Debt Consolidation Problems

Trickyuk

Basically a combination of some existing debt, paying of an ex wife and 6 months without a job last year have all meant I have 30k of debt spread between loans and credit cards. The majotity of this is credit card debt which amounts to 22k.

I earn 36k a year but obviously servicing this debt is crippling me, especially as I am the only person working in the house and have my partner and 4 kids to support.

So my thoughts were to consolidate the debt meaning I pay less per month. The problem is I suspect I will not get a loan anywhere. I have done a soft search and I am getting know where. I dont want to destroy my credit file so I am reluctnant to apply in full anywhere.

As I understand it teh default is to assume you are lying when you say its debt consolidation and as there is no guarentee I will use this money to actually pay off the debt so I am being assesed on affordability assuming this will just become further debts. Is that right? And is there anyway around this? Would a face to face appointment in a branch make any difference? Do they have different criteria or a 'i believe this guy' check box??

gb12345

Trickyuk wrote: »

Basically a combination of some existing debt, paying of an ex wife and 6 months without a job last year have all meant I have 30k of debt spread between loans and credit cards. The majotity of this is credit card debt which amounts to 22k.

I earn 36k a year but obviously servicing this debt is crippling me, especially as I am the only person working in the house and have my partner and 4 kids to support.

So my thoughts were to consolidate the debt meaning I pay less per month. The problem is I suspect I will not get a loan anywhere. I have done a soft search and I am getting know where. I dont want to destroy my credit file so I am reluctnant to apply in full anywhere.

As I understand it teh default is to assume you are lying when you say its debt consolidation and as there is no guarentee I will use this money to actually pay off the debt so I am being assesed on affordability assuming this will just become further debts. Is that right? And is there anyway around this? Would a face to face appointment in a branch make any difference? Do they have different criteria or a 'i believe this guy' check box??

You'd will be underwritten on the assumption that you won't pay of the existing credit as that is the worst case scenario.

A face to face appointment is unlikely to make much difference - branch staff have very little authority, so it would still be a decision by the underwriters and they work on facts not how nice/believable you are.

Cycrow

Its not that they assume you are lieing, its just that they have no guarentee that u'll use it to pay of the debts, and even if you do, that you would then use the available credit, ending up in more debt.

Not sure anyone will actually lend 30K for an unsecured loan anyways.
but even if they did, you would never get it on your salary, even if you didn't have the other debts.

If the credit card is with a bank then you might be able to convince them to convert it to a loan, but its a long shot at best.

DCFC79

Look at your spending and cut back, pay off the cards with the highest apr first.

Tixy

Hi and welcome to the forum.

Its not that lenders assume that you are lying, its that their decisions are based on risk, and there is a risk that you won't use the new credit to pay off other or that you may continue to use the credit cards and run up the debt again, and they then consider whether they think you could afford to service all that debt.

The only debt that a potential lender can be certain/enforce that you repay is existing debts with them, so if for example someone has a loan/credit card and/or overdraft with the same bank they may find it easier to be accepted for a consolidation loan with that particular bank.

To be fair even if you had no other debts at all you would likely struggle to be accepted for anything close to a £30k loan. The banks affordability criteria would be likely to think it too high risk that you could afford repayments on even that loan alone.

If you are struggling to afford repayments without reusing cards etc then it might be worth speaking to one of the debt advice charities about other possible options.

Trickyuk

gb12345 wrote: »

You'd will be underwritten on the assumption that you won't pay of the existing credit as that is the worst case scenario.

A face to face appointment is unlikely to make much difference - branch staff have very little authority, so it would still be a decision by the underwriters and they work on facts not how nice/believable you are.

As I suspected. So given that I can not consolidate any other options??? Currently I am just managing to pay but not sure this will continue much longer.

Trickyuk

Cycrow wrote: »

Not sure anyone will actually lend 30K for an unsecured loan anyways.
but even if they did, you would never get it on your salary, even if you didn't have the other debts.
QUOTE]

The plan was to probably pay off teh 22k credit card debt so only really wanted to borrow this anount

Trickyuk

DCFC79 wrote: »

Look at your spending and cut back, pay off the cards with the highest apr first.

After paying debts and normal household bills (gas/elec etc...) we have £600 a month to support the 6 of us so we dont have anything spare.

gb12345

Trickyuk wrote: »

As I suspected. So given that I can not consolidate any other options??? Currently I am just managing to pay but not sure this will continue much longer.

Unless you can seriously cut back on spending in other areas or earn extra money, then any other option is likely to trash your credit file for the next 6 years, but as Tixy says speaking to one of the debt advice charities is probably a good idea.

You could also try posting a statement of affairs on the debt free wanabee board and see if some of the experts on there can suggest ways to save money (many of them have been in the same boat, so know what they're talking about).

Trickyuk

Tixy wrote: »

Hi and welcome to the forum.

Its not that lenders assume that you are lying, its that their decisions are based on risk, and there is a risk that you won't use the new credit to pay off other or that you may continue to use the credit cards and run up the debt again, and they then consider whether they think you could afford to service all that debt.

The only debt that a potential lender can be certain/enforce that you repay is existing debts with them, so if for example someone has a loan/credit card and/or overdraft with the same bank they may find it easier to be accepted for a consolidation loan with that particular bank.

To be fair even if you had no other debts at all you would likely struggle to be accepted for anything close to a £30k loan. The banks affordability criteria would be likely to think it too high risk that you could afford repayments on even that loan alone.

If you are struggling to afford repayments without reusing cards etc then it might be worth speaking to one of the debt advice charities about other possible options.

Thanks. All the credit cards are frozen as i rejected APR increases. I was looking for a loan to clear the credit card debts as although I would pay not much less I would at least be paying off at a quicker rate. Based on my current repayments I am looking at 8-9 years.

Should I be looking at IVA's or bankrupcy?

DCFC79

Trickyuk wrote: »

After paying debts and normal household bills (gas/elec etc...) we have £600 a month to support the 6 of us so we dont have anything spare.

Reduce your bills, food bills, mobile phone contract, tv/landline/internet package.