I want to consolidate but can't!

mdbuk

I bought a flat last January and got a ~£75k mortgage, using all of my savings for the deposit. I had a good credit rating and was offered increased limits on my 2 credit cards soon after. I also took out a loan for £14k to pay for some work the flat needed doing before I could move in. All seemed fine.

Then, I overspent on doing the place up and didn't really plan how to pay for it properly and ended up with ~£15k in credit card debt. Two of the cards (Sainsbury's Bank and Halifax) are on interest free deals for at least another year, but the other, my Barclaycard, isn't and there's about £3k of debt there which I keep paying interest on each month because I don't have the disposable income to pay it off. They're also regularly charging me £12 over limit fees because their interest takes me over the limit, which adds insult to injury.

Then in November I messed up the timing on a bank transfer and ended up missing the payment date on my Sainsbury's card, which put a 'late payment' flag on my credit file against that account, although I managed to get them to agree to leave the promotional rate in place. Since then, nobody seems interested in offering me any finance and whilst CheckMyFile shows me as 840+ when the UK average is supposedly 750 (classing me as 4/5), Noddle for some reason gives me a much lower score of 1/5.

Last month Nationwide, who have my main current account, decided to knock £750 off my overdraft, and in the same week I had a minor car crash and my insurers wrote off my (old) car - worst timing. I looked at finance for a new car but it was a firm 'no' from 2 different companies so I bought an old banger for £200 more than the insurance paid out.

Clearly my first goal should be to pay off the ~£3k on the Barclaycard as at the moment it's costing me at least £50 per month in interest. I wondered if I could get a small loan to cover this so that I could make fixed payments, but the MSE loans eligibility checker said I had only a 20% chance with one lender, Hitachi Personal Finance. I just did the eligibility checker on their own website and they said no pretty instantly.

So now I feel stuck. If I can't get a loan to pay that card off then I'm stuck making small payments which reduce the overall balance by little once interest and over limit fees are added and, despite what CheckMyFile says, my credit rating must be crap all because of that one missed payment in November.

Any advice would be welcome.

- Marc

Vikipollard

Ignore the made up number the credit agencies give you. No one sees it except you. It's designed to get you to sign up to their paid-for service, where they claim to be able to improve your (fictional) score.

The last thing you need is a consolidation loan. You've found out the hard way that taking out a loan + credit card usage leaves you in a mess. Even if you could get a loan, what stops you using the Barclaycard again, and then you have £17k loans + £15k credit cards + £3k Barclaycard? Been there, done that. It's an uncomfortable hairshirt to wear. It worries me that you have a significant overdraft as well(judging by the reduction by £750 comment).

You need to post a Statement of Affairs, so that people can advise where you can make savings so that you have more to throw at the Barclaycard debt.

You are overstretched. What you are seeking to do will only move the debt, not reduce it, and leave you with the temptation of an "available" £3k on a credit card.

Sorry if this feels harsh, but unfortunately it needs to be.

mdbuk

Thanks for your reply.

I should probably have said that my plan was to pay off the Barclaycard and then close it. I don't need it for spending although there are a few small regular payments (~£25 each month) which currently come from there.

The overdraft was £2k and is now £1250.

What's a statement of affairs? I'll happily post it if it'll help people give advice.

- Marc

sourcrates

Marc,

Think yourself lucky the banks have pulled the plug on you, you do not say how much you earn, but paying debt with more debt, is generally a very bad option to take.

Post an SOA (statement of affairs) then people can advise you on a better way out of the mess you are in.

http://www.stoozing.com/calculator/soa.php

mdbuk

Here we go. I think it's all correct, although I put my loan down as HP which might not've been where it should've gone.


Statement of Affairs and Personal Balance Sheet

Household Information
Number of adults in household........... 1
Number of children in household......... 0
Number of cars owned.................... 1

Monthly Income Details
Monthly income after tax................ 1733
Partners monthly income after tax....... 0
Benefits................................ 0
Other income............................ 50
Total monthly income.................... 1783

