Freezing credit card interest, payments and consolidating

Berries2014

Hi All, 
I am new to the forum and wondered if anyone could help advise.  Post relationship break up I have been left with significant debt, all in my name.  The debt is historic and I have had a conversation with my mortgage lender about drawing down and adding to the term which for me is the best solution as I have significant equity.
The application was initially refused as an error on my credit file indicated I wasn't on the electoral role ( I think).  I am having this amended.
If I approach my credit card companies and ask them to freeze interest / payments will this adversely affect my credit score?  I am paying 24% interest, and struggling to make minimum payments at the moment.  Thanks in advance.

emmajones1976

Of course it will affect your credit FILE (the score is a meaningless number generated for the purposes of trying to cross sell you credit cards etc), but from the sounds of it thats the least of your worries anyway

Generally you have to default on payments before lenders will even consider such a move anyway.

fatbelly

Converting unsecured non-priority debt to secured priority debt is NOT usually the best solution.

You say you are struggling to meet the minimum payment on the credit card. What happens if you fail to pay? Not much.

If you fail to pay the increased mortgage payments what happens? You face possession action which is very difficult to defend.

Secured and unsecured borrowing is very different and you should not consolidate to the former.

What would help us to understand your situation better is a statement of affairs.(link is to a calculator)

If you format for mse and cut and paste we can make better suggestions

If you want to send you r credit card company something quick there is this letter

https://www.nationaldebtline.org/sample-letters/hold-action-your-account/

EssexHebridean

Exactly what fatbelly says above - please hold off putting currently unsecured debt onto your mortgage until you've been through everything to work out what better options ay be available to you! 

Berries2014

Thanks all. I have done a budget, I’ll post a statement of affairs. A series of bad relationship decisions have got me into this mess. I have a decent salary but childcare costs along with the debt repayment and one income is becoming unmanageable. Really appreciate the advice and guidance.

Berries2014

Hi All, 
My SOA below.  Any reviews and advice appreciated.  At the moment my car is off the road.  It looks like it is unrepairable and covered neither by insurance or warranty which leaves me £500 worse off - I am in the process of selling and using a hire car (more expense). I am hopeful the sale will cover the HP then I will lease direct from work.

Statement of Affairs and Personal Balance Sheet

Household Information

Number of adults in household........... 1

Number of children in household......... 3

Number of cars owned....................

Monthly Income Details

Monthly income after tax................ 4390.88

Partners monthly income after tax....... 0

Benefits................................ 0

Other income............................ 0

Total monthly income.................... 4390.88

Monthly Expense Details[/b]

Mortgage................................ 672

Secured/HP loan repayments.............. 487

Council tax............................. 300

Electricity............................. 60

Gas..................................... 68.66

Water rates............................. 40.04

Telephone (land line)................... 0

Mobile phone............................ 22

TV Licence.............................. 13

Satellite/Cable TV...................... 0

Internet Services....................... 91 - includes TV

Groceries etc. ......................... 300

Clothing................................ 0

Road tax................................ 41

Car Insurance........................... 60

Car maintenance (including MOT)......... 30

Petrol ............................ 300

Childcare/nursery....................... 885

Other child related expenses............ 50

Medical (prescriptions, dentist etc).... 20

Pet insurance/vet bills................. 30

Buildings insurance..................... 20

Contents insurance...................... 20

Life assurance ......................... 0

Other insurance......................... 0

Presents (birthday, christmas etc)...... 100

Haircuts................................ 10

Entertainment........................... 100

Holiday................................. 0

Emergency fund.......................... 0

Total monthly expenses.................. 3769.7

Assets

Cash.................................... 0

House value (Gross)..................... 307000

Shares and bonds........................ 0

Car(s).................................. 12000

Other assets............................ 0[b]

Total Assets............................ 319000

Secured & HP Debts

Description....................Debt......Monthly...APR

Mortgage...................... 181415...(672)......1.89

Hire Purchase (HP) debt ...... 10714....(487).....5

Total secured & HP debts...... 192129....-.........-   

Unsecured Debts

Description....................Debt......Monthly...APR

MBNA CC........................10000.....279.......24

Halifax CC.....................8746.19...219.4.....24

Santander......................4400......213.2.....19

Thanks in advance

Chris_English

Berries2014 said:

Hi All, 
I am new to the forum and wondered if anyone could help advise.  Post relationship break up I have been left with significant debt, all in my name.  The debt is historic and I have had a conversation with my mortgage lender about drawing down and adding to the term which for me is the best solution as I have significant equity.
The application was initially refused as an error on my credit file indicated I wasn't on the electoral role ( I think).  I am having this amended.
If I approach my credit card companies and ask them to freeze interest / payments will this adversely affect my credit score?  I am paying 24% interest, and struggling to make minimum payments at the moment.  Thanks in advance.

