Struggling with debt? Ask a debt adviser a question

hasm94

Need some advice on a student situation, I currently have a standard bank account in overdraft (nearly at max) the bank is charging interest on this as its not a student account. What can be done about this, and what is your advice on taking out personal loans to sort my mess as I am a student.

StepChange_Rachael

Hi

Thanks for posting.

I’d first suggest checking the original agreement to make sure the interest they are adding is correct under the agreement. You can always speak with your bank to check this and ask if there's an option to move to a student account without added interest. There may be a slim chance of them agreeing to this but it’s worth asking.

I appreciate it can be difficult to get on top of your finances with the increasing interest, however I wouldn’t suggest getting a loan out to cover the overdraft as it doesn’t usually remedy the problem. You’d still need to maintain a monthly payment and still incur monthly interest on the loan.

Instead I’d suggest looking into alternative debt solutions and getting some free debt advice. You can then get a good idea of all your options and decide on what would be best for you.

Here you can find a link to StepChange’s self-help tool Debt Remedy where you can access tailored debt advice.

Thanks
Rachael

hasm94 wrote: »

Need some advice on a student situation, I currently have a standard bank account in overdraft (nearly at max) the bank is charging interest on this as its not a student account. What can be done about this, and what is your advice on taking out personal loans to sort my mess as I am a student.

tiny_dee

I would really appreciate some advice!


I currently have approx. £4300 in debts. I have a £1,100 overdraft, and two credit cards; a Barclaycard with a balance of £1,700 and a Capital One card with a balance of £1,500.


I have had the Barclaycard for years, and to try and pay it off last year I took out the 0% Capital One Card so that I could transfer the majority of the balance of the Barclaycard to it and not have to pay so much interest. This was a good idea in principle, but then things happened (I needed a car repair, my cat needed some expensive vet treatment) so the balance on both cards crept up and up and now they are both nearly maxed out again.


I currently pay off just over the minimum amount on the Barclaycard each month, but this covers little more than the interest. With the other one again I pay just over the minimum payment but I often end up using it again for petrol and necessities just before payday.


My overdraft fees are usually around £20 a month too, and I am guilty of extending the amount when I get desperate. I am aware that I need to look at my budgeting(!)


I would really like to try and streamline my debt a bit. At the moment I am not in any direct trouble as such, but I am also not really paying anything off while slowly getting into more debt. I'd like to be free of this situation.


Also I should add that I am looking to apply for a mortgage with my husband later this year. Would I be better off waiting until after we have done this before I make any changes?


Would love to hear your opinions!

debtfreehopeful77

Hi

I am so ashamed to be writing this

I have had a small online business for about 10 years and it kept me ticking over. However, the last couple of years has been very slow and I've been using credit cards here and there. Nothing big, just general day to day shopping etc. I get to keep this money as my partner has a good wage and pays all the bills (the house is in his name)

Ive now got to the point where i owe about 20k over 4 different cards. The problem has been the interest. Im spending every penny I'm earning on paying the minimum payment so its barely making a dent. Then I'm using the cards as I have no money left over. I've hardly eaten or slept this past week

I really need to sort this out but really don't want my partner to find out, so can I get help with a debt management plan without his earnings being taken into account? We have no financial ties. Even freezing the interest would be fantastic but 3 of the cards are with the Halifax and i've read stories online about them not being interested in that.

Thank you

micholly

Hello and thanks for reading.

I'm 33, and until recently had a good credit rating. I had around 6000 of debt that I was paying back steadily, over two 0% credit cards. I wasn't going to be able to clear them both before the promotion rates ended, but felt that I would be able to take advantage of a balanced transfer rate.

However, I found out last year that my partner had been using pay day loans. She owed a significant amount. To help, I took over the payment of all bills and gave what I could to cover the costs. I overstretched myself and missed a couple of payments, before managing to get back on track.

Now my credit rating is poor, and my promotional rates are ending. I owe around £10,000, and am unable to get any balance transfer deals.

