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21- £16k in debt and dont know what to do! HELP!!

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Hello All,

Ive got myself into a bit of a sticky situation and need some advise/help please.

Right my situation, Im a 2nd year uni student and this is what i owe:-

Egg Card- £5400 (at the limit and interest being charged). Min payments around £110/120 a month.

Egg Loan-£11000 (repayments £450/month).

Where has this money gone? Well I have used the funds to pay for my living costs, food, rent, books etc AND foolishly i spent 4k on a 3 month round the world holiday last summer - i knw stupid however heinsight is a great thing!

Right moving on up until this month Ive been working 30 hours a week in a call centre after uni hours/weekends etc for which i was getting around £600/month so all was going fine as i could afford repayments!

But ive had to give up the job with exams coming up (i just couldnt cope with both!!).

Also as from July my studies (im a medical student) involve 9-6 days with travelling to various hospitals (some an hour+ away) so I really dont think ill be able to work even part time!! Which leaves me in a dire situation which im so worried about!!

On the other hand it isnt all bad - i owe £16.5k BUT i do have 8/9k assets. This is mainly from some the loan leftover/student loan and parental gifts over the years so my qu is this. Should I:-
A- Use this £8k that i have to continuing making min payments (and then worry again when this has run out) - NOT REALLY MY PREFERRED OPTION!
B- Default on payment and then arrange a lesser replayment option with egg/debt collection company!
C- use my 8k (which is around 50% of my debt) to negotiate a settlement with any debt collection agency?- is this feasible?

I fully understand by doing B or C that i risk my credit rating a lot!!!

Im so worried that if i default ill be taken to court as i couldnt really handle that on top of my studies!!
All help would be appreciated!! Thank you!!!

PS - sorry if i come accross as feeling sorry for myself! I understand people have been in far worse situations than me and through no fault of their own so yeah apologies if i do come accross in this way!!
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Comments

  • mrcow
    mrcow Posts: 15,170 Forumite
    Part of the Furniture 10,000 Posts Combo Breaker
    Hi and welcome

    Firstly, please don't apologise to us for your situation!! The main thing is that you are facing up to your situation and are looking to deal with it.

    I am a little confused though.......(doesn't take much!)

    ....If you're a second year medical student, how come you have a Egg loan? Would a student loan not be a better option....where repayments are deferred until you can afford them?

    Can you not use your savings to clear that credit card and some of the loan and then get a student loan to cover the balance (or whatever of it you can?).

    I must be missing something here......

    I agree BTW with the job situation, you've enough on your plate with just your exams, and you don't want to throw away the opportunity of getting decent degree qualifications because you didn't give it your all at exam time.....
    "One day I realised that when you are lying in your grave, it's no good saying, "I was too shy, too frightened."
    Because by then you've blown your chances. That's it."
  • kanjoose_one
    kanjoose_one Posts: 24 Forumite
    Hi thanks for replying!

    Why i have a egg loan? Well lets just say i was foolish enough to apply for one as I saw it as "easy money" and thought the repayments would be simple to repay (considering my job). I did also take out a student loan which is currently untouched in a savings account. So yeah i guess i could use my savings to pay off the credit card which would leave me with around 3k left and around 11k of loan to pay egg! ie enough for around 6/7 months of repayment then ill be stuck again!

    I mean i have 3 years of uni left which means my earning capacity during those three years with be minimal so yeah i cant see a way out! Getting my parents to bail me out isnt really an option as ive got myself into this mess and im determined to get myself out of it!!
  • Lucie_2
    Lucie_2 Posts: 1,482 Forumite
    Part of the Furniture 1,000 Posts Combo Breaker
    As I see it there's no point having £8K savings when you owe more. Pay off the Barclaycard & some of the loan. When you pay off the loan ask egg if they will restructure the remaining balance over the original term. This will reduce your monthly payments & avoid you getting a bad credit rating.
    Secondly you need to control your spending - cut up that credit card until you have a better handle on your finances.
    All students get into debt - don't get too hung up on it. Are you using your interest free overdraft to it's full advantage?
  • gravitytolls
    gravitytolls Posts: 13,558 Forumite
    you are paying more interest on the loan than you are earning on your savings.
    It makes sense to use your savings toward the loan.

    wHY DID YOU BORROW SO MUCH? dID YOU NEED IT ALL?
    Can you get any more student loans to clear the rest of the debt?
    What about grants? Hardship grant for instance?

    If none of the above, contact egg and renegotiate a longer payment schedule, or better still, explain your diofficulty, ask them to freeze the interest and make a reasonable offer of monthly repayments, with the option of renegotiation when your studies are finished.
    I ave a dodgy H, so sometimes I will sound dead common, on occasion dead stupid and rarely, pig ignorant. Sometimes I may be these things, but I will always blame it on my dodgy H.