"which for me is the best solution as I have significant equity."

Why do you feel that this makes it the best option? How long is left on your mortgage? By adding the unsecured debt to it you extend the period over which it will accrue interest to the same length as the mortgage has left, and you are changing unsecured debt to secured.

In many cases it will be a much better choice to find a route to pay off the unsecured loans at the original schedule, or more quickly, than to increase the risk of losing your home by increasing your mortgage.

fatbelly

You cut off the end bit.

So income 4390.88
expenditure 3769.70

gives 621.18 available

debts are 711.60

I can see the difficulty now - looks like a debt management plan scenario

kimwp

Is your council tax right, it seems very high? 

I think it would be helpful to revisit your SOA - there is nothing in there for clothing, which seems unlikely.

If it is right and you are £100 short to pay your debts, it would seem sensible to cut back on presents and entertainment costs and downgrade your TV package rather than damage your credit history with a DMP.

If you are having to change car anyway (and hopefully the sale will cover the HP), why not buy a second hand car - rather than pay a lease each month? 

Brie

A couple of things jump out of the SOA (well done on putting it together BTW)

Internet at 91/month....anyway to cut this?  It must include a subscription service of some sort, netflicks, sky?  Can they be cancelled??  Or does having those keep you from going out to a pub or friends to see the footie and spending that way?

Zero for clothing?  I guess it's likely you have a nice supply of stuff to wear for various occasions.  I don't spend a lot (think it's been well under £50 in the last year) but I'd have a think about whether this is accurate for you.

£100 for entertainment....again maybe this can be cut?  Or is there a good reason to spend so much?  What are the cheaper alternatives?  Having friends over for beers and football rather than all spending at the pub??  (not sure why I think you are a beer and football guy, sub those for wine and ballet if you like)

Your credit cards....is there any options of a balance transfer to get a zero rate for a while?  Both MBNA and Santander seem to offer regularly to me so maybe that would get you a bit of relief.  And the totals for these also seem to too rounded - do you need to check what's actually owed?

I quite get the idea of adding to the mortgage - I've asked about that myself in the past and it does seem an easy and sensible option.  But people are right to warn you about adding unsecured debt to your secured debt.  I think if someone wanted to be reassured that this was a good idea for you some details would be needed about the actual mortgage.  At a guess I'd say you have something like 60% owing on the value of the house which is great.  But how long is that rate good for and how likely will you be able to easily remortgage when the rate ends and how affordable will it be with a rate hike?  Or is downsizing a better option for you??

Best of luck with it all.   

kimwp

Brie said:

A couple of things jump out of the SOA (well done on putting it together BTW)

Internet at 91/month....anyway to cut this?  It must include a subscription service of some sort, netflicks, sky?  Can they be cancelled??  Or does having those keep you from going out to a pub or friends to see the footie and spending that way?

Zero for clothing?  I guess it's likely you have a nice supply of stuff to wear for various occasions.  I don't spend a lot (think it's been well under £50 in the last year) but I'd have a think about whether this is accurate for you.

£100 for entertainment....again maybe this can be cut?  Or is there a good reason to spend so much?  What are the cheaper alternatives?  Having friends over for beers and football rather than all spending at the pub??  (not sure why I think you are a beer and football guy, sub those for wine and ballet if you like)

Your credit cards....is there any options of a balance transfer to get a zero rate for a while?  Both MBNA and Santander seem to offer regularly to me so maybe that would get you a bit of relief.  And the totals for these also seem to too rounded - do you need to check what's actually owed?

I quite get the idea of adding to the mortgage - I've asked about that myself in the past and it does seem an easy and sensible option.  But people are right to warn you about adding unsecured debt to your secured debt.  I think if someone wanted to be reassured that this was a good idea for you some details would be needed about the actual mortgage.  At a guess I'd say you have something like 60% owing on the value of the house which is great.  But how long is that rate good for and how likely will you be able to easily remortgage when the rate ends and how affordable will it be with a rate hike?  Or is downsizing a better option for you??

Best of luck with it all.   

Not sure there'll be much pub-going with three children to look after 🙂