We're aware that some users are experiencing technical issues which the team are working to resolve. See the Community Noticeboard for more info. Thank you for your patience.
📨 Have you signed up to the Forum's new Email Digest yet? Get a selection of trending threads sent straight to your inbox daily, weekly or monthly!

Enormous Credit Card interest

Options
Hi, I'm self employed and about a year ago a lot of my customers paid me so late that I lost first one then all of my promotional rates on credit cards. Over the last year I've used the cards to survive, making things worse.

I know owe around £20k in total to three credit card companies, all at excruciating rates (one of them is 29.9%). I'm paying about £500 a month just in interest. Except I've actually missed a couple of payments now.

My friend has offered to lend me £7000 so i'm thinking to offer this as full and final settlement of the highest interest card.

Would that be sensible? Given the high interest rates, how much might I be able to offer as full and final settlement?

£7850 Barclaycard
£3100 Nationwide
£8550 MBNA

I've heard suggestions that because the interest rates are so high, I might be able to offer £5k to MBNA and £2k to Nationwide for example?

Ultimately I'd like to move property and get a new mortgage to pay off the remaining card debt. Would these settlements for reduced amounts harm that aim?

My mortgage is £89k 3.69% and my neighbours place just sold for £175k so I'd hope to get at least that for my place.

Thanks in advance,
GP
«1

Comments

  • sourcrates
    sourcrates Posts: 31,516 Ambassador
    Part of the Furniture 10,000 Posts I've been Money Tipped! Name Dropper
    Hi,

    Are the debts defaulted and sold on to debt collectors ?

    If not I doubt they will entertain any offers, they have no reason too, as you are still required to make regular payments as per your contract.

    It's only after the relationship between you has broken down, and defaults issued, that settlement offers would be entertained.
    I’m a Forum Ambassador and I support the Forum Team on the Debt free wannabe, Credit file and ratings, and Bankruptcy and living with it boards. If you need any help on these boards, do let me know. Please note that Ambassadors are not moderators. Any posts you spot in breach of the Forum Rules should be reported via the report button, or by emailing forumteam@moneysavingexpert.com. All views are my own and not the official line of MoneySavingExpert.For free non-judgemental debt advice, contact either Stepchange, National Debtline, or CitizensAdviceBureaux.Link to SOA Calculator- https://www.stoozing.com/soa.php The "provit letter" is here-https://forums.moneysavingexpert.com/discussion/2607247/letter-when-you-know-nothing-about-about-the-debt-aka-prove-it-letter
  • I had a default notice for MBNA because I was late paying.
  • I would call them and kindly and politely ask whether they are able to reduce rate, given that you are unable to repay them and rates are crippling
    GOAL 30th November 2017 - 100% paid off, 0% debt left
    31st March 61% paid off:T
    March 2015 Debt at Highest
  • Is there a possibility of remortgaging your current property in order to release some equity and pay off the debts?

    I would agree with sourcrates that they're unlikely to accept a full and final settlement. I considered this when I received a lump sum a while ago - a debt advisor on here advised me it was highly unlikely to be accepted unless you've been defaulting for quite a while and the accounts are clearly not going to be paid. In those circumstances, the CC company will take what they can get from you. But please don't be tempted to intentionally leave the accounts to continually default in order to get them to accept the offer! This ruins your credit rating and you'll find getting another mortgage etc very difficult.
    HIGHEST DEBT £63,300 LBM 27/5/2020 DEBT FREE DATE 31.08.2022
  • I tried negotiating but didn't really expect they'd do much and got no joy.

    StepChange think they might freeze interest.

    I don't know if I can remortgage with such a poor credit rating. Affordability is ok they'll lend me enough and it would be hugely advantageous but don't know if they'd lend to me. Maybe more chance because it's secured debt and low loan to value ratio?
  • chevalier
    chevalier Posts: 7,937 Forumite
    Part of the Furniture Combo Breaker
    http://www.stoozing.com/calculator/soa.php


    well done on getting started. have a look at the link above and think about doing a budget through to see what you can realistically afford. ie putting decent amounts in agains food and heating etc. If you can't then afford the credit cards then maybe a DMP would work for you. of course it does affect your credit rating.
    good luck
    chev
    I want a job that is less than an hour driving away from my house! Are you listening universe?
  • Is there a possibility of remortgaging your current property in order to release some equity and pay off the debts?

