Am I doing the right thing? Re:HUGE CC Debt - Your feedback please.

SunshineSmile

Hi everyone,

My husband and I have accrued a huge debt over the last 6 years. A bereavement years ago, and me being unable to work for a year because of it, contributed to this as well as losing a couple of huge work contracts for the both of us (we are both self-employed) which certainly didn't help.

We owe thousands on our credit cards - about £45000. I am embarrassed writing it as I don't know how the hell we got in this situation. Well I do, but bad error on our part and unfortunate circumstances have led to this.

So the other day when I felt like killing myself (figure of speech) I had a think and realised there is a solution for every problem no matter how bad. Now up until this point we have been able to pay the minimum on our 4 credit cards (sometimes a substantial amount more) but the interest has been crippling us - nothing is being paid of and we have run out of money. It's now reached the stage where we are going to get into serious arrears and trouble if we don't take action.

Let me add at this point an IVA or bankruptcy isn't an option - it really isn't. We don't want to reach that stage. We can't let it. We just want some time without interest to get ourselves back on level.

So I phoned up Lloyds who we owe £15000 too and explained that we want to pay back our loan in full but the interest is ruining us. We asked if they could help us out by freezing the interest for a few months so that we could get back on track. They replied they would send an income and expenditure form to us, work out a minimum payment for us to pay and would freeze the interest for 3 months. After that time they would look into renewing it for a further 3 months.

Now I know our credit is screwed but the way I see it is if we can freeze the interest on all our cards for a short while and pay a minimum repayment then we would be able to pay off the one with the highest interest without getting deeper and deeper into debt with everything else. We would also be more productive and make more money over the next 6 months without constantly worrying we're about to have a heart attack from it all. We have our mortgage, phone and debit cards - we don't need credit for anything else. Once the loans are all paid - how difficult can it be to rebuild your credit?

We don't want credit cards, all we would be concerned about is a getting a mortgage if we want to sell-up. If our credit rating was severely damaged, yet we owed no debt and had a £100,000 as a deposit to put down - would it still be that difficult to get a mortgage?

I think it is better to nip this debt in the bud instead of trying to protect our credit-rating and plunging even further head-first down this financial spiral of doom.

As aforementioned I phoned up Lloyds but I want to put this in writing to all four credit card issuers. Is there a template for this? I want to cut our cards up, 'close' our accounts and ask them to temporarily stop our interest. Is this okay? Should I say or do anything else?

Is there any other advice you can give me?

I actually feel in control for the first time in ages. It's a really crap situation, but I refuse to let this ruin me and my husband. I want to this sort this out. A credit score can always be fixed can't it? But letting things reach the stage of losing your home is irreversible.

Do the card issuers have a social responsibility to try and help us?

So if there is anything else I should write, do or say, or if anyone has done this themselves, please let me know your thoughts.

Thank you for taking the time to read this.

GeorgeUK

Aha - just as well i waited before replying on the other thread

First thing - you say that you are making the minimum repayments. Have you had any late payments or defaults? Check your credit history at experian (free). How many credit checks have you had in the last 3 months?

Do a SOA as completely as possible. Provide APR's and limits for the CC's.
http://forums.moneysavingexpert.com/showthread.html?t=107280

Hopefully your credit rating is good enough that you can get some more credit cards and take advantage of the 0% interest promotions or move some of the higher interest debt to lower interest. If you manage to clear one of the cards, after a few weeks they may offer you an incentive to keep it open if you contact them to close your account.

If your credit rating isn't good enough (wouldn't bother paying for a credit score as different organisations have their own criteria for this), there may be other options we can suggest.

itsnever2lateisit?

In effect what are planning is to enter into a Debt Management Plan (DMP) Seek the assistance of the likes of CCCS,Payplan or the CAB, they will all help you for free. Do not use the services of a Dept Managememt Company, because you will have to pay them as well, meaning that a much smaller amout goes to paying off your debt.
Be aware that your credit rating will be ruined for 6 years ( although it is probably near that state anyway) But check out the above anyway, they will deal with your debtors on your behalf and they will be more receptive than if you approach them all yourself

CLAPTON

As I said on your other thread you would get better advice if you post up a full SOA.. details of income, spending and all the debt details (amount, APRs and minimum monthly payments).
Also how much is the mortgage and how much the property worth.