Massively in debt! Help please?

runforlife

tiger_eyes wrote: »

More borrowing doesn't fix debt.

It sounds obvious, but I think there's a temptation for debtors to think that getting a better loan (lower interest rate, longer term, whatever) will fix all their debt problems, whereas further borrowing only compounds their problems. We see it time and again on these boards. People who consolidated all their debt into what they thought would be a single manageable loan, then continued racking up debt, ending up deeper than they started. People who transferred their debt into a secured loan (or remortgaged) and are now in even deeper trouble. You cannot borrow your way out of debt. It just makes everything worse.

You need real advice from a proper debt adviser. Go to Stepchange. Every debt problem is fixable. Just please don't think another loan will fix everything.

Wishing you the very best of luck.

Good advice!

runforlife

Even going onto a DMP is scary and yes, your credit file will suffer. I held off for far to long before starting in November. However the relief offered by affordable debt repayments and the ability to actually pay the bills each month knowing that the debt is being looked after - albeit maybe slowly initially - AND to have enough to live normally again and not worry about day to day expenses is immeasurable.

It is a calculated decision, I just wish my calculator started a long time back.

It isn't for everyone but the guys at Stepchange are very pleasant to deal with and very helpful and not at all judgmental.

Broke_Kitty

Yes consolidation loans are never the way to go, I know this from having done it twice and just digging myself deeper and deeper.

Everybody in here has already given you great advice which it sounds like you are taking on board, so nothing much to add, just wanted to throw in my two cents re taking out a loan

National_Debtline

Hi fuzzyhead1

If it's of any reassurance, the scenario you describe in your first post is one I've heard from an awful lot of callers over the years. The fact that you've even posted on here is positive, as many more in the same position tell themselves that things will sort themselves out and end up ignoring the problem.

I think jackieblack is probably right when they suggest above that your credit rating will be adversely affected already. Just remember that creditworthiness is just a means to an end, not an end in itself.

Glad to hear you are planning to seek some free advice. Good luck!

Regards

Dennis @NDL

clarryd

fuzzyhead1 wrote: »

Hello, sorry if this is in the wrong section, I'm new.

Myself and my husband are hugely in debt and it's got to the point where we can't afford basics each month and so each month get further into debt. This has come about due to having young children, husbands increased travel expenses, a job change, my lack of work etc etc.

We are 25k in debt. It's all on credit cards which we move around for 0% deals although it's got too large for this now and rather complicated! I am aware that we are now paying large amounts of interest on it each month as well. We haven't missed any payments on it or our mortgage but instead just get further credit card debt.

My husband wants to get a loan over 15 years to pay it back. My problem with this is that the one he has been offered is a secured loan on our house. We have no payment protection on our mortgage as it is (can't afford it) and so if he lost his job would be in terrible trouble immediately (no savings), add to that a loan secured on the house . . .

An unsecured loan would take the APR from about 7 to about 12. Is it worth paying that to not have our house at risk?

The loan would halve what we are paying each month on repayments but we still would struggle to make ends meet.

His plan is to overpay (he's checked we can do this without a fee) each year when he gets his bonus which could in theory have it paid off in 6 years.

I watched a video on here which suggests we are in debt crisis and should see a non profit debt advisor. Does anyone know what they could actually do to help? I don't want to declare bankrupt and am trying to avoid losing our home. We can't move anywhere cheaper as we are already in the cheapest part of the area so would mean a massive relocation.

I would like to have it added to the mortgage but we applied a while ago and they said no. Apparently because our debt is spread over about 5 cards, it's bad for our rating or something. So my husband thinks that if we put it all on one loan and wait a few months the bank may then say yes to adding it to the mortgage. The problem is that I am self employed and my earnings are very erratic (with some 0 earnings years) and they use that as a reason to say no. Also our mortgage is quite large already. When they looked at affordability they didn't think we could afford it. But we can't afford to live as things are anyway. We have tried a few times over the last few years. One time they said no because they couldn't guarantee that we would pay the debts off with it!

I'm sure I've left lots of important info out, sorry!

Can anyone help?

Contact step change straight away and it will be a wait off your shoulders.

I couldn't sleep eat and just wanted to curl up and die. I went into my bank and they gave me step change's telephone number and advised me to call them asap.

Once I had said I had debt problems out loud and gave them all my outgoings and incomings they made me a debt management plan which I have been on for 1 year now. (So I know it works).

I have just had my review and I still feel like I'm in charge even though I have no money to call my own.

They talk you through everything from rent/mortgage to all essential bills and even buying a news paper and toiletries.

I got into debt due to illness. I was on a great salary of £28,000 per year plus bonus every 3 months so could afford to pay my credit cards, loans, store cards etc.

I felt worthless and useless and Step change made me feel human again and now I don't have sleepless nights and worry every time the phone rings and the door chaps.