Monthly Expense Details
Mortgage................................ 239
Secured/HP loan repayments.............. 390.29999999999995
Rent.................................... 0
Management charge (leasehold property).. 0
Council tax............................. 63
Electricity............................. 57
Gas..................................... 0
Oil..................................... 0
Water rates............................. 19
Telephone (land line)................... 0
Mobile phone............................ 0
TV Licence.............................. 12.12
Satellite/Cable TV...................... 0
Internet Services....................... 0
Groceries etc. ......................... 100
Clothing................................ 0
Petrol/diesel........................... 100
Road tax................................ 16
Car Insurance........................... 25
Car maintenance (including MOT)......... 0
Car parking............................. 2.5
Other travel............................ 0
Childcare/nursery....................... 0
Other child related expenses............ 0
Medical (prescriptions, dentist etc).... 4
Pet insurance/vet bills................. 0
Buildings insurance..................... 0
Contents insurance...................... 7.69
Life assurance ......................... 5.33
Other insurance......................... 0
Presents (birthday, christmas etc)...... 0
Haircuts................................ 0
Entertainment........................... 0
Holiday................................. 0
Emergency fund.......................... 0
Total monthly expenses.................. 1040.94


Assets
Cash.................................... 0
House value (Gross)..................... 110000
Shares and bonds........................ 0
Car(s).................................. 1200
Other assets............................ 0
Total Assets............................ 111200


Secured & HP Debts
Description....................Debt......Monthly...APR
Mortgage...................... 76500....(239)......1.54
Hire Purchase (HP) debt ...... 9758.....(390.3)....4.9
Total secured & HP debts...... 86258.....-.........-

Unsecured Debts
Description....................Debt......Monthly...APR
Sainsbury's Bank CC............6000......132.......0
Halifax CC.....................4129......41.3......0
MBNA CC........................1200......25........0
Barclaycard....................3400......86.42.....16.9
Total unsecured debts..........14729.....284.72....-


Monthly Budget Summary
Total monthly income.................... 1,783
Expenses (including HP & secured debts). 1,040.94
Available for debt repayments........... 742.06
Monthly UNsecured debt repayments....... 284.72
Amount left after debt repayments....... 457.34

Personal Balance Sheet Summary
Total assets (things you own)........... 111,200
Total HP & Secured debt................. -86,258
Total Unsecured debt.................... -14,729
Net Assets.............................. 10,213

Created using the SOA calculator at stoozing.com.
Reproduced on Moneysavingexpert with permission, using Firefox browser.

EitherWalnut

If your SOA is correct (although I suspect it might need tweaked - see comments below), your income is more than your minimum outgoings so that's a good place to start. Comments below in red.

mdbuk wrote: »

Here we go. I think it's all correct, although I put my loan down as HP which might not've been where it should've gone.


Statement of Affairs and Personal Balance Sheet

Household Information
Number of adults in household........... 1
Number of children in household......... 0
Number of cars owned.................... 1

Monthly Income Details
Monthly income after tax................ 1733
Partners monthly income after tax....... 0
Benefits................................ 0
Other income............................ 50
Total monthly income.................... 1783

Monthly Expense Details
Mortgage................................ 239
Secured/HP loan repayments.............. 390.29999999999995
Rent.................................... 0
Management charge (leasehold property).. 0
Council tax............................. 63
Electricity............................. 57
Gas..................................... 0
Oil..................................... 0
Water rates............................. 19
Telephone (land line)................... 0
Mobile phone............................ 0 You don't have a mobile phone?
TV Licence.............................. 12.12
Satellite/Cable TV...................... 0
Internet Services....................... 0 You don't have internet?
Groceries etc. ......................... 100
Clothing................................ 0 You never buy new clothes, ever?
Petrol/diesel........................... 100
Road tax................................ 16
Car Insurance........................... 25
Car maintenance (including MOT)......... 0 Is car very new? Otherwise will defo need MOT, so cost of that plus any servicing/wiper blades/tyres/brake pads etc should all be accounted for here.
Car parking............................. 2.5
Other travel............................ 0
Childcare/nursery....................... 0
Other child related expenses............ 0
Medical (prescriptions, dentist etc).... 4
Pet insurance/vet bills................. 0
Buildings insurance..................... 0 If you have a mortgage, this is usually a requirement, no?
Contents insurance...................... 7.69
Life assurance ......................... 5.33
Other insurance......................... 0
Presents (birthday, christmas etc)...... 0 You never buy anyone Xmas or birthday presents?
Haircuts................................ 0 Growing hair long?
Entertainment........................... 0 Never go out, ever?
Holiday................................. 0
Emergency fund.......................... 0
Total monthly expenses.................. 1040.94


