shouldn't challenge the decision. Having reduced your limit, I think they would be irresponsible in the extreme to put your limit back to where it was when your health means you're unable to work & can't fund the renovations from earned income - that would be the irresponsible lending that credit companies are so often accused of. You said it yourself - "At the moment I am at a complete loss as to what my next move should be and I am rapidly approaching another breakdown." If this decision has affected you so badly, how would you react if you couldn't get the prices you expect for the properties, or if your lodgers moved out & you couldn't get good ones to replace them? You could be ill again from the stress of that plus the inevitably higher debt because you'd have almost exhausted your credit by that point, & what would you pay the higher charges with until this property was sold? Credit limits weren't all set above people's ability to pay - it's changes in circumstances later on that have often got some people in trouble. Your circumstances have changed, & you should revise your plans accordingly.

I genuinely wish you a full recovery, but I don't think you should be thinking any further than where you've already got to with the house until you are completely well. As for the credit card companies not caring, they don't have to - you do. That's why you should think about your health first & put any plans of renovation etc on the back burner until you can actually afford them. With an income as restricted as yours, I'd be very scared of adding any more debt that's so dependent on other factors to what you've already got.

Robflh

wherediditallgo
You had a £10,500 limit when you'd been out of work for years. Although you were paying your debts, you didn't clear them & now your limit has been decreased, it's hit you at a point that you can't afford it. The interest payments are hard for you to meet now because you didn't reduce the debt earlier & because you're now living on benefits.

Yes and no to the above. It is not the interest payments that are the problem, it is the minimum payments.

When I first lost my job, I had a loan for around £3,000 with payments of £150 per month. At that time I only had two credit cards with nothing on either of them. To be able to make the loan payment each month I used the credit cards to pay for everything I could and kept my benefit money in the bank. At the end of the month, I would use my benefit money to pay at least the minimum payment on the credit cards and anything that I could not buy with the credit cards.

At the time, I was renting a TV and a Video. It was cheaper to buy a new TV & Video and use the rental money to pay extra off the credit cards. A number of months later and the rental money will have paid for them.

The mortgage relief payment did not start for few months and for a few more months, I only received 50% of it.

By the end of the first year, I had several thousand pounds of debt between the two cards. I was on JSA and getting less then I am now, the rent from lodger was less then too.

Anyhow, there was no why I would be able to pay off this debt and although it would go down most months, sooner or later something would go wrong, need replacing, I would only have one lodger for a few weeks and for umpteen other reasons it would go up. As long as I have credit available on one of my credit cards, I can carry on.

In case I did not make it clear enough, I would need a job, to win the lottery or have a rich relative pop their clogs and leave me all their money before I would have a hope in hell of clearing this debt.

Over the last twelve years, it has crept up to £18,000 and along the way, I have repaired and improved my credit rating. So, I have a few more credit cards. As long as you make at least the minimum payment each month, they do not care whether I have a job.

For a long time, I thought I would be ok once I had a job, which is why I have not been worried about the debt slowly increasing but lately I have been thinking long term. I am 47 this year, so I have been wondering what will happen if I never get another job.

That debt will keep creeping up and consequently the minimum payments will get more and more. One day I will not have enough money to make the minimum payments each month and then I will be in big trouble. There are no ifs and buts’ about this, it will happen.

This is the reason why I had decided to renovate my home.

As I have stated previously with the cash I had at my disposal and the available credit on my credit cards I would have enough money to renovate my home and keep myself afloat until the newly renovated house is sold and I have bought my next home.

Someone will say I could have used the cash to pay money off the credit cards. That would have reduced the debt but it would keep rising and eventually I would still arrive at the point when I would not be able to make the minimum payments.

The price I get for my house is slightly irrelevant it is more a question of how much more I can get for my renovated house then the house I am going to buy. The difference between the two will be the money I can pay off the credit cards.

Amex has NOT done me a favour, I no longer have any available credit and loosing a lodger now would be devastating financially and mentally. How the hell you expect me to get well when I am no longer able to meet my financial commitments each month is beyond me. Technically, I am bankrupt, I have more money going out then I have coming in.

Put the renovating on the back boiler you say, the renovating of my current home and my next home is the only way I will ever be able to get rid of this debt. The only way out of this situation would be if someone lent me the money I need to finish renovating my home so I can do what I set out to do, renovate two homes and get rid of this great big f******g debt that I have round my neck.

