Consolidating debts to help become debt free.d

Scottx2

Good afternoon guys,

I'm new here so please take it easy.

I currently have around £10k in unsecured debts, the majority secured against 3 credit cards all of which I'm paying around 20-25% APR (I believe). My current monthly outgoings to service this debt is around £275 per month.

I'd really like a way of helping me seriously reduce my debt while lowering how much I pay to service it (i.e reduce the amount of interest I pay on the debt).

It is probably worth noting that I am able to pay all my bills on time and all minimum payments on my cards but it doesn't leave much left over so simply paying more off the credit cards doesn't work as my disposable income after I've paid for things such as food is very little.

Can anyone offer any advice on what my options are? I was considering looking at loans (either secured or unsecured) to bring it down to one lower monthly payment which meant I would have everything paid off in a couple of years but with my credit rating I'm unsure if thats possible.

May be obvious but I don't want anything I do to have adverse affect on my credit rating (i.e. bankruptcy).

Any advice would be greatly appreciated.

sourcrates

Hi,
Well unfortunately you cant have it all ways I`m afraid.
If you fill out this :


http://www.stoozing.com/calculator/soa.php


Then people will be in a better position to offer advice, there are no quick fixes to these things, consolidation loans are rarely a good idea, the bottom line is if you cant increase your income/decrease your outgoings, then there is little you can do, unless you opt for some form of debt repayment plan, which you say you don't want to do !!:o

longtermplanner

Please do post a SoA.

A consolidation loan for 10k is unlikely if you are struggling.

Have you stopped using the cards? If you haven't, then you need to do this. If you can't, it's a sign that you ned to be looking at a Debt Management Plan. This will affect your credit rating, but not as seriously as bankruptcy.

Tixy

Hi

What is the maximum you can afford a month towards the debts?

You mention a consolidation loan which would mean you could pay off the debt in 2 years. For a £10k debt the repayments would have to be a lot higher than £275 a month.

As suggested a statement of affairs may be useful for you to see where your money is currently going and look to see if you can make any changes.

Do make sure you find out what the APRs on on all your debts. You may also want to try a snowball calculator to see how long it will take to pay off your debts at £275 a month and how much you can shorten it by altering the £275 on the calculator to slightly higher amounts. http://www.whatsthecost.com/snowball.aspx

You mention your credit rating possibly being a barrier to a loan - what negatives do you have reported on your credit files?

Scottx2

Hi guys,

Thank you for your replies and I apologise for any naivety in my post. I've done the SoA below, I've left the interest rates blank for now as I'm not sure what they are. I will try and find out.

I don't currently live on or require my credit cards. They're maxed out pretty much (I used them to pay for solicitor costs following a court case over visitation rights for my son) but I don't use them anymore.

Statement of Affairs and Personal Balance Sheet

Household Information
Number of adults in household........... 1
Number of children in household.........
Number of cars owned.................... 1

Monthly Income Details
Monthly income after tax................ 1411
Partners monthly income after tax....... 0
Benefits................................ 0
Other income............................ 0
Total monthly income.................... 1411

Monthly Expense Details
Mortgage................................ 275
Secured/HP loan repayments.............. 205
Rent.................................... 0
Management charge (leasehold property).. 0
Council tax............................. 65
Electricity............................. 20
Gas..................................... 20
Oil..................................... 0
Water rates............................. 20
Telephone (land line)................... 35
Mobile phone............................ 15
TV Licence.............................. 0
Satellite/Cable TV...................... 0
Internet Services....................... 0
Groceries etc. ......................... 80
Clothing................................ 0
Petrol/diesel........................... 160
Road tax................................ 0
Car Insurance........................... 0
Car maintenance (including MOT)......... 0
Car parking............................. 0
Other travel............................ 0
Childcare/nursery....................... 0
Other child related expenses............ 175
Medical (prescriptions, dentist etc).... 0
Pet insurance/vet bills................. 0
Buildings insurance..................... 11
Contents insurance...................... 0
Life assurance ......................... 0
Other insurance......................... 0
Presents (birthday, christmas etc)...... 0
Haircuts................................ 0
Entertainment........................... 0
Holiday................................. 0
Emergency fund.......................... 0
Total monthly expenses.................. 1081


Assets
Cash.................................... 0
House value (Gross)..................... 65000
Shares and bonds........................ 0
Car(s).................................. 3500
Other assets............................ 0
Total Assets............................ 68500


Secured & HP Debts
Description....................Debt......Monthly...APR
Mortgage...................... 59000....(275)......0
Hire Purchase (HP) debt ...... 4000.....(205)......0
Total secured & HP debts...... 63000.....-.........-

Unsecured Debts
Description....................Debt......Monthly...APR
Halifax........................2800......57........0
Nationwide.....................3200......68........0
BarclayCard....................2200......72........0
Shopto.........................300.......30........0
Next...........................90........5.........0
Overdraft......................450.......15........0
Total unsecured debts..........9040......247.......-


Monthly Budget Summary
Total monthly income.................... 1,411
Expenses (including HP & secured debts). 1,081
Available for debt repayments........... 330
Monthly UNsecured debt repayments....... 247
Amount left after debt repayments....... 83

Personal Balance Sheet Summary
Total assets (things you own)........... 68,500
Total HP & Secured debt................. -63,000
Total Unsecured debt.................... -9,040
Net Assets.............................. -3,540

Scottx2

Tixy, sorry forgot your question regarding credit rating. I use Noddle which puts my credit rating at 1/5 and puts the amount of debt as the main thing against my credit rating.

