Advice Required on Debt

BukowskiGirl

Hi could really use some advice,
I have several outstanding debts from my late teens/early twenties, these include a student overdraft of £2000, no longer interest free, which I tend to hover around -£1000 as my wages go in to take the balance up but then Bill's drag it back down. I also have a credit card £2000 and something is covered by a balance transfer and £1000 is not and is being charged interest. I also have the balance transfer credit card for that one still within its interest free promotion time. 
Pre-covid things were going OK and I managed to get out of the overdraft into constant plus figures. Now I'm back at square one and worried as I work in a restaurant so things arent the same, we arent as busy and the cash tips reflect this and our hours have decreased.
An old friend advised something called either debt reconciliation or debt consolidation, cant remember what he called it, where you talk to a bank and they put all debts together - would anyone recommend this? Or have any alternative advice?
Thank you in advance I'm just getting scared I'm 27 now and still in a mess and some day (seemingly well into the future at this rate) all I want is to own my own home. Please help!

sourcrates

Just going to move your post to the correct forum, when you will get more tailored advice.

RAS

Welcome
First things first; without knowing your exact situation it's hard to advise.

I had to copy the sentence below but it's relevant.
If you complete the Statement of Affairs http://www.stoozing.com/soa.php and post it back here, we can go over it with you and see if there are any places to help you make savings or manage the debt.

Given what's going on re Covid, you might want to wait a couple of days until you know more about your income situation  

Grumpelstiltskin

OK      Do as RAS  says. Whatever you do don't talk to the bank or anyone except a Debt Charity, banks are only interested in making money as are so called Debt Companies. ( If anyone mentions an IVA run a mile }
It will be solvable but until you have completed an honest SOA the good people on here won;t know which is the best way forward.

macman

Consolidation is not the answer, however tempting is made to sound: 'just one easy monthly payment!'.
It may reduce the monthly payment amount, but the term is extended and you will pay more in total over the whole term. It does not magically reduce your debt.
Your focus should be on paying down the debt with the most expensive APR first, so you need to list out the rate on each debt.

BabyStepper

£4k debt is not the end of the world so try not to panic. First, you need a budget and you absolutely need to be living within that budget. Do not take on any more debt, do not spend on your credit card, live within your means.

Paying off overdrafts is a bit more tricky than paying off CC debt so tackle these 2 separately. 

With the credit card, login online and take a look at your statement. (I know this is scary but just bite the bullet and do it, you'll be glad you did.) It will tell you exactly how much is on 0% and more importantly, for how long. It will also tell you how much is accruing interest. If you can get the part that's accruing interest moved to a 0% card then that would be good. Martin has a soft check on this website to let you see who may accept your application, give it a go. Do NOT start collecting credit cards though and do not spend on the new one. Set the DDs to just above the minimum payment and leave it there for now. 

Then focus on the overdraft. I think many banks are still offering £500 interest free so phone your bank and make sure that is being applied. Then you need to look at your budget and work out how much you can pay off every month. If you can manage £50 then that's ideal. You can log on and reduce the overdraft by £50 yourself every month. You'll need to be disciplined and make sure you do it, but this method is entirely possible. How much are you being charged every month?

If you can't manage this then you may need an arrangement with your bank which, as mentioned, will impact on your credit file. Some will let you set up a new account without an overdraft, so your overdraft is separate from your monthly cashflow, and you can pay it off in whatever the agreed amount is. Or get an account with a new bank, and make payments to the overdraft account every month. Make sure you stick to the agreement. 

As with everything debt-related, it's all about your budget. You need to work out what you can afford, what you can't afford, and prioritise the debt. If you have things you can sell, extra work you can do, any extra cash available at all then a lump sum to your overdraft would help. 

Let us know how you get on and good luck with it. 

fatbelly

Information on what each bank is offering is at the start of this article.
https://www.moneysavingexpert.com/banking/cut-overdraft-costs/
You'll need to act this week.

BabyStepper

Really helpful fatbelly, thank you. OP, the deadline for requesting £500 interest free due to coronavirus difficulties is 31st of October so yes, you really need to do this asap.