Personal Loan on a personal level?

KJo_4

So, I've gotten myself into a financial MESS.
I currently have 10 credit accounts with various lenders and of recent I've missed payments to most of these and as a result my credit file isn't looking too good.

I've recently started keeping track of the money I owe and the money I get and I am slowly climbing out of this hole.

But with my current projection I have zero money to even afford groceries until May if I am to stand any chance of getting back on budget.
This is obviously not an option.
(although this projection does include payment of my essential bills and rent).

So I'm here for advice. I'm 26 now and hope to be debt free by 30. I know it is possible and with what I've learned from my past money mistakes I have no intention to carry on my bad habits.

After much searching reading and researching I have worked out 2 options. one ideal and the other is a kind of plan B.

I currently earn 27k and I owe close to 15k (not all of it is to lenders).
My ideal situation is a 15k loan at (hopefully) no more than 20% (unsecured w/o guarantor) with which I clear all current debt to current lenders and pay £400-£500 a month (much less than my current re-payment terms) over 4 years.
Obviously no application against a credit check will get me this... (I've tried).

The other option is obviously debt consolidation through a debt charity. I've thought quite a bit about this and I'd rather not take this route as I'd still feel the stress of owing all of my lenders and not just one.
Plus I am already on payment terms with some of them.

So my question:
TL;DR

Is it possible to get in front of my bank manager or other reputable lender to work out an agreement? or are there any other routes I could take?

Thanks.

matttye

Before you consider a debt consolidation loan, think long and hard about what lessons you have learnt as a result of getting into debt. Do you think that with your credit lines open once again you'll be able to resist the temptation to spend?

The reason I mention this is that there have been occasions where people have consolidated all of their debt into one loan and then ran up debt on cards etc. when they've found those credit lines open again, so in effect they've doubled their debt. It would be a truly horrendous situation to get into.

Personally I'd rather not go down the debt consolidation loan route but it's entirely up to you - assuming you can get one, of course. Such loans are a high risk to lenders when you already have debts totalling more than 50% of your annual income. With the loan, you would have borrowed more than 100% of your annual income. I think you'll struggle to borrow what you're asking for. Don't forget, the lender has no guarantee you will use the loan to pay off your debts.

KJo_4

Hi matttye, thanks for the reply.
These are things I have definitely considered also. It's a horrible situation I've gotten into and I really don not want it again (of course I can say that now).
I definitely understand how High risk I look on paper and thats why I'd like a chance to find a way to have a loan considered from a pers point of view.
If there was just a way I could prove to my lender that I had cleared my previous debt with the money they had offered me or they did it them selves. I've done all the workings and with my current income I can comfortably afford £500 on top of all my essential out goings.

Just need that chance *sigh*

Tixy

I'm afraid there really is no chance of getting a loan from a bank based on the situation you have described.

No banks now work on the basis of meeting with you and trusting your word alone. All will consider your credit file, missed payments, and that you may not use the funds to clear the debts, or may run up the debts again by respending credit cards.

The only place that wouldn't would be a personal/family loan - I assume this isn't an option (and don't really think its a good idea).

I'd still think you may have 2 options though
1) as you say to enter a debt management plan with a charity DMP provider (this isn't actually consolidation).

2) see if you can get some short term arrangements with a couple of creditors (perhaps a repayment holiday on a loan or something) so you can get the others back on track and be able to afford some money on groceries/basic essentials and then live really frugally for a few months, then once you are back on track with your debts keep up with repayments on all and gradually work the debt down.
Whether that would be an option and work financially for you you'd need to look into.

You say you can comfortably afford £500 - what are your current debt repayments a month (if you had no arrears)?

KJo_4

Thanks Tixy,
My current problem is I may have overspent coming up to Christmas (and much before then) but also using Payday loans to get to the end of a month.
Some of the debt is also arrears on council tax and accumulation of missed payments on utilities. it's bad, I know this, I have no excuses, now I have to dig. .

Poppops

Only now, after years of loan consolidation and robbing Peter to pay Paul do I understand that there are circumstances in which having a trashed credit rating is a good thing.

When you have no remaining lines of credit, you have to face facts and get down to some serious debt repayment.

You can do it!

You need to sort out your council tax and utilities, work out how cheaply you can live, and tackle the remainder of your debts with what you have left.

A few years ago, my debt was one and a half times my salary and while it has taken yonks to get towards a tunnel with a light, every year gets easier.

Please don't borrow more to pay back, even if you could manage it. Post your SOA on here for tips, shop wisely and economically, sell on ebay, use a teabag twice, whatever it takes. Throw every penny you can at it.

Even now I still try to pay something through phone banking every day, even if it's only 50p. I've read companies don't like it but none have ever complained.

Good luck x

KJo_4

Thanks Poppops
I've cut down a lot in recent months but other than that I don't smoke, or drive, or play video games (anymore) or have cafe/takeaway food at work. I've also sold my games console, stopped browsing ebay, stopped netflix and spotify and magazine subs etc etc.

Wish me luck, eh...

barbarawright

Worth looking through the forums for other threads about consolidation loans. I'm not sure I've seen a single person recommend them as a solution to debt

Poppops

KJo wrote: »

Thanks Poppops
I've cut down a lot in recent months but other than that I don't smoke, or drive, or play video games (anymore) or have cafe/takeaway food at work. I've also sold my games console, stopped browsing ebay, stopped netflix and spotify and magazine subs etc etc.

Wish me luck, eh...

No Netflix?

My goodness, you can take things too far you know. :eek:

Tixy

Have you spoken to one of the debt charities at all yet?

Given that you have arrears on priority debts it may well be worth a conversation with them, even if you ultimately decide not to enter a DMP.

KJo_4

Tixy, I have.
Almost entered into an agreement with a paid one!
Anyway I've had a preliminary chat and applied for information packs (which I am waiting for).
The main reason I don't want to go down this route is that I will still have the responsibility of paying ALL of my lenders (who don't have to agree to the terms) plus I owe money to a family member whom I do not want to let down. plus I am already in final agreements on 2 council tax accounts and I also have my utility arrears to take care of.

The first couple of months are going to be a lot of hassle with a DMP, cancelling DD's and what not plus clearing my Payday loan (im not in arrears on this yet and don't want it included as I'd have to wait for the pay date to pass costing me more money).

In all off my workings a consolidation loan is most stress free, affordable option I can think of.

..But, I got myself in to this mess, right...