My plan is to take out a personal loan to cover the amount. I've been getting loan quotes using credit soft searches to avoid impacting my credit rating further. The best I could get is a 10.9% rate with Ikano that doesn't penalise overpayments. Over a couple of years, I'll try to repair my credit rating while making overpayments, until I can either get a better loan rate to cover the remaining amount, or get a credit card at 0%.

Is this a sensible plan? I've budgeted and can afford the repayments, although I am still worried that they won't accept my loan application.

Thanks!

StepChange_Kirsty

Hi there,

Thanks for your post and welcome to the forum.

It sounds as though you’re managing your debts at the moment but you’re mainly struggling with the interest rates. As a debt charity whilst we can’t specifically give advice on taking out further credit, you may benefit from looking at another balance transfer in order to reduce the interest. There is an article on the main MSE site you may find useful which you can find here. It’s really important that you cut up any previous credit cards so that you are not tempted to use them again. You also need to think about what the interest rate will be once the 0% interest rate has come to an end in case you’ve not cleared the balance within the interest free period.

If this isn’t possible it’s important to keep up with minimum payments on your credit but if you’re able to pay a little bit extra each month you might want to focus on pay off the credit which carries the highest interest rate as this will help you to reduce the balances more quickly and will save you money in the long run. As you’ve mentioned, looking at your budgeting may help you with this and you can find an MSE article on budgeting here.

If you’re looking to apply for a mortgage later this year you must be saving up funds for a deposit. You might want to consider if it’s possible to free up some of the funds in order to pay off your debts so that you’re debt free when you apply for a mortgage. The interest rate on your debts will usually be much higher than the interest you can earn on your savings. Clearing your debts now may mean that you’re able to save more of your money. Again the main MSE site has useful article on savings vs debts which you can find here.

I hope you find this information helpful.

Kirsty

tiny_dee wrote: »

I would really appreciate some advice!


I currently have approx. £4300 in debts. I have a £1,100 overdraft, and two credit cards; a Barclaycard with a balance of £1,700 and a Capital One card with a balance of £1,500.


I have had the Barclaycard for years, and to try and pay it off last year I took out the 0% Capital One Card so that I could transfer the majority of the balance of the Barclaycard to it and not have to pay so much interest. This was a good idea in principle, but then things happened (I needed a car repair, my cat needed some expensive vet treatment) so the balance on both cards crept up and up and now they are both nearly maxed out again.


I currently pay off just over the minimum amount on the Barclaycard each month, but this covers little more than the interest. With the other one again I pay just over the minimum payment but I often end up using it again for petrol and necessities just before payday.


My overdraft fees are usually around £20 a month too, and I am guilty of extending the amount when I get desperate. I am aware that I need to look at my budgeting(!)


I would really like to try and streamline my debt a bit. At the moment I am not in any direct trouble as such, but I am also not really paying anything off while slowly getting into more debt. I'd like to be free of this situation.


Also I should add that I am looking to apply for a mortgage with my husband later this year. Would I be better off waiting until after we have done this before I make any changes?


Would love to hear your opinions!

StepChange_Kirsty

Hi

Thanks for your post and welcome to the forum.

I’m sorry to hear that your business has been slowing down over the last couple of years and this has been causing you difficulties with debt.

It’s up to you when you decide to talk to your partner about your debts. You might find that being open about the situation will help relieve some of the stress you’re currently experiencing and he may even be able to help.

It’s important for you to get some advice on dealing with these debts. If you’re recommended an informal solution such as a debt management plan (DMP) it is not usually essential for you to provide details of your partner’s earnings as long as you also don’t include any of the bills your partner pays as part of your expenses so that your plan can be correctly calculated.

On the other hand, if you’re looking at a formal solution such as Bankruptcy, an Individual Voluntary Arrangement (IVA) or Debt Relief Order (DRO) which involves debt write off, you may be required to provide details of your partner’s income. This is not because your partner would be expected to contribute towards your debts but because the Official Receiver or Insolvency Practitioner may need to check that your partner is paying their fair share towards the household bills. As your partner is paying all the household bills you should be able to demonstrate this.

As you run a business I would recommend you get in touch with Business Debtline for further advice. They can advise on personal debts but will tailor your advice in light of your business considerations.