Good luck they are really approachable and tell them the whole truth as they will contact all your debtors for you and make the repayment arrangements that you can afford.

Their telephone number is:0800 138 1111 and be prepared to be on the phone for a long time, so get comfy and make sure you have all your debts infront you you so you can give them reference numbers and amounts you owe.

Let me know how you go and please try not to worry.

Foxy-Stoat_3

So post up your salaries, and what you spend you money on, excluding the debt, and confirm what your disposal income is.

Then post up the debt with the interest rates on each card.

If you make up an excel spread sheet with the information you should be able to see how much money is left after all essential bills are paid, the total interest being added each month and how much you are paying off the debt, or increasing the debt.

Do you have anything you can sell or down grade, ie car or is moving to a cheaper area on option to release equity from your house?

At the moment it seems that you are keeping up with the repayments so your credit isn't trashed just yet.

eyeopener2

Hi,

Debt management plans do work, I finished my recently and they certainly take the weight off your shoulders and you regain control.

It's not l plain sailing though. Your lifestyle will change (although you seem to have cut back to the bone already, be prepared to cut some more) and you can no longer use credit which can take a little getting used to.

You will be fine and as long as you both work together you'll be debt free before you know it. Whether that is 3 years, 5 years or more it soon goes.

The good thing is that your debt starts going down not keep going up!

Oh and the consolidation idea? Forget it. About £5k of my £24 was AFTER I consolidated some debts......foolish eyeopener.

Good luck

E2

Puzzcat

Simply put.. do not consolidate, do not get a secured loan on your property...


I've got both and still have 60k debt.. consolidation does not work.. I am now on a dmp with stepchange, yes my credit file is now shot to pieces, but I don't want credit again, I want to live...


You can try out the debt remedy tool on the SC website and play about with figures, you don't even ever have to talk to anyone if you don't want to. Do be aware that if you go down this route obviously your creditors will ring/write and send scary letters whilst the plan is being set up. And they may or may not stop/reduce interest it is an informal arrangement.. As an example of my 7 cc's 6 have stopped and 1 had reduced by a tiny amount.. I've just started fighting that one.


At the end of the day it will still be your debt and down to you to manage it. SC will take a monthly payment from you on the 1st or 10th of the month and then pay all your creditors on the 25th..


I can't praise SC or a dmp any higher, but it isn't going to be right for everyone..


Pop over to the dmp mutual support thread if you have time to read.. and of course ask any questions you may have...


And for the first time in years my debt is finally going down...

fuzzyhead1

Thanks for all the replies.

I have been using the StepChange debt remedy tool and talking about it online with their advisors. I have a couple of concerns about it that perhaps someone here can clarify.

The first is the amount that they allow for medicines and prescriptions. The max is £11 because they say that it what monthly prescriptions cost if you have a precription prepayment certificate. The problem is that that only covers prescriptions for one member of the family (which would be my husband as he has the health issues) and not other medicines they might need which aren't on prescription, or any prescriptions or medicines for the rest of us.

Also you can't pay monthly. It seems that you have to pay 3 monthly or yearly, with 3 monthly costing 29.10. So you have to buy in advance which means you have to start with more money than they budget allows for.

The second thing is that it said I couldn't afford to put any money into the emergency fund and that what I had put in the car repairs and servicing was too high. I reduced that to £15 a month which it's ok with. So assuming I started in January and my MOT is due in February, that means I would have only saved £15-30 to pay for the MOT. They cost 50 don't they? Any then what if it needs repairs, new wiper blades, tyres etc?

The other issue is that then I would start saving again and by the end of the year have saved 150 towards possible car problems. What happens if it breaks down and is going to cost 500/700 etc to repair? Where is that money supposed to come from? The car is essential for my husbands job and so would need to be fized immediately. We wouldn't have a credit card (and probably wouldn't be able to get one) for emergencies and the one's we have now would be frozen.

I think the budget is a very good idea but if it is unrealistic it's not going to work. The car thing above would leave my husband out of work!

The other thing, what happens if they credit card people refuse to stop charging interest? With the puny little amount I would be paying back and the interest going on top it would mean that the balance of my debt would be going up rather than down!

Last of all, do overdrafts have to be included? The bank are fine with us having the overdraft and the overdraft interest is relatively small (35 a month) so I'm not sure it's worth !!!!ing my bank off with by adding it to my debts. Our mortgage is with them as well and we have an account that means we don't get charged if we go overdrawn or anything. I don't want them to remove that.

Thanks

glasgowsaver2011

Hi,

You appear to be asking what if...

Unfortunately, the what if's are not important

the basic fact is you cant afford your outgoings...

Have you thought about selling house and down sizing

or even if there is any equity in your property selling, paying off debt and renting?