Consolidate for somebody else?

Jami74

Khujiro wrote: »

The issue I have is that my credit rating is just below average and due to my earnings and the fact I now have a daughter, I can't get 0% cards to replace the ones I have (and the terms have started to run out meaning mega interest!).

I can't believe it hasn't been said yet but, lenders don't see your credit rating, it doesn't really mean much. Have you done any eligibility checkers? If you've been consistently repaying and reducing debt for 17 months then there might be lenders willing to take a chance.

Khujiro wrote: »

Can my brother use a debt consolidation loan to take the debts from credit cards in my name? .

He can lend you money if he wants. If he applies honestly, I'm not sure banks would want to lend him money to pay someone elses debts. But it is so lovely that he wants to help you.

Khujiro wrote: »

Why would I need to pay him back? He would be taking out the loan and I would be meeting the payments every month.

When someone applies for a loan they have to give the details of the account for the money to be paid into and the direct debit payments to come out of. I would imagine that as it was in his name and would probably affect any future applications he makes (does he have a mortgage?) he would want to at the least monitor it to ensure the loan is being paid. Of course, you could set up a standing order to pay the correct amount into his bank a couple of days before the direct debit was due out. But as it was his loan, you would effectively be paying him back. If it doesn't get paid, it'll be him they chase.

You might be thinking of a guarantor loan, where you apply and he signs something to say he guarantees to pay the loan if you stop paying it. These tend to have massive interest rates though and if you do a search of these forums you'll see how many families and friendships they've torn apart. Best avoided at all costs.

Khujiro wrote: »

I've been paying £400 a month on debt consistently for nearly a year and living from what's left. I would reduce this to £269 a month with the loan which would leave me with more money to put into my emergency fund which is currently at £400.

If you can afford £400 a month then you should continue paying this. By reducing the amount you pay back and extending how long you are paying it you could end up paying far more in interest. If he hasn't actually been accepted for the loan yet then you can't be sure what the repayments are. Banks always use low rates like 3.4% on their repayment calculators but in reality people are often offered a much higher interest rate.

I know emergency funds are important but if you are employed, presumably getting some benefits (child benefit at least) and have a brother willing to borrow several thousand for you, how much of an emergency fund do you need? Saving £8k over five years while simultaneously paying interest on a loan seems a bit bonkers.

Khujiro wrote: »

I'm only asking whether this is technically possible?

Technically your brother can apply for a loan and if successful give you the money to pay off your debts.

I know you might think an SOA is a waste of time but you'd probably get some advice which could help reduce the amount that your brother would need to borrow or reduce the amount of time it takes to pay off. While lower payments are tempting, imagine if you could pay it off in half the time.

Khujiro

I've decided after looking at all these replies that I will fill out an SoA and see what advice I get from there. Thanks for the recommendations everyone.

Willing2Learn

I included the link for the SOA online form in my post. Here it is again

https://www.lemonfool.co.uk/financecalculators/soa.php

Please remember to click on the 'format for MSE' button near the bottom of the form, before pasting the whole lot into this thread.

sourcrates

Khujiro wrote: »

I've decided after looking at all these replies that I will fill out an SoA and see what advice I get from there. Thanks for the recommendations everyone.

We tend to find people consolidate their debts more than once, as they don’t address the basic problems of why they are in debt in the first place, the one thing I do know is that you cannot borrow your way out of debt, there are solutions to deal with problem debt, and borrowing more money is not one of them.

But it’s a well worn path, unfortunately people always look to more borrowing instead of better management of the debt they already have.

Some get the message, those that don’t end up rinsing and repeating the same old bad decisions, don’t be one of them.

jonesMUFCforever

Khujiro wrote: »

Why would I need to pay him back? He would be taking out the loan and I would be meeting the payments every month.

I think you will find that repayment for a loan will have to come from his account - so you then pay him back - that is what I meant.
If you miss any payment then he would be liable for it.

Exodi

Khujiro wrote: »

I've decided after looking at all these replies that I will fill out an SoA and see what advice I get from there. Thanks for the recommendations everyone.

Yayyyy!!! Finally an intelligent new poster that has listened to and followed advice given.

I'm so happy!