I hope this helps.

Kirsty

debtfreehopeful77 wrote: »

Hi

I am so ashamed to be writing this

I have had a small online business for about 10 years and it kept me ticking over. However, the last couple of years has been very slow and I've been using credit cards here and there. Nothing big, just general day to day shopping etc. I get to keep this money as my partner has a good wage and pays all the bills (the house is in his name)

Ive now got to the point where i owe about 20k over 4 different cards. The problem has been the interest. Im spending every penny I'm earning on paying the minimum payment so its barely making a dent. Then I'm using the cards as I have no money left over. I've hardly eaten or slept this past week

I really need to sort this out but really don't want my partner to find out, so can I get help with a debt management plan without his earnings being taken into account? We have no financial ties. Even freezing the interest would be fantastic but 3 of the cards are with the Halifax and i've read stories online about them not being interested in that.

Thank you

StepChange_Kirsty

Hi,

Thanks for your post.

As a debt advice charity we’re unable to offer any advice on taking out further credit as this is not our specialism. What I can say is that in our experience, trying to consolidate debts with a loan rarely works and the people we speak to have often found themselves in a worse position than when they started.

There are alternative ways of dealing with the debts that we can certainly give you advice about. In order to give you the best advice we would ask you for information about income, expenditure and debts which will create a budget.

The best way to get started is by using our online Debt Remedy tool which is available on our website here. Once you’ve filled in your information you'll be able to access a personal action plan which explains the best solution for your individual situation and what you would need to do next.

I hope this helps.

Kirsty

micholly wrote: »

Hello and thanks for reading.

I'm 33, and until recently had a good credit rating. I had around 6000 of debt that I was paying back steadily, over two 0% credit cards. I wasn't going to be able to clear them both before the promotion rates ended, but felt that I would be able to take advantage of a balanced transfer rate.

However, I found out last year that my partner had been using pay day loans. She owed a significant amount. To help, I took over the payment of all bills and gave what I could to cover the costs. I overstretched myself and missed a couple of payments, before managing to get back on track.

Now my credit rating is poor, and my promotional rates are ending. I owe around £10,000, and am unable to get any balance transfer deals.

My plan is to take out a personal loan to cover the amount. I've been getting loan quotes using credit soft searches to avoid impacting my credit rating further. The best I could get is a 10.9% rate with Ikano that doesn't penalise overpayments. Over a couple of years, I'll try to repair my credit rating while making overpayments, until I can either get a better loan rate to cover the remaining amount, or get a credit card at 0%.

Is this a sensible plan? I've budgeted and can afford the repayments, although I am still worried that they won't accept my loan application.

Thanks!

Ron_Shiel

Hi there
I am 73 living in Brittany
I own my house outright for 11 years. Currently for sale with 4 estate agents fot 90,000 Euros (Which is what I pasid for it in 2006.
3 years ago we ordered double glazing then my wife died following a fall. So only one pension coming in and funeral and credit card bills to pay. I had loan from bank and have used credit card to pay 2 years later for car repairs. I want to borrow 12, 000 to clear all debts to be repaid with interest from proceeds of house sale. This will save me 400 Euros a month in debt repayments. Can you help me please
Regards Ron Shiel
ron.shiel@orange.fr

Megcake

Hello,

Please can you help me.

I have a personal loan with £10000 left to pay, I pay it by direct debit each month and have never missed a payment, The rate is 7%apr. I also have a credit card with £8900 on it and an apr of 29.9% and have only been paying the interest lately as that's all I can afford. I am self employed and so is my husband, altogether we make £33000 before tax. We have two children.

I have tried the loan and credit card eligibility calculators and it says we wouldn't be accepted for any. I was thinking of adding the credit card amount onto my loan but that's not possible according to the bank. What else can I do so I'm actually paying off the credit card and not the interest please? Also, we are meant to be paying hmrc back for overpayments of tax credits years ago, which we do monthly and we can hardly manage to afford to do that, is there anything we can do? We are basically paying back every sort of benefit entitlement we have ever received 😫 any help would be appreciated! Many thanks.