Consolidation

worriedDan

Hi,

not sure if this is ok as a separate thread, or if I should have added it on to my existing one??

Currently in over 50K od unsecured debt ( see my other thread for details)

A couple of the cards are about to drop off their 0% promotional rates. It is very unlikely, according to the online eligibility checkers, that I will be able to secure any new 0% details right now.

I have been offered a loan though by creation. Its 9.9% which is high, however 2 of my cards are about to revert to 27.9% apr, so in comparison 9.9% is preferable!

Not really sure what to do? I know that generally consolidation doesn't work. It hasn't worked me before, however I didn't have this mindset back then.

Thoughts and advice please xx

StokieBecks

Thrre are very few people here who would ever recommend a consolidation loan. And creation will not give you a 50k loan so you won't have paid all your debt leaving you to struggle more trying to make payments on loan and existing debt.

Have you spoke to any of the free debt advice services? They can discuss your best options for you. If these accounts default through a few missed contactual payments and sold on the interest is usually stopped meaning every penny you pay through a debt management plan would go to the debt.

enthusiasticsaver

In general consolidation does not work unless you budget very carefully and are not tempted to spend in same manner as previously. If you cannot get 0% deals then obviously the 9.9% is cheaper than credit cards but your mindset needs to change totally. Your soa looks like you have tried consolidating before and it has not worked. You have such a high disposable income I really wonder what you are spending on to get to such a high level of debt. Have you worked it out from your bank statements?

January2015

Consolidation rarely resolves debt problems. From personal experience it just increased our problems. We consolidated, more than once, but never learned our lesson on managing within our means and controlling spending - hence we ran up more debt on credit cards. By the time we had our LBM we were over £100k in debt, by the time we had found this forum and posted here we had manage to reduce that to £95k by selling a vehicle - but we felt we had no choice at that point.

Consolidation is a quick fix that doesn't really solve the debt problem.

motivated

Would also like to second what January 2015 has said

We too have been there done that and now we are in the process of setting up a DMP.

Consolidation always seems like the ideal solution at the time but rarely works out for the best. Hence the reason I am in approx £75,000 of unsecured debt
I now have long journey ahead.

I would advise you to think very carefully about consolidation
M

worriedDan

StokieBecks wrote: »

Thrre are very few people here who would ever recommend a consolidation loan. And creation will not give you a 50k loan so you won't have paid all your debt leaving you to struggle more trying to make payments on loan and existing debt.

Have you spoke to any of the free debt advice services? They can discuss your best options for you. If these accounts default through a few missed contactual payments and sold on the interest is usually stopped meaning every penny you pay through a debt management plan would go to the debt.

Hi Stokie

Despite the debt being huge, I can afford to make the monthly payments, plus a bit extra. I don't really need to go down the formal DMP route as I can afford to service the debts.

blisteringblue

If you can service easily then I would snowball, even without the creation loan. You are not getting 0% deals for a reason now, you owe too much. Consolidation never works, been there bought the T-Shirt. Some of mine even ended up on my mortgage

http://www.whatsthecost.com/snowball.aspx

EssexHebridean

Nope. If I remember rightly you're freshly onto a new higher wage that will leave you a good surplus to service your debt with? First off get a good solid working budget, then throw every spare penny at the cards that are about to drop off the 0% until they're clear. In the meantime use the MSE credit Club to keep an eye on likely eligibility for further 0% BT cards. the budget is key though - until you get the routine of knowing what goes where, when and how much is left over down to a tee, consolidation will just make things worse in the long run.

GeorgianaCavendish

Just adding another "don't consolidate" vote, I've tried it in the past and it didn't work. I've still got the consolidation loan and now I've got roughly the same again on credit cards!
Why not implement your budget ideas for 6 months first and try to make those extra payments to the debt and reassess? I know it's tempting to think that the loan is a limited offer and you need to grab it now, but you might be able to get another 0% balance transfer credit card when your current 0% ends (especially as you'll have paid off a very decent amount of the existing debt with those over payments). And if Creation will offer that rate now, they might offer a better rate once you've brought down your balances a bit?

enthusiasticsaver

I would second what Georgiana and Essex have said. Implement your new budget for 6 months and then try for 0% deals when your debt is lower. Pay off highest charging debt first and minimums on others. Consolidating is no quick fix and mostly leads to higher debt eventually.

ani*fan

Another voice to add to the cacophony...DO NOT CONSOLIDATE!!

There is not a soul on here, not anyone who is successfully paying down debt anyway, who would think this is the way to go. It's not. Here's why.

You have no idea where the debt came from so will continue to spend as you have been. It's hard to learn new lessons and spending habits. Tough. You need to do it.

You will have freed up the credit cards by consolidating therefore giving yourself extra credit, more than ever before, when you couldn't manage with what you already had.

Your mind will be tricked into thinking it's all ok, because you got the consolidation loan, and you'll be adding to the debt total and using those credit cards in no time at all. Because you didn't learn the lessons, you just got a loan and carried on.

It's painful, but you need to go through the process.