We'd like to remind Forumites to please avoid political debate on the Forum. This is to keep it a safe and useful space for MoneySaving discussions. Threads that are - or become - political in nature may be removed in line with the Forum’s rules. Thank you for your understanding.

Need advice on getting rid of my debts please :

Hi All,


I am have debts totalling £17k (not including my mortgage as follows) :
Credit Card £9,000
Overdraft £2,000
Loan £6,000


I am paying the loan repayments of £280pm and the credit card minimum payment of approx. £250pm but obv this is never going to get repaid if I continue doing this.


I tried to get an unsecured loan with the AA for 12k which would have covered all my debts and saved me money each month on repayments but I was refused. My credit score is excellent so I assume its due to my high borrowing level.


I have a car worth approx £6k that has no finance and I also have £5k inheritance coming in the next few weeks.


So what is the best way to reduce this debt - should I go for a secured loan for £12k which will pay it all off with the inheritance.


Or should I sell my car and with my inheritance pay off £11k off my debt (leaving me with just my loan). The only thing then is I do need a car for work so will need to get car finance.


I have never been refused credit before I though consolidating them all into one 12k loan to be repaid over 4 years would solve my problems but I am unable to do that. I am scared to apply with other lenders due to being refused by AA. Do you think I should try other lenders?


Any advice gratefully received.

Comments

  • DawnW
    DawnW Posts: 7,620 Forumite
    Part of the Furniture 1,000 Posts Name Dropper Photogenic
    Didn't want to read and run, and I am sure lots of other people will be along shortly with constructive suggestions. Secured loans are not usually advised, as you are changing unsecured borrowing to a debt that is secured on your house, which could in some circumstances lead to your losing your home if your situation changed and you couldn't keep up the payments. Also, consolidation generally is not advised either, as so many people have done this and then run up the original cards, overdrafts etc all over again. Even with the best will in the world, situations such as illness or unemployment, which can happen to anyone, can scupper plans :(

    What is usually advised is to put up a statement of affairs (I don't have the link, but someone will come along with it in a minute). Other posters can then make suggestions of how you could potentially cut down to free up more money for debt repayments. Even if you didn't want to post it, and not everyone does, it is a really useful tool enabling you to see exactly where the money goes each month, and which debts are costing you most in interest. Another useful tool is a spending diary, which can be simply a notebook, or a phone app, or special budgeting software such as You need a budget (YNAB) which many on here swear by.

    Anyway, just a few ideas to think about, and I am sure there will be many more shortly x
  • sourcrates
    sourcrates Posts: 30,569 Ambassador
    Part of the Furniture 10,000 Posts I've been Money Tipped! Name Dropper
    Consolidation loans can be a nightmare, and turning unsecured debt, into secured debt, is not a good idea.
    The temptation to borrow again is just too strong for lots of people, however, if you feel you can control your spending urges, then it may be an option.
    However, first I would use the 5k to reduce the card debt, and pay off the OD, then possibly apply for a 7k loan.
    Or you could resist the loan solution, and just throw as much as you can at the card and existing loan, after deducting the 5k.
    I’m a Forum Ambassador and I support the Forum Team on the Debt free wannabe, Credit file and ratings, and Bankruptcy and living with it boards. If you need any help on these boards, do let me know. Please note that Ambassadors are not moderators. Any posts you spot in breach of the Forum Rules should be reported via the report button, or by emailing forumteam@moneysavingexpert.com. All views are my own and not the official line of MoneySavingExpert.For free non-judgemental debt advice, contact either Stepchange, National Debtline, or CitizensAdviceBureaux.Link to SOA Calculator- https://www.stoozing.com/soa.php The "provit letter" is here-https://forums.moneysavingexpert.com/discussion/2607247/letter-when-you-know-nothing-about-about-the-debt-aka-prove-it-letter
This discussion has been closed.
Meet your Ambassadors

🚀 Getting Started

Hi new member!

Our Getting Started Guide will help you get the most out of the Forum

Categories

  • All Categories
  • 348.2K Banking & Borrowing
  • 252.1K Reduce Debt & Boost Income
  • 452.3K Spending & Discounts
  • 240.7K Work, Benefits & Business
  • 616.9K Mortgages, Homes & Bills
  • 175.6K Life & Family
  • 253.9K Travel & Transport
  • 1.5M Hobbies & Leisure
  • 16K Discuss & Feedback
  • 15.1K Coronavirus Support Boards

Is this how you want to be seen?

We see you are using a default avatar. It takes only a few seconds to pick a picture.