£70,000 consolidation loan?

its_maths_not_magic

Hi. This is not meant to offend you, and I hope it doesn't come across as harsh but to me there seems to be some glaring problems you may not have thought about yet.

Firstly, your partner and you seem to be in significant debt at a young age. I honestly don't mean to sound judgmental because we are all in the same boat here, but if you are in this sort of debt now, unless you change the way you view and handle money, its only going to get worse as you get older and life becomes more expensive. Trying to deal with it by getting further in debt indicates, to me anyway, that you haven't really thought about how you got into debt in the first place. There have been many on here who tried to clear debts by getting a consolidation loan and for the most part have regretted doing it.

What tends to happen is someone gets a consolidation loan (assuming you even are able to get one, which is doubtful), and everything is great for a while. But the old habits start creeping back in and very quickly they are spending how they always have and eventually get back right into debt.

I would honestly suggest you take a very candid look at your financial lives and work out how you got in debt in the first place. Work out how to spend sensibly and within your budget. There are some great resources on this site, and many to talk to for budgeting advice. I would also talk to those who had consolidation loans and see how it panned out for them. I hope that helps. I can tell you that as someone who had no control over her spending, one of the best things I ever did was take control of my financial life and my spending.

blisteringblue

Sorry to say like all the others you've not had your LBM yet (Light Bulb Moment). 70K is a massive debt and you are just looking to shift it onto another debt so you can borrow again in a few years. Ask a serious question, and I ask this because I've been there and done that. We consolidated in the shape of an offset mortgage (kicking myself on that one) added 40k to our tiny mortgage and still ran up 60K on the cards. Believe me this is the situation you will be in if you consolidate again.

The ONLY way I have managed to start reducing my debt is via a DMP. It's the first time in over a decade I've started to reduce what I owe.

However what you are not going to like to hear is a DMP will make you a financial pariah for probably about 10 years. Basically the way the banks play them now they don't mark you as defaulted, they just put AP markers on your credit file (Arrangement to Pay) so its 6 years after you finish the DMP that your credit rating is back to normal.

Personally I've got past this quite quickly and it is not even slightly an issue for us. We don't need to move and now save for what we need. Yes, that is true, just bought a new Fridge Freezer on money put aside in our budget pots. I've not done that well EVER before.

Seriously think long and hard before taking on any further borrowing, in my opinion you will regret it in the long term.

longtermplanner

Unsecured? Cloud cukoo land as sourcrates says

Secured? Even if you have enough equity, it would probably be at a horrible rate. Don't even think about this.

If you can afford the minimum repayments, then you need to look at reducing your expenditure and throwing all the freed up money at the most expensive debt.

If you can't, then you need to look at an IVA or a DMP. Or selling the house if there is a lot of equity in it.

relhaopyla

I think you need to reconsider a DMP, because it may be the only way you can do those things, just in about seven years instead of five.

Stewart_78

I would advise that you don't switch your unsecured debts to a secured loan. I nearly did this 4 years ago and am now so pleased that the bank said no.

Without knowing your full situation, I would suspect that a DMP is one of your best choices. The key thing with this is that when you start it, make only token payments for a while to ensure that your accounts are defaulted as early as possible. Then you have 6 years to try to clear the debt and after that, your credit file will be clean.

Good luck and please do try to be as honest with yourselves as possible.

National_Debtline

geedoggg wrote: »

I have looked on the stepchange website and others like this but a few things are holding me back about these options. We both aren't keen on anything which will affect our credit score as in 5 years time we would like to sell our home to move into a bigger house, get married and start a family etc as by that time we will both we entering our thirties.

Hi geedoggg and welcome to MSE.

The thing about a "credit score" is that it doesn't exist in any real sense. It is just a relative indicator of whether a bank will lend you £X or not.

The fact that you currently have £70K of unsecured commitments to maintain means that banks may already view you as a risk, even if your repayment history is unblemished.

If you are able to post up a Statement of Affairs (SOA) on here, forumites will be able to offer much more advice on where you can go from here.

Best wishes

Dennis
Twitter: @natdebtline

[Deleted User]

Good advice as always; I really think you need to look at your spending habits; £70000 of debt is impressive by any standard at your age.