Halifax debt - Need Advice

fatbelly

Neraly all the bits and pieces I was going to mention have already been said.

I do think that biting the bullet now rather than later will save a lot of money in the long run - you have interest on the loan, charges on the overdraft, a fast depreciating asset in the main car and some of your money is disappearing into areas which may well feel nice but are not helping the present situation (holiday, life insurance, high food spend).

(Contributing to a personal pension direct from wages is a better way to go than standalone life insurance)

To extract the positives, you have equity in the house and the mortgage is reasonable. You have no priority debt. With not much tweaking you can pay your bills and have something for a dmp for the non-priority debts, though not a lot.

I am not sure if your 'old account' is with a different bank. It needs to be as you are going to have to protect your income somewhere where the Halifax cannot access it. In the short term you will need to default on the loan, credit card and overdraft. It is unlikely Halifax will give you that advice.

Actually I've just realised something but I don't think it fundamentally changes the advice above. On that income I would expect you to be receiving around £200 per month child tax credits as well as child benefit and it appears you are not (the CB figure is also a bit out as it should be £82.40 per 4 weeks). If you are in a UC area this will have to come through Universal Credit now.

Check benefits here

kgrant

Yes, my wife is a housewife looking after our young son and I have large life assurance payment due to previous health conditions. Unfortunately my wife and I also need to have two cars and if I sell one for a “banger” then I could get into difficulty if I need to fix it hence I got the personal loan to buy a decent car with no issues instead of a HPI deal. In regards to ways forward I need to get tighter and yes I have a current account with another bank and I have reduced weekly food/drink, essential outgoings and bills so will be trying to switch everything across but I am finding it tight and don’t want to default on payments with Halifax. What should I do with my credit card and overdraft?

I am looking genuine advice on what to do next so please see my main income and outgoing proposed details when using the new bank as below;

Main Monthly income
£1540 - Salary
£70 - Working tax credit
———-
£1620

Main Monthly outgoings
Mortgage - £505
Personal loan - £235
Credit Card - £50
Overdraft fees - £50
Car fuel - £100
Essential food - £320
Essential bills - £300
————-
£1560

Shall I cancel the overdraft card and try to put this into my personal loan payments? What is best to try to do first - 1. To clear overdraft or 2. clear credit card?

Thanks.

enthusiasticsaver

The overdraft fees appear to be the killer. I think you will need to speak to Halifax and see what they can suggest as you cannot go on like this. It is difficult to just default as your mortgage is also with them but obviously that has to be the priority. They wont want you to default on the credit card, loan or overdraft either though. I am amazed that you managed to get so much borrowing with them and to a certain extent they are at fault in that they have continued to ply you with debt (obviously you are complicit in this too) so they should help you with sorting it out. Whether they will or not though is another matter. Make an appointment with them but make sure that you keep up with the mortgage payments.

I am sorry but I don't agree with sourcrates that you continue as you are and let the debt escalate further. All your debt is with Halifax and IMHO they have been very remiss in letting you borrow that much on your income. I think you have to sort the overdraft out first but ask them to stop the fees.

anfieldred

Regarding the overdraft fees - Halifax and Lloyds don't offer much support on this.

If you're really struggling, they will sometimes (1-2 times a year 'give' you £25-50 to cover the fees for the remainder of the month). If you want the overdraft charges 'freezing' for a month or more, you'll have to do a full income/expenditure over the phone with them (takes about an hour), and they'll decide what they can do.

I wasn't offered a loan, but instead a repayment plan to clear everything. I rejected it as it wouldn't have left me any better off, and dragged it out over a longer term. Instead, I've been reducing the overdraft by 50-100 a month as often as I could afford to online.

One of the tricks I saw on here was changing your direct debits to later in the month if possible, so you're not as much overdrawn, keeping the fees down a bit.

kgrant

Yes I spoke with Halifax and have the income/ expenditure conversation. They did freeze the overdraft and credit card fees but this finishes on 11 February.

With my monthly salary I really need to keep on repaying my mortgage but unsure how to clear my unsecured debts, so rang them back today. When speaking to the Halifax rep they said as I am currently a Halifax mortgage customer and have around 85% LTV they could help me with a unsecured consolidation loan so they have offered me an unsecured consolidation loan as below;

Consolidation loan for £16,300
£260pm for monthly repayments
Interest @ 9% APR Over 7 years (84 months)
£21,780 paid back
12 months no credit once accepted
Approx 3% Fees for early repayment

Unsure if it is best solution but I think this might be my only option unless I can clear my £1,500 overdraft or stop the fees by some other means?!

Any advice would be appreciated.

enthusiasticsaver

I am not a fan of consolidation loans, no one on here is but I have to say I think you should consider it not least because the rate is lower than your existing loan. You have to stop living on credit though or doing that will make things so much worse. Your second soa shows you should be able to meet the new loan payment if you don't have the overdraft to think about and the credit card will be drastically cut. No overdraft though, no credit cards and start saving as much as possible so you have an emergency fund. Remember you are not clearing debt, just moving it.

kgrant

Thanks. I am going to think about it over the weekend and decide on Monday.

John_G_Jones

I agree with all the advice above, but would add this.

You’ve been using credit for completely unnecessary things, and in the future need to avoid that. A garden makeover is not necessary when you are in financial trouble. Christmas is not a surprise, and should not need credit to pay for, and borrowing for a holiday when you are only just keeping your head above water makes no sense at all.

Are you actually now saving the amounts from your SOA to mean that you won’t need to borrow this year? Is it in cash somewhere, or in an account earmarked for this?

The worry is that you list these amounts, spend the money elsewhere, and end up borrowing again.

Dobbibill

If you accept the loan agreement with Halifax it will just move the debt. The have said no further credit so you still need to increase your income. The details above call out fuel but you will need to MOT the cars and get insurance, tyres, oil and general repairs done - this won't be a surprise so make sure you are putting money to one side for it. The same goes for House repairs, Christmas, birthdays - the list is a long one.

You need to be prepared so one way or another you need to increase the income with either overtime, a second job or a job for your OH when you are home for childcare. It's not easy but do-able if you work as a team.

All the best.

kgrant

I actually had to put tyres on the car last week and that bill stung me. I still haven’t fully accepted the new loan and after all the comments I am still non the wiser.

Accept
Pros - Fixed monthly payments and debts in one amount
Less interest owed per month than existing personal loan
Rejects credit from being added and helps keep me in black

Cons - 84 months is long time
No credit offered with Halifax if can’t meet 1 payment within this timeframe then my credit score will hit a default
Keep the loan will not help long term