Anyway out of this catch 22 loan situation?

uttermadness

I'm asking this on behalf of a friend, any advice would be appreciated.

Since she had her hours cut to 20 from 37 she has been struggling to make her credit card payments and these have increased as she has tried to continue to live and pay her bills. She currently owes around 12000 pounds and is being chased by various credit card companies.

She has a good deal of equity in her house (over 50000) but every bank she has approached seems to be telling her the same thing. Due to her low wage of £15000 pa and her poor credit rating they are not prepared to give her a loan against the property.

They will consider a loan if she can pay off the credit cards but she can't do this without the loan. Is there anyway out of this predicament. The house is on the market but she is being hounded by the various credit card companies.

What would be the best way to proceed. Many thanks in advance.

longtermplanner

If her own bank won't see sense, then it sounds as though her best option is a 'holding' Debt Management Plan whilst her house sells, then she can clear her debts. Pros & Cons and how it works is explained here: http://debtcamel.co.uk/debt-options/dmp/. But really there are no Cons for her if she already has a poor credit rating.

StepChange could set up the DMP for her: http://www.stepchange.org/# - they are a charity and don't charge the debtor any fees.

claret_mike

Has she checked to see whether she is entitled to any benefits? Working Tax Credits?

Can she spread her council tax over 12 months rather than 10 to reduce monthly outgoings?

Do they have a spare room that they can rent out?

Any chance they can post on here with a full statement of affairs to see if her outgoings can be reduced?

Can she approach one of the charities on here for help - step change for example?

I would consider doing what they are as a last resort.

Without more info, Im struggling to offer any more detailed assistance...

BillJones

If she has enough equity to cover her debts, then selling up and renting could be a route out of her problems.

opinions4u

She'd be better off defaulting the unsecured credit than sticking it on the mortgage and getting repossessed.

Visit the Debt-free Wannabe part of the forum.

BonkersBonkers

opinions4u wrote: »

She'd be getter off defaulting the unsecured credit than sticking it on the mortgage and getting repossessed.

Visit the Debt-free Wannabe part of the forum.

Sorry I can't agree with this.
Making unsecured debt secured is bad most of the time especially in this case.
She should approach the card lender and enter into an arrangement to repay.
They may put a charge on her property but she should be free to sell at her own pace and price - repossession would mean a quick sale possibly at auction but IMO at a reduced price so she would lose out.

Wilkins

BonkersBonkers wrote: »

Sorry I can't agree with this.
Making unsecured debt secured is bad most of the time especially in this case.
She should approach the card lender and enter into an arrangement to repay.
They may put a charge on her property but she should be free to sell at her own pace and price - repossession would mean a quick sale possibly at auction but IMO at a reduced price so she would lose out.

Surely, O4U was suggesting the precise opposite?

fatbelly

uttermadness wrote: »

What would be the best way to proceed. Many thanks in advance.

Discuss with one of these

http://www.moneysavingexpert.com/loans/debt-help-plan#help