Khujiro

To be fair it would be tightish but it would be a lot easier for me to pay if he did take it out. The problem I have is that when the 0% terms do run out I will be paying 20%+ on every card which I can't afford and would see me borrowing much more money to pay debts which obviously just plunges me further in.


I also understand that money would come from my brother's account but I think it's unfair to assume because people have done wrong by their family before that everybody will. Nobody knows our circumstances and we are extremely close, he also fully understands how easy it was for me to fall into debt but acknowledges I've done a good job paying it off.


My only fear is that either I have to do a DMP which I'm dubious about due to CCJ/legal action, or an IVA which puts my house at risk. I also worry about DMPs because I'm advancing at work and even if they freeze interest, once my ability to pay goes up then won't they just reinstate the massive interest and have me getting further into debt? At least with the consolidation loan I'll know that I have a definitive end date in sight.



I have done an SoA and will post the results later.

Khujiro

Statement of Affairs and Personal Balance Sheet

Household Information
Number of adults in household........... 2
Number of children in household......... 1
Number of cars owned.................... 1

Monthly Income Details
Monthly income after tax................ 1701
Partners monthly income after tax....... 572
Benefits................................ 28.8
Other income............................ 0
Total monthly income.................... 2301.8

Monthly Expense Details
Mortgage................................ 356.1
Secured/HP loan repayments.............. 0
Rent.................................... 0
Management charge (leasehold property).. 0
Council tax............................. 91
Electricity............................. 62
Gas..................................... 60
Oil..................................... 0
Water rates............................. 42
Telephone (land line)................... 0
Mobile phone............................ 67.99
TV Licence.............................. 13.2
Satellite/Cable TV...................... 53.99
Internet Services....................... 0
Groceries etc. ......................... 476.66
Clothing................................ 0
Petrol/diesel........................... 52
Road tax................................ 0
Car Insurance........................... 93.48
Car maintenance (including MOT)......... 0
Car parking............................. 0
Other travel............................ 162.5
Childcare/nursery....................... 0
Other child related expenses............ 0
Medical (prescriptions, dentist etc).... 9
Pet insurance/vet bills................. 0
Buildings insurance..................... 20.27
Contents insurance...................... 0
Life assurance ......................... 54.28
Other insurance......................... 0
Presents (birthday, christmas etc)...... 0
Haircuts................................ 23.83
Entertainment........................... 8
Holiday................................. 0
Emergency fund.......................... 0
Total monthly expenses.................. 1646.3


Assets
Cash.................................... 400
House value (Gross)..................... 100000
Shares and bonds........................ 0
Car(s).................................. 8000
Other assets............................ 0
Total Assets............................ 108400


Secured & HP Debts
Description....................Debt......Monthly...APR
Mortgage...................... 81027....(356.1)....3.29
Total secured & HP debts...... 81027.....-.........-

Unsecured Debts
Description....................Debt......Monthly...APR
MBNA Card......................4897.08...128.9.....20.93
Halifax Card...................7194.84...71.95.....0
Aqua Card......................128.67....5.........0
Halifax Loan...................719.68....161.2.....13.99
Tesco Card.....................2300......25........0
Total unsecured debts..........15240.27..392.05....-


Monthly Budget Summary
Total monthly income.................... 2,301.8
Expenses (including HP & secured debts). 1,646.3
Available for debt repayments........... 655.5
Monthly UNsecured debt repayments....... 392.05
Amount left after debt repayments....... 263.45

Personal Balance Sheet Summary
Total assets (things you own)........... 108,400
Total HP & Secured debt................. -81,027
Total Unsecured debt.................... -15,240.27
Net Assets.............................. 12,132.73

noobinvestor

I don't think you need your brother's help, all you would be doing is moving the debt to someone else and you would owe him money.


You could start putting 263 left over in an emergency fund so you don't need to reply on credit.

phillw

Khujiro wrote: »

I also understand that money would come from my brother's account but I think it's unfair to assume because people have done wrong by their family before that everybody will.

Most times when problems have torn families apart, the people entered into it in good faith.

It's the unforseen things like you lose your job and aren't able to keep making payments and they also can't afford to cover them in the meantime, then he could end up with his credit file being trashed, debts collectors coming round etc. Even if he could afford to cover them, if they have to go without then there will be resentment eventually no matter how close.