In debt and scared.

CottonTail

I recently had a customer who remortgaged with Natwest around £50K of unscecured debts (cc/bank loans from a failed business) back into their mortgage (they had about 150K equity in the property at £350k). they had been turned down buy so many other lenders but got approved immediately with natwest and didnt have to provide proof that they were actually paying off their debts with the remortgage (which they have, but anyway). I know its this kind of action that caused unsustainable lending but they had almost no option as the combined monthly repayments of the debt was wiping so much of their monthly income.
Yes they have lost a large portion of equity out of their home but finally they are on an even keel and budgeting and already starting to overpay the mortgage vs that money having gone on huge amounts of interest and clearing the debts before.

Im new here and so interested to know what this would not be a good option to do? would remortgaging not be the same risk as before, as in you will still have a mortgage debt secured against the house weather it was 72K or 122K?
Not being inflammatory just genuinely trying to learn from the super knowledgeable form members :-)

MuffinTops

Hello CottonTail,

What often happens is that people are panicking about their situation but haven't really learned how to budget. So they remortgage or get a consolidation loan and pay off all of their current credit cards and loans. But, when they again need (often inevitably if they haven't learned to budget) more money they then use their newly paid up 0 balance credit cards , or get another little loan and the process starts again but gets much worse as they're getting in deeper and deeper.

Sometimes, despite a new debt being on a much lower interest rate, they will also end up paying out far more by getting a new loan as a lot of the interest has already been paid to the loan company of their current loan, so they're increasing their debt needlessly. My advice here to people in that situation is always to open a new account that allows direct debits and get every loan paid out from that account. Work out the amount of money that goes onto each loan and pay that one lump sum into your new account each month, kind of creating the illusion of a "one easy payment" method rather than lots of bits here and there (as we all know how confusing that can get when you're trying to find some contro). I know you don't personally need advice, but had asked what options people have, and this is my understanding of it.

MT

paulindebt

Hi all, thank you all for your comments and advice. I've read all and taken on board all the advice and suggestions that have been brought forward and its put me in a stronger frame of mind.
Since I first put up my post I'm saddened by the amount of new threads being posted by people like me in the same situation. I cant get over how many people with families seem to be in this situation. Its so easy to fall into this debt trap and not very pleasant.
Since my first post my wife and I have sold a few things at car boots and on the internet and raised £520. With this we have brought the school uniforms for the kids (£120) had the car repaired (£260) did a grocery shop (£80... we plan this will last us 2 weeks).
We have decided to resist getting anymore credit to pay off credit and any spare cash will go straight towards our smallest debt which is £510 on a CC. We started by paying the remainder of the cash we raised (£60) straight towards paying this debt off.
Its not going to be easy and times might be testing but I think by paying this little debt off first we'll hopefully feel inspired to push on with the others. I'm currently looking for a part time job just to help the cause and hopefully something will come up soon.


Regarding a post earlier referring my wife's wages dropping to the minimum wage level, she works part-time and any overtime she did was time and half or double time. This was regular for her in the 20 years she has been there and this is where they have reduced it to meet the minimum wage which to us is a loss of £200 month...more during the seasonal periods. They are cutting back the overtime and taking students on. She isn't the only one a few at her workplace are in the same position and other stores are following suit and doing the same thing.


Thanks again everyone and I will post updates and I will share any tips/advice that I come across. Good luck with all your debt issues