Loan for debt consolidation - what am I doing wrong?

Reidles

I think this is the best option, using my parents. Essentially, they have to trust me, which is what the banks (probably) won't. It's any potential lender's loss, as they won't make any money out of my situation, whereas I'll happily pay interest on a 'parent' loan.

The thing that irks me (and no doubt many, many people on here) is the rather backwards way the credit system works. Do I have high debt/income levels? Sure, that's exacly what I'm trying to address. I can't reduce my debt/income level...becuase I have a high debt/income level. It's rather self-perpetuating. Sure, I get why it works this way, but it doesn't make it any less frustrating. I'm fairly sure that the risk of me dying/going to prision/falling ill is very low, no matter how any creditor may weight it.

One last thing: I have a mortgage. Kind of. It's a joint mortgage with my ex/mother of my kids. We both can't get out of it, so she keeps up repayments (as she lives there) while I pay her money for child maintainence. Naturally, becuase I don't live there I don't declare it/the fact I have a mortgage on any applications I was wondering if I could use this to any advantage to help me with my otehr debts? The main reason I haven't considered bankruptcy is becuase of my link to the house...

Coveredinbees!!!!

Yea but you dug yourself in to the debt hole you are now in and are asking to dig the hole twice as deep as it already is and possibly pay off the debt or splurge it on hookers, booze and gambling.

Reidles

Love the username, but a little unsure on the analogy...

I'm asking for an escalator to get myself out of the hole. Potential creditors may think I'm using it to ferry hoookers, booze and poker tables down the hole, but I'm really not lookign for it to be a bigger hole.

MallyGirl

Guarantor loans won't save any money anyway - they have massive APRs

Thrugelmir

Reidles wrote: »

The thing that irks me (and no doubt many, many people on here) is the rather backwards way the credit system works.

The credit system works surprisingly well. Predicts those likely to re-offend extremely accurately. In the main it's down to human nature. Nothing to do with income , job or class.

but the real issue is the 'hand-to-mouth' situtaion I'm in right now.

A sure way of learning from the experience. Far better than an easy way out. That teaches nothing.

Baked beans on toast. Walk part of the way to work. Take sandwiches to work. Cancel the Apple phone contract. There's lots of ways to chip away at the debt.

Reidles

I really, really do appriciate the advice, but I assure you that all these measures have been taken and are actively being applied. Are these long overdue? Without doubt; but simply telling me to 'save money' isn't really the advice that I was looking for.

'I'm paying x to pay off y. x is big, but workable. I would like to explore the possibilty of the value z, in order to replace x. z is a better deal for me and would make a creditor money. I would also remove x completely in 5 years.'

If there's no takers, fine; but I'll always consider it a flawed system.

burlington6

Your parents need to realise if you can't pay the debts you have, then they aren't going to get paid either

comeandgo

Oh please, please, please please, leave your dad alone. If you loose your job, become ill, in car accident, anything where you can't pay, you make him liable for your bad spending habits. Is there nothing you can sell to help bring debt down or get part time work, with Christmas coming the hotels, shops will need more short term staff.

andyfromotley

Reidles wrote: »

One last thing: I have a mortgage. Kind of. It's a joint mortgage with my ex/mother of my kids. We both can't get out of it, so she keeps up repayments (as she lives there) while I pay her money for child maintainence. Naturally, becuase I don't live there I don't declare it/the fact I have a mortgage on any applications I was wondering if I could use this to any advantage to help me with my otehr debts? The main reason I haven't considered bankruptcy is becuase of my link to the house...

Really? At what point did you think this was a sound idea. Do you really think that not mentioning it meant that companies wouldnt know about it? Nope theres no advantage to it. it makes your situation appear even worse than it already was. The companies arent interested in the fact that you dont service the mortgage, they are very interested in the fact that you are liable for the mortgage.

I'm not having a go because belive me i have been there and done that with the whole debt thing. But i'm not really sure that you are grasping the point on this. The problem isnt the high ratio, lending policies or interest rates. Your basic problem is that you need to spend less. Probably a lot less, and pay off your debts. This is your solution.

From everything that you have said i think that a loan will not solve your problem and will just worsen it. Your dad would be daft take on the risk of your debt for you.

Good luck with whatever you decide, as i say the DFW forum is always a good place to seek advice.

phillw

Reidles wrote: »

Do I have high debt/income levels? Sure, that's exacly what I'm trying to address. I can't reduce my debt/income level...becuase I have a high debt/income level.

The only way to reduce your debt/income level is to increase your income or reduce your expenditure.

The high interest is essentially an insurance premium against default. You want a low premium even though you are high risk. Taking out another loan does not change the risk, so it shouldn't really affect the premium you pay. The only time that debt consolidation makes any difference to repayments is if you increase the term, which just increases the amount you will ultimately pay back.

If you can get to see a free debt councillor then they might be able to help you negotiate something. It might be worth while talking to citizens advice bureau.

It would be bad enough to get an advance on your inheritance from your parents, but if they don't have the cash to spare then co-opting someone to your debt is never a good idea.