Assets
Cash.................................... 0
House value (Gross)..................... 110000
Shares and bonds........................ 0
Car(s).................................. 1200
Other assets............................ 0
Total Assets............................ 111200


Secured & HP Debts
Description....................Debt......Monthly...APR
Mortgage...................... 76500....(239)......1.54
Hire Purchase (HP) debt ...... 9758.....(390.3)....4.9
Total secured & HP debts...... 86258.....-.........-

Unsecured Debts
Description....................Debt......Monthly...APR
Sainsbury's Bank CC............6000......132.......0
Halifax CC.....................4129......41.3......0
MBNA CC........................1200......25........0
Barclaycard....................3400......86.42.....16.9
Total unsecured debts..........14729.....284.72....-


Monthly Budget Summary
Total monthly income.................... 1,783
Expenses (including HP & secured debts). 1,040.94
Available for debt repayments........... 742.06
Monthly UNsecured debt repayments....... 284.72
Amount left after debt repayments....... 457.34

Personal Balance Sheet Summary
Total assets (things you own)........... 111,200
Total HP & Secured debt................. -86,258
Total Unsecured debt.................... -14,729
Net Assets.............................. 10,213

Created using the SOA calculator at stoozing.com.
Reproduced on Moneysavingexpert with permission, using Firefox browser.

enthusiasticsaver

A consolidation loan wont help you. What you need to do is control your spending better.

Your soa shows a surplus but there are a lot of gaps. I am guessing that it is unbudgeted spends which are getting you in a mess and that you have got into the habit of using cards to spend rather than saving for things and waiting until you can afford them.

The usual things people "forget" on their soas are takeaways, coffees and lunches out, cigarettes, alcohol, car maintenance, nights out at the pub etc etc. Keep a spending diary as according to that soa you should have £457 spare each month and you obviously don't.

You are right that you need to tackle the Barclaycard first. Firstly stop using the cards and no more late payments. Get yourself organised so that payments are made by direct debit preferably a few days after your paydate.

Sncjw

You do realise to consolidate the debt the lender will be assessing you on double the debt. So I imagine that would be in the 60k range.

They won!!!8217;t know your using the money to paying debts off. They will asses affordability on 60k. So if your struggling now there!!!8217;s no chance they will loan you another £30k plus you would need a really high income for that.

fatbelly

Is the £9758 loan actually a secured loan (like a second mortgage)?

If not then it can just be lumped in with the other debts.

However, you are not really looking at a debt management plan so it's academic really.

You do need to check the aprs of the debts as the way forward for you is to overpay the highest apr debts first.

So that's the Barclaycard, which you could clear in under a year on your numbers.

However, if your overdraft (which you haven't listed as a debt) is effectively of a higher rate, then clear that first.

Martin has some ideas here

https://www.moneysavingexpert.com/banking/cut-overdraft-costs

mdbuk

Thanks for all the replies.

nicmalauren, regarding my empty spending fields:

• my phone and broadband are paid for by work
• I rarely buy clothes (they're usually presents)
• I put nothing down for car maintenance because having just bought it I expect no costs until next year
• buildings insurance and contents insurance are together as it's a joint policy
• I do buy presents but I had no idea what to put here
• my hair is long, but I suppose I could've put a figure against that: a quick calculation says it averages over the year at £7.50 per month
• entertainment obviously should have something but I don't really go out a huge amount - once per week at most.

enthusiasticsaver, you're right that I clearly need to keep a closer eye on my unbudgeted spending. I think maybe I'll take out some cash and just spend that to keep an eye on how much I'm spending. With a card it's so easy to not think about it.

Sncjw, I was only talking about a loan to sort the Barclaycard, but I can't get it so it doesn't matter anyway.

fatbelly, I should look at my overdraft more closely but as the charge for it each month is less than £15 and the Barclaycard is £50+, I suspect the card is the higher priority.

- Marc

Fireflyaway

One of the worst things I did was get a consolidation loan. It feels like you are taking action but really you are just moving the debt about and increasing it.
You need to feel bothered enough to take action or the debt will be hanging about a lot longer than it needs to.
If you don't need to protect your credit score then why not do the snowball method? Pay a small sum on everything but the smallest, pay that off then move to the next and so on. Check out Dave Ramsey on YouTube. The Debt free screams are really motivational. People pay off huge sums this way.