I don't actually have any bad marks against my credit (in terms of missed payments) as far as I'm aware, certainly not within the last 5 years.

-taff

Have you got car insurance? Do you get your hair cut? Do you buy magazines? Have you got mortgage insurances? broadband?

Scottx2

I pay my car insurance annually with my yearly bonus. My sister is a hair dresser so I've not paid for a hair cut in over a decade. I don't buy magazines, I don't currently have mortgage insurance and my broadband was covered in the 35 for my telephone line, this is a bundle including line rental TV and broadband.

Tixy

I would guess you may struggle to get accepted for an unsecured loan to pay off the debts on an affordability basis (how a lender would see it as they will consider the risk you don't consolidate or do but run up the cards again).
You don't have enough equity for a secured loan, and it wouldn't be advisable to turn these debts to secured anyway.

I would definitely look out the APRs for each card (if some show a monthly interest rate on statements there is a converter here - http://www.stoozing.com/calculator/apr-rate-converter.php)

Your outgoings listed look low, and it looks like there are some costs not accounted for (though I note you mentioned the bonus pays for some of it does this also cover car tax, maintenance etc).


Is there anyway you could increase your income to help you clear these debts quicker? overtime? a second job? a lodger for a while? any things you could sell to raise some cash to put towards the debts?

You could consider a DMP as although you can meet debt repayments if you budgeted 'normal' reasonable amounts in each category then you would probably show a shortfall. There are downsides to a DMP (wrecked credit rating/no future credit until all paid off) but upsides as well (hopefully creditors would freeze interest / better quality of life whilst still repaying the debts). May be something to consider.

Scottx2

I'll get on to the APRs asap, when I find these out what can I do? What does that info allow me to do? Yeah, my annual bonus covers my car insurance, tax, MOT & service which is why I didn't include it in there as I didn't mention my bonus.

Overtime is something I'm trying to get at work but they aren't willing, I've considered a second income but due to childcare and my current working hours I've struggled to find anything suitable. Any options here? I'm currently brushing up on my coding skills as I wanted to do some freelance work which hopefully could earn me some extra income but I'm unsure how that will work. I only have a 2 bed flat, the second is my sons room when he stays over and have very little in terms of thing I can sell.

How will a DMP affect my mortgage and my ability to remortgage in the future? I'd like to avoid that option if possible but I guess it may be my only option.

[Deleted User]

Scottx2 wrote: »

Statement of Affairs and Personal Balance Sheet

Household Information
Number of adults in household........... 1
Number of children in household.........
Number of cars owned.................... 1

Monthly Income Details
Monthly income after tax................ 1411 - Any way to increase this? Overtime/second job?
Partners monthly income after tax....... 0
Benefits................................ 0
Other income............................ 0
Total monthly income.................... 1411

Monthly Expense Details
Mortgage................................ 275
Secured/HP loan repayments.............. 205
Rent.................................... 0
Management charge (leasehold property).. 0
Council tax............................. 65
Electricity............................. 20
Gas..................................... 20
Oil..................................... 0
Water rates............................. 20
Telephone (land line)................... 35
Mobile phone............................ 15
TV Licence.............................. 0
Satellite/Cable TV...................... 0
Internet Services....................... 0
Groceries etc. ......................... 80 - Just £18-46pw. Really?
Clothing................................ 0
Petrol/diesel........................... 160
Road tax................................ 0 - Nothing?
Car Insurance........................... 0 - Nothing?
Car maintenance (including MOT)......... 0 - Nothing?
Car parking............................. 0
Other travel............................ 0 - Never?
Childcare/nursery....................... 0
Other child related expenses............ 175
Medical (prescriptions, dentist etc).... 0 - Never?
Pet insurance/vet bills................. 0
Buildings insurance..................... 11
Contents insurance...................... 0 - You need this. Cost is around £10pm.
Life assurance ......................... 0
Other insurance......................... 0
Presents (birthday, christmas etc)...... 0 - Nothing?
Haircuts................................ 0
Entertainment........................... 0 - You never rent a DVD, buy a pizza, pop out for a pint?
Holiday................................. 0 - Not even days out?
Emergency fund.......................... 0 - You need something in here, especially as you are a home owner.

Total monthly expenses.................. 1081


Assets
Cash.................................... 0
House value (Gross)..................... 65000
Shares and bonds........................ 0
Car(s).................................. 3500
Other assets............................ 0
Total Assets............................ 68500


Secured & HP Debts
Description....................Debt......Monthly...APR
Mortgage...................... 59000....(275)......0
Hire Purchase (HP) debt ...... 4000.....(205)......0
Total secured & HP debts...... 63000.....-.........-

Unsecured Debts
Description....................Debt......Monthly...APR
Halifax........................2800......57........0
Nationwide.....................3200......68........0
BarclayCard....................2200......72........0
Shopto.........................300.......30........0
Next...........................90........5.........0
Overdraft......................450.......15........0
Total unsecured debts..........9040......247.......-


Monthly Budget Summary
Total monthly income.................... 1,411
Expenses (including HP & secured debts). 1,081
Available for debt repayments........... 330
Monthly UNsecured debt repayments....... 247
Amount left after debt repayments....... 83

Personal Balance Sheet Summary
Total assets (things you own)........... 68,500
Total HP & Secured debt................. -63,000
Total Unsecured debt.................... -9,040
Net Assets.............................. -3,540

With so many areas left blank, I suspect your £83pm left over, is way off the mark.

With just £83pm (at best) left over, and your existing debt at well over 50% of your annual income, I doubt you will get additional credit, let alone at a low APR.