Debt consolidation loans

Cyclosa

Hi I'm a first time poster so please bear with me!
I have roughly 20k in Credit card debts but have a good credit rating as does my wife we have gotten to the point where it's barely manageable.
We have been looking at loans to get out of the spiral of paying masses if interest and I'm really unsure where to start in terms of looking I dont want to start applying willy nilly im the fear it will affect my credit rating. We have joint finances and equity in our house would it make more sense to try individual loans for smaller amounts say 10 and 10 or a bigger joint one?

Ilona

Hi. I will be the first to tell you this, and many more will follow, taking out a loan to consolidate debts rarely works. Basically you will be doubling the amount of debt you are in, there is no guarantee that you will use the loan to pay off the other debts, there is a good chance you will start spending on the cards again. It happens all the time.

The better solution is to fill out a Statement of Affairs, all your incomings and outgoings. You need to account for every penny coming in and every penny going out. This will give you a better picture of how you got there and where you are going.

If you post it on here the good people can advise on where you can cut back on your spending to give you more money to throw at the debts.

You need to either spend less or earn more. Give it a go.
http://www.stoozing.com/calculator/soa.php

Ilona

PS You need to post your SOA on the Debt Free Wannabe board.

DCFC79

Dont get too fixated on your good credit rating as only you can see it. Lenders see your credit history.

How much do you earn ?

Lenders will see the loan as additional borrowing and will have no idea of what you plan to do with it.

Debt consolidation rarely works but it might not even be a non starter anyway.

Cut back on your spending and as been suggested post on the debt free board.

Cyclosa

Thank you I will look into that, but hypothetically does anybody have a suggestion about what to try if we go along this line?

DCFC79

Cyclosa wrote: »

Thank you I will look into that, but hypothetically does anybody have a suggestion about what to try if we go along this line?

Along which line ?

Debt consolidation ?

Well how much do you earn ?

Cyclosa

I earn £26,500

Grumpelstiltskin

Cyclosa wrote: »

I earn £26,500

So you earn £26,000 and you are looking for a loan of £20,000 plus the debt you already have?

Seriously there is no chance.

TadleyBaggie

You need to address the underlying problem, namely you are spending more than you earn. You should head to the Debt Free Wannabe board and ask for help there.

enthusiasticsaver

As already said debt consolidation almost never works in clearing debt and you don't really earn sufficient or have enough leverage to get a decent rate loan to move the credit cards to. If you do go down this route make sure you get rid of the credit cards or you may well be back at this forum in 5 years time with a £20k loan and another £10-15k of credit card debt again. This is why it rarely works.

If you have a good credit rating apply for a 0% credit card and do a balance transfer of your highest interest charging credit card debt. That is a good way to start. If you then start paying minimums on this and paying as much as possible to the next most expensive credit card the debt will come down quicker. Unfortunately the process may take some time and it would have been much better to start this when the credit card debt was £10k and not £20k but a lot of people have managed to clear it by being focus and disciplined.

Starting a DFW diary and doing an soa is a good start. Also start a spending diary so you can see where your money is going.

DCFC79

Not gonna happen.

Cut up all your credit cards, buy shops own goods rather than the brands, drive a little slower on your journey to work. Various other things you can do to help.

System

Cyclosa wrote: »

I earn £26,500

A debt consolidation loan isn't happening then and a 0% credit card isn't likely to be on the horizon either, quite simply you don't earn enough and would fail the mandatory affordability test even without the level of debt to income ratio you already have which is just the final nail in the coffin. A friend of mine with £21k of loan/cc debt was declined a consolidation loan and 0% cards and his income was £36k and his mortgage was on a £100k house.

Unless you can significantly increase your income AND decrease your outgoings you need to accept you're stuffed, phone up Stepchange and get on a Debt Management Plan and in the meantime as others have suggested, post a SoA and start reducing your outgoings.

This is going to take a long time to get out of, at least 4/5 years even if you banked with a credit history for both of you being trashed for that time so it is a good time now to start to get used to living within your means because new credit isn't going to be an option for a long time to come.