    Sorry, I'm a bit of a grumble weed today, no offence intended ... well it might be, but I'll be sorry.
  • kanjoose_one
    kanjoose_one Posts: 24 Forumite
    you are paying more interest on the loan than you are earning on your savings.
    It makes sense to use your savings toward the loan.

    wHY DID YOU BORROW SO MUCH? dID YOU NEED IT ALL?
    Can you get any more student loans to clear the rest of the debt?
    What about grants? Hardship grant for instance?

    If none of the above, contact egg and renegotiate a longer payment schedule, or better still, explain your diofficulty, ask them to freeze the interest and make a reasonable offer of monthly repayments, with the option of renegotiation when your studies are finished.

    Why did i borrow so much? yeah I get your point, i was young, follish and stupid and wont be making a similar mistake again!

    I agree having £8k "savings" is pointless when owing so much so really my qu is whats the best way to utilise the £8k effectively! I will now contact egg and try and negotiate an offer which is more suitable to me!
  • mrcow
    mrcow Posts: 15,170 Forumite
    Part of the Furniture 10,000 Posts Combo Breaker
    Hi sorry about that - I've just seen where you mentioned the Student Loan in your original post.

    My only worry is that is you use all your savings to pay off the debts...what are you going to live on?

    I would still say to clear the credit card debt, as this is probably more expensive than the loan?

    It looks as if your Egg loan is only over two years or so....how about speaking with them and reapplying over a longer term to reduce the repayments and then applying for more Student Loan to cover it to pay it off? (It's been a while since I graduated, so sorry if they've changed the rules now - but you used to be able to apply for a loan each year - I don't know what the maximum that you can take out now is?). That way you are deferring as much of the debt as possible until you are in a position to pay it off when you graduate.

    Also - do you have an interest free overdraft facility? You can always plug some money onto this if you do.
    "One day I realised that when you are lying in your grave, it's no good saying, "I was too shy, too frightened."
    Because by then you've blown your chances. That's it."
  • Murtle
    Murtle Posts: 4,154 Forumite
    Part of the Furniture 1,000 Posts Combo Breaker
    Hi kanjoose_one

    If you have

    Egg Card- £5400 (at the limit and interest being charged). Min payments around £110/120 a month. I would use some of your 8/9K to pay this off. Then cut it up.

    This would leave £2600 (based on 8k of the 8/9k) which will equal 5months payment towards your loan. This should see you through your exams and out the other side when you can start working again. I would also put your student loan towards the egg loan as well.

    Egg Loan-£11000 (repayments £450/month).

    What about money to live on? is this seperate or where will this money be coming from?? if you don't have any money for this work out what you will need and calculate that in with the monthly repayment to know how long your money will last.

    I would still recommend speaking to egg about the length/amount paying back.

    Good luck and please do what's best for you.....you don't have to agree with me...I'm sure others won't!!!!
  • mrcow
    mrcow Posts: 15,170 Forumite
    Part of the Furniture 10,000 Posts Combo Breaker
    Also - who are your bank?

    Some do further education loans at special rates where you can defer repayments until you've completed your studies. You could look at using one of these to pay off whatever is left off your Egg loan to take this pressure off whilst you should be concentrating on your studies and pay if off once you start work.

    Just an idea? It would be worth talking it though with your bank to at least see what they can offer.
    "One day I realised that when you are lying in your grave, it's no good saying, "I was too shy, too frightened."
    Because by then you've blown your chances. That's it."
  • kanjoose_one
    kanjoose_one Posts: 24 Forumite
    Thanks for all the advise guys!

    Sorry If ive been a bit vague in the details ive posted! As for living costs, well this academic year is nearly done and my next installement of the student loan will come through in July (when my term re starts) so living expenses will be taken care of by the student loan! I know now (having learned the hard way) that i must live according to my means so no contract mobile, expensive broadband etc. And having cut back im sure i can survive on the student loan alone as from July. (infact i knw i can having done a budget etc)

    With regards to my overdraft yeah i do have the facility of £800 interest free although i want to keep that there just in case of any emergencies (may sound a but silly i knw but still).

    Im going to have a good think about things tonight and draft a few letters that i could send to egg re the loan to see if they are willing to reduce the payments(by extending the term).

    Thanks again to all!!
  • roger56
    roger56 Posts: 478 Forumite
    Getting my parents to bail me out isnt really an option as ive got myself into this mess and im determined to get myself out of it!!

    OK, it may be a little :o going to your parents, but if they can help and are willing let them.
    a) you'll save your credit rating (and that is good for the future).
    b) you could offer them some interest or even offer to help in some other way.

    You've recognised debt needs dealing with, well done.
    Try you parents first, what is there to loose?
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