As for Amex not having killed me, let me put it this way, I suffer from depression. On numerous occasions, I have sat and worked out all the different ways to end it and picked out the best one for me.

Overdosing on paracetamol is not a good idea, if someone finds you and calls an ambulance or you do not do it right, your liver packs up and you drown in your own blood. Not a nice way to go.

Jumping in front of a train or from a high building is ok, if death is instant. Otherwise, it will be very painful way to go but first of course you have to throw yourself.

Wrists while laying in a bath is not a good one, it takes hours for enough blood to drain out of a body and cause you to die.

My favourite is sleeping tablets. Go to the GP and ask for a few because you are not sleeping properly because of this reason or that reason. Do this every few months and in no time at all, you have all you need to go to sleep and never wake up again.

Fortunately or unfortunately, depending on how you look at it, I am a coward and thinking about it is all I am ever likely to do but you should be very careful what you say to someone that has had a Nervous Breakdown as depression always accompanies it. I have suffered from depression for all my adult life. Therefore, I am use to it and know what to look for and how to cope with it.

wherediditallgo

Hang on!! I wasn't having a go at you, I was giving you advice (like other people in this thread) that you don't seem to want to hear. I have also suffered from depression, though I thankfully haven't gone down the route of considering whether to end it. I don't think it's fair to anyone, including yourself, to bring up suicidal thoughts at this stage when your initial post gave bare facts about you becoming ill & no longer being able to pay the credit card bills because Amex had reduced your credit limit.

As I work in mental health, I've seen people who have attempted suicide, & I've seen the paraplegics, quadraplegics & amputees who sometimes need mental health help as a result of failed attempts. Detailing the various ways of killing yourself doesn't help you or anyone else. It may make me feel sorrier for you than I did before, but I stand by what I said & my conscience is clear, because part of being a depressive is sometimes not being able to see above the parapet because you don't think the parapet should be there in the first place & you blame it for being in your way. Depression can make you blind to what everyone else can see is staring you in the face. But not being able to see the reality that everyone else sees doesn't mean you shouldn't be told what the reality is, & doesn't mean you shouldn't be helped to see it for yourself. In your case it's increasing debt & stress because you can't meet your debts now & aren't likely to be able to if you're given increasing levels of credit & then don't get to sell the properties, keep your lodgers or have to face other unexpected financial pressures. We all have to face the reality of our debts, & it's hard, & it would seem to me that you haven't had that "lightbulb moment" yet. You feel that Amex are to blame for the situation you now find yourself in, but you didn't have any money before they made that decision because you were already living off credit. All they've done is draw a line in the sand & say "No more". That's what you've got to do too, as uncomfortable as that decision may be to make. It would be so wrong for anyone here to encourage you to get into more debt when you're already in difficulties.

If you feel in need of mental health assistance, you can contact helplines or a local community mental health team that may be attached to your local hospital. If you don't feel in need of it, then I don't see why you thought it was relevant to mention your mental health history as part of an angry post that resulted from not getting the answers you expected. You said you're at a complete loss as to what your next move should be, so you were asked to post an SOA, which you did. You've been given the advice you need, even if it's not the advice you want. This board isn't to enable people to get into more debt - it's to help people sort out the debt they've already got, help them make lifestyle changes so that they don't get into that position again, & provide them with support in their journey through that. For them to get the best out of it, they also have to face up to their situation, & have their "lightbulb moment" where they realise how bad their debts are, that they need to do something about them & that they need help. If you decide to look into bankruptcy, you can get advice from free organisations such as the Consumer Credit Counselling Service, National Debtline or Payplan or from the 'Bankruptcy and Living With It" forum attached to this one. You can also look at the Insolvency Service website, which not only covers the effect of bankruptcy but also gives information on the alternatives to it. You need to put the issues you have with Amex to one side though.

I won't be replying to this thread again. Rightly or wrongly, I feel whatever anyone says here from this point on isn't going to be accepted by you unless the answer suits your current way of thinking, so I don't know how they can help you. People shouldn't feel obliged to give you inappropriate advice or ignore points you've made because of your depression, or because of comments you've made about ways to kill yourself or because you don't want to hear what needs to be said. I nonetheless wish you well.

mrsmortenharket

Why can't you sell the house in its current state? Lots of people will buy a property to renovate.

I don't wish to sound horrible but noone will lend you money while you are on incapacity benefit.

Lisa