    I would agree with sourcrates that they're unlikely to accept a full and final settlement. I considered this when I received a lump sum a while ago - a debt advisor on here advised me it was highly unlikely to be accepted unless you've been defaulting for quite a while and the accounts are clearly not going to be paid. In those circumstances, the CC company will take what they can get from you. But please don't be tempted to intentionally leave the accounts to continually default in order to get them to accept the offer! This ruins your credit rating and you'll find getting another mortgage etc very difficult.


    On the contrary if you are stuggling to make payments and don't have enough to live on then that would be one of the better options, as soon as you agree reduced payments your credit file is shot anyway, The sooner they are defaulted the better.


    If they agree to freeze interest you will likely be on an arrangement to pay which will stay on your file 6 years after its paid off, a default its gone 6 years from default paid or not


    As for not getting a mortgage again that isn't true. I have literally just remortaged, a 125% mortgage at that, I have 3 defaults on my credit file I was in a similar situation to the OP in 2011 and now im back on track
  • You initially cited late-paying customers as the reason you had to use your credit card, but then when those customers paid surely this should have got you back in red?

    What I'm getting at is if you're self-employed and in this much debt, I don't see how your situation is going to be any different once you've settled these debts.

    Resolving matters with creditors is fine but it's not addressing the root issue of you spending more than you earn.
  • sourcrates
    sourcrates Posts: 31,516 Ambassador
    Part of the Furniture 10,000 Posts I've been Money Tipped! Name Dropper
    GPaulo wrote: »
    I had a default notice for MBNA because I was late paying.

    Yes but you are still governed by the terms and conditions of your credit card agreements, so you are liable for the cash balance, plus any interest and charges added, this will continue regardless, until you break the terms of your agreement by not paying.

    Only after the account has defaulted, been dragged through the debt collection process, and sold on to a debt collector, could you possibly hope to get the settlement you are after.

    Now asking a creditor to stop interest and charges, is another track altogether, if they agreed, they would expect monthly payments, not a lump sum, if you made a lump sum payment, its possible they would reinstate the interest again, but i see your thinking on this.
    I’m a Forum Ambassador and I support the Forum Team on the Debt free wannabe, Credit file and ratings, and Bankruptcy and living with it boards. If you need any help on these boards, do let me know. Please note that Ambassadors are not moderators. Any posts you spot in breach of the Forum Rules should be reported via the report button, or by emailing forumteam@moneysavingexpert.com. All views are my own and not the official line of MoneySavingExpert.For free non-judgemental debt advice, contact either Stepchange, National Debtline, or CitizensAdviceBureaux.Link to SOA Calculator- https://www.stoozing.com/soa.php The "provit letter" is here-https://forums.moneysavingexpert.com/discussion/2607247/letter-when-you-know-nothing-about-about-the-debt-aka-prove-it-letter
  • SkyKyo
    SkyKyo Posts: 12 Forumite
    Why are you paying interest? I have £8000 all on 0% credit cards if you could use the 7k to pay off a credit card so you reduce one of your debtors and debt consol using balance transfer on 0% the rest you would be able to pay £600~ per month off your capital
This discussion has been closed.
Meet your Ambassadors

🚀 Getting Started

Hi new member!

Our Getting Started Guide will help you get the most out of the Forum

Categories

  • All Categories
  • 350.9K Banking & Borrowing
  • 253.1K Reduce Debt & Boost Income
  • 453.5K Spending & Discounts
  • 243.9K Work, Benefits & Business
  • 598.8K Mortgages, Homes & Bills
  • 176.9K Life & Family
  • 257.2K Travel & Transport
  • 1.5M Hobbies & Leisure
  • 16.1K Discuss & Feedback
  • 37.6K Read-Only Boards

Is this how you want to be seen?

We see you are using a default avatar. It takes only a few seconds to pick a picture.