Trouble with payday loans. Please advise.

DonkinJames

Hi all. Abit of a funny one but here goes.

Been living in a rented house with my GF for about 8 months. Found out a couple of days ago she couldn't afford it when we first moved in and had to get a payday loan when we moved for around £200. But with the cost of living and the interest on the first loan she now has 4 payday loans totaling £1300.

I'm really careful with my money aswell but because she was desperate to move out with me and she was so worried I'd leave her if I found out about the loans she has basically lied to me and hide it from me. Not good

So she has 4 loans with different companies and I'm struggling what to do. We have contacted step change for a pack and to set up a Debt management plan but I'm affraid it won't get sorted in time. As the payments are due on the 27th. Now she has taken all her money out of the bank and canceled the direct debits to them.

Should we contact them and tell them what's happened?
Wait for step change to send this DMP pack?

I'm affraid there going to bung loads of interest on the 27th if they don't get there money.

pLease help ladies and gents I'm really worried

Apples2

DonkinJames wrote: »

I'm affraid there going to bung loads of interest on the 27th if they don't get there money.

Not much you can do about that now.
She should really close her bank account as the bank may still process the withdrawals (it will go into overdraft or possibly even an unauthorised overdraft).

Her credit file will be smashed to bits so under no circumstances should you enter into any Joint Agreements with her.

The DMP process will try to negotiate revised payments and the freezing of interest.

DonkinJames

Apples2 wrote: »

Not much you can do about that now.
She should really close her bank account as the bank may still process the withdrawals (it will go into overdraft or possibly even an unauthorised overdraft).

Her credit file will be smashed to bits so under no circumstances should you enter into any Joint Agreements with her.

The DMP process will try to negotiate revised payments and the freezing of interest.

I'm not going into anything joint with her but what's done is done, I need a way to help her resolve it, she has opened a new bank account and she is setting all her other direct debits up, council tax, phone, internet.

I'm having control over the bank account because so nothing else will go wrong, will this start to help her credit out of she doesn't slip up again?

Could she contact the companies and offer them a payment for them to freeze the interest? Will the interest go up daily once they don't get the payment or when they next try to take it out?

DevCoder

Regarding the credit rating, with a DMP then it will be pretty much ruined for 6 years.

Whilst companies are advised that they should be sympathetic towards people struggling, there is no regulation that insists they freeze interest or charges. Wonga tend to be the better of the PDL for this.

DonkinJames

krisdorey wrote: »

Regarding the credit rating, with a DMP then it will be pretty much ruined for 6 years.

Whilst companies are advised that they should be sympathetic towards people struggling, there is no regulation that insists they freeze interest or charges. Wonga tend to be the better of the PDL for this.

I understand how they could easily say there not freezing the interest. On step change there was another option which was like bankruptcy. Would that just completely ruin her credit history forever?

What would be the best way to get out of this? Maybe a loan from a family member or bank to pay them all off?

DCFC79

DonkinJames wrote: »

I understand how they could easily say there not freezing the interest. On step change there was another option which was like bankruptcy. Would that just completely ruin her credit history forever?

What would be the best way to get out of this? Maybe a loan from a family member or bank to pay them all off?

Bankruptcy will also ruin her credit history for a number of years but not forever, not sure on the time frame. Only problem with getting family involved (it is an option though) is it could end up getting messy eg your gf doesn't pay the monthly payments to the family member to then pay off the loan.

Have a read of the first thread in the loans section.

DevCoder

Bankruptcy would be very last resort, you would have to declare on any application that asks "Have you *ever* been declared bankrupt" as a "Yes" and this takes away a lot of credit opportunities.

A loan from family or bank is infinitely better (as regards your GF credit) then bankruptcy. Albeit see the sticky on lending to friends / family. If you do accept a loan from friends/family then please make sure you stick to repayments as DCFC states.

Jobseeeker

Has your girlfriend got a job? How about just a normal loan from the bank to pay off this £1300?

Bankruptcy seems pretty extreme for the sake of a grand

DonkinJames

Yes she has a job, I'm looking after her money now so I'm pretty sure things will run smoothly now, We both take home just under £1000 a month.

I'm just affraid of under borrowing and not getting a loan in time and they stick interest on and then we end up even worse off with a loan to pay the other loans off.

andyuk01

DonkinJames wrote: »

Yes she has a job, I'm looking after her money now so I'm pretty sure things will run smoothly now, We both take home just under £1000 a month.

I'm just affraid of under borrowing and not getting a loan in time and they stick interest on and then we end up even worse off with a loan to pay the other loans off.

Take out a loan or overdraft for around £2k then, pay off the payday loans, use the remaining money to live on til your next payday so there is no temptation to re borrow, pay whatever you have left into your loan account as an overpayment

DMPs, Bankruptcy etc etc all seem a bit extreme for a £1300 debt when you are both working and in a position to repay it

nidO

Assuming she doesn't, do you have the option to apply for an overdraft with your bank?
Although it's shifting her debts to you so carries some risk for you and an overdraft isn't exactly the cheapest credit going, if you have a good history with your bank asking them for a £1000-£1500 overdraft shouldn't be asking too much and will usually be an instant decision, so would make the cash available on Monday to be able to clear the payday loans on time, which will then give you longer to sort out actually paying the cash off and with vastly lower interest/charges while doing it.

Once the PDLs are paid off, you/she could look at the option as Jobseeeker has mentioned of applying for an ordinary loan for the £1300 to clear the overdraft, which will get your loan down to a nicely manageable interest rate that can be paid over a sensible period of time.

As mentioned, a DMP or bankruptcy for the sake of a relatively small debt is a hugely extreme step, with both of you working with a (presumably) stable income getting normal credit to pay a £1300 debt shouldn't be asking too much.