DMP or secured loan to consolidate debt?

Bewildered

My husband works for Landrover and we're worried about the possibility of him losing his job if the company is down-sized or asset stripped when sold. We have income insurance which would cover us for a year or so, if he was made redundant so we're very lucky there.

However, it's made us sit down and look at exactly where we are financially and we've been living way beyond our means - pootling along getting into loads of debt through not communicating with each other or budgetting properly. (I'm feeling so vulnerable posting this, especially the figures, so please, please, don't tell me I'm stupid - I already know and am at my wits end with how moronic we've been).

Our SOA is:

Income - OH takehome 1946
my takehome 900
CHB and tax credit 118

monthly outgoings mortgage 830
life assurance 69
income insurance 37
house insurance 18
gas and electric 90
water rates 23
school meals 36
child care 125
petrol 300
food, clothes and petcare 480
going out 50
Digital tv and tv licence 43
landline and bband 20
mobile contracts 30
charity 10
Magazine subs 10
Car tax, servicing and insurance 45

Petrol is so high as OH commutes and we can't move closer as we look after his elderly parents in their home (they live a few doors away) and they won't move. I've not included council tax and we generally pay this off in one hit with a yearly bonus that we generally (but not always) get.

Debts Credit card 1 (15.9 apr) 72 per month 5350 owed
Credit card 2 (0% apr) 96 per month 4750 owed
(0% is for the next 3 months, then it will be 14.9%)
Credit card 3 (0%) 76 per month 3750 owed
(0% is for the next 10 months, then 14.9%)
Loan 1 (6.1%) 390 per month, 12500 owed
Loan 2 (7.9%) 355 per month 22500 owed

No overdrafts
Savings/cash of approx 5000

I've approached payplan who have suggested a dmp, but we've also been offered a first plus consolidation loan at 6.2% (no pppi, as we have that already).

I'm not sure what is the best way to go - I don't want to risk taking on a secured loan whereby once we've signed up the interest increases until it's as high as a credit card. First Plus say they don't do that and also that the charge for early repayment is just 150.00 plus two months' interest. We wouldn't be able to overpay without a pro-rata 'fine' for doing so. First Plus have suggested that we borrow 50K which would leave us about 5K to put in a high interest account as a safety net. (I'm not sure about borrowing extra) the monthly repayment would be 385.00

If we take out a dmp, then we commit to cutting up credit cards and not using overdrafts, etc., which is fine in principle, but leaves us in the clag if oh is made redundant and we need to borrow more in the short term.

We've never been late with repayments and have never defaulted or had any ccj's.

DMP or consolidate with a secured loan? - both look scary and I'd really appreciate any advice.

(I could use 6000 from another credit card (0% for one year) to add to the 5000 and ask bank loan 1 if they'd take 11500 in full payment. This would reduce our outgoings by 280 per month but I'm not sure how to ask them to do so)?

Thank you.

RAS

Welcome and hope that other can help you more than I can.

Bewildered wrote: »

Our SOA is:

Income - OH takehome 1946
my takehome 900
CHB and tax credit 118

Total £2964

monthly outgoings mortgage 830 - is this repayment or interest only?
life assurance 69 - this looks high. Can you check the costs on other forums and then use quidco to swap. Put the cash back to paying off one of the CCs
income insurance 37 - in the circumstances keep this?
house insurance 18
gas and electric 90 - this is high, check for cheaper suppliers and swap
water rates 23
school meals 36 - send them with pack ups
child care 125
petrol 300 - try to reduce this by reducing journeys, driving conservatively and buying as cheaply as possible. Can you sell it if he is made redundant?
food, clothes and petcare 480 - for how many adults and children? This can proably be halved depending on numbers
going out 50 - cut this right back
Digital tv and tv licence 43 - can you cut the digital?
landline and bband 20
mobile contracts 30 - go PAYG asap
charity 10 - cut this
Magazine subs 10 and this
Car tax, servicing and insurance 45

total 2216

Debts Credit card 1 (15.9 apr) 72 per month 5350 owed - move this to 0% now then the payments
Credit card 2 (0% apr) 96 per month 4750 owed
(0% is for the next 3 months, then it will be 14.9%) - unless you can replace this with another 0% or Low life balance be ready to use your savings to pay in 3 months. Given the circumstances try for llb.
Credit card 3 (0%) 76 per month 3750 owed (0% is for the next 10 months, then 14.9%)
Loan 1 (6.1%) 390 per month, 12500 owed - can you repay on this?
Loan 2 (7.9%) 355 per month 22500 owed - ditto

Total debt servicing £989

total expenditure £3205

Monthly deficit -£241

No overdrafts
Savings/cash of approx 5000 - use this to pay one of the cards when you cannot get he 0% or llb

I could use 6000 from another credit card (0% for one year) - yes

I am not a specialist in all this but others will be along.

As a starter though, it is not considered a good idea to consolidate here as it only leads to more debt. It looks like you have already done this anyway?

So you need to cut your expenditure urgently just to break even and clear what you can.

rayday2

Well I would say keep away from consolidated loans not only are they expensive they impact your credit history anyway.

I went down the consolidated route I borrowed 16,000 we have been paying two years (this is a big company known on the TV) it was over 10 years I requested a settlement figure it came back at 17,300. So for two years we have basically paid the expensive payment protection they made us take out and then some.

This is not an unusual story for consolidation the apr is now after a few rate rises 10.5% it started at 8.4%