Debt consolidation with low credit

Anna1009

Hello,

I wonder if anyone could offer any help / advice at all please?

I have a very high level of unsecured debt at the moment in excess of £40k 😩😬( I know this is ridiculously high but I have had mitigating circumstances over the last 3 years)

My income is just under £40k pa with overtime every month and an annual bonus. I have never missed a payment on any of my debts and do not plan on doing so in the future. Half of my lending is on a personal loan but the other half is on credit cards. I am desperately trying to find a loan to either consolidate the whole lot into one loan with a lower payment or consolidate the credit cards into a loan with a lower payment. Credit cards alone are over £400 a month with a loan payment of just under £400.

I have worked out with loan calculators I could be saving between £160 and £400 a month with some lenders but due to the high level of debt my application fails on eligibility every time. I am desperate to get out f the viscous circle of just paying interest and want to bring the debt down ASAP but can't afford additional payments at the moment.

Any advice on lenders that allow underwriters to review loans in a case by case basis would be greatly appreciated.

I would also like to mention that I don't want to go down the doubt of debt management or iva's etc as I don't intend to start missing payments and don't want my credit report impacted for the next 6 years plus.

Thanks!

sourcrates

Hi Anna,

Welcome to the forum.

Unfortunately you cant have it all ways, you have tried, and failed to get a consolidation loan, which is probably a blessing to be honest, you may pay less per month, but you end up paying a hugh amount in interest, and extending the time you are in debt significantly.

A consolidation loan is usually the path taken by so many people who eventually end up having to use some kind of debt solution, as they get in over there heads.

As i see it, you have two choices :

(1) post up an SOA, (statement of affairs) let the good forumites see where your money is actually going, they may be able to suggest tips and ideas on cutting back on your spending, so you have more money to throw at your debts.

Or,

(2) you could write to your creditors, and ask for a suspension of interest, say for 6 months, help you get ahead, this could be extended with the creditors approval, however, this would have an effect on your credit file, something your keen to avoid, so really, option (1) is your only choice.

What are your thoughts ?

National_Debtline

Hi Anna1009 and welcome to MSE,


I think the problem that you have is that to get a personal loan for around £20k - £40k is going to be tricky in any situation. This level of lending is normally secured on a property and generally speaking, this is not a good idea. You will pay interest on top of interest and have just made personal debts secured on your home - which means if you do start to struggle in the future, you have put your home at risk.


For any refinancing ideas, even if it is just a 0% balance transfer on a credit card, you should try and get some financial advice. If the minimum payments are manageable (without you having to compromise on your living expenses) then a DMP or IVA are unnecessary. If you want your minimum payments to have more impact you need to overpay or look at some financial advice.


Be careful how many applications you make for credit because searches will be on your file for 12months and numerous searches with no credit can be damaging to your file. Good luck,


Laura
@natdebtline

Sam29

DONT consolidate! It rarely ever works and will likely make things worse.

As suggested post an SOA so that people can help and also look at the APR on your cards and loan and focus on the one paying most interest and chuck all spare cash at this then once paid off snowball to next highest etc. Small steps is the key to paying it off and unfortunately there are no quick fixes. You are doing the right thing but be careful before taking on any new debt. Good luck.

Anna1009

Thank you all!

My money literally pays my bills which I have looked at in depth and are as low as I can possibly get them (utilities etc) and I pay the minimum and then any extra on the cards with the highest interest and that are not on 0%. All other money is left for general living on food petrol etc.

I know there is no quick fix and it is very much my own fault that the debt is at the level it is so I will always maintain and pay as much as I can to get rid of them ASAP.

Thanks both for your advice and comments and for not judging on the amount haha! X

DCFC79

You say your bills are as low as possible, does that include groceries, mobile phone bill/s ?

Dobbibill

The DFW board has plenty of people who have been where you are and come through the other side of it.
Head over with a SOA and see if they can cut any extra from your budget. They can often offer alternatives eg freesat v's sky or colleges v's salon for haircuts etc., it's not always about cutting it to the bones.

All the best.

Thrugelmir

Anna1009 wrote: »

My money literally pays my bills which I have looked at in depth and are as low as I can possibly get them (utilities etc) and I pay the minimum and then any extra on the cards with the highest interest and that are not on 0%. All other money is left for general living on food petrol etc.

There's always ways of eeking a few more quid out in savings. A determined effort for a few months can make a real difference.

runforlife

You sound like me 3 plus years ago. Similar debt (actually turned out to be larger than I thought and similar salary. I delayed a DMP for so long and wish I had started it before. However it's not for everyone and I hope you can find an alternative solution. My advice in the first instance is to cut up your cards if you haven't already done so. Then look at snowballing the debts.

Fromply

A summary of the figures you've provided as I understand it:
Annual Income: £40k
Total Debt: £40k
Annual Debt Payments: £9,600
Annual non debt spending: c £30k

This means that your annual debt payments are about 25% of debt.
If your average APR is 25%, then you will, as you say, be caught in the cycle where you are just paying interest, and not reducing the debt.
If your average APR is greater than 25%, then your debts will be increasing
If your average APR is less than 25%, congratulations, your debt will be falling.

IMO, in the current climate, there should be no reason for paying an average APR of greater than 25% (though I appreciate that can be difficult with a poor credit history).

My view, as others have suggested, from the information provided, is that you need to work hard on reducing your current £30k annual spending and use the savings to increase the £9,600 p.a. that you currently use towards reducing your debt. As others have said, there are always savings that can be found, and if reducing your debt quickly is important to you, then I suspect you can find a surprising number of ways to reduce your spending and increase your debt repayments.