A bit overwhelmed with debt and need some pointers.

I have around 13k in CC debt and 7k in a loan (plus my student loan but that's not here or there at the moment) and I would like to get debt-free or at least get a handle on the amount I'm paying each month.

I have an average income and am currently managing, but I can't see the credit cards ever being paid off and the monthly amounts are creeping up as I'm not clearing them fast enough. Things are very tight now, and I have no safety net, so I would like to act before there's an issue and its too late or I need to go into more debt.

I'm currently paying £543 towards the CCs and loan each month and want to either pay things off faster or reduce this amount.

Someone had mentioned a debt relief order which seems like a last-ditch attempt at things and a consolidation loan.
I have found a 20K consolidation loan which can be paid off over 5 years for £487 a month and it seems like my best option.
It has a slightly lower APR than what I'm paying, with a slightly less bill each month and peace of mind knowing it's only one thing to pay off rather than 2 cards which might creep up.

Is this the best shot, or is there something else I should look at?

Thanks, all.

Comments

  • Brie
    Brie Posts: 9,364
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    Yes - what you should look at first is completing a statement of accounts as seen on the top sticky in this forum.

    Then you can post it here or just look at it yourself.  The point is that it should be a complete record of your income and expenditures and can help you (& us potentially) spot what savings you might make, what might be the problem with your budget etc.  People here are generally very helpful about making suggestions so it may well be a good start.

    What people here won't do is say that a loan can help you as, while it might reduce the interest you are being charged, it doesn't get to the heart of the problem of why you have debt in the first place.  Very few of us just suddenly get into debt for 1 thing.  Normally it's a creeping thing that seems to be ticking along just fine and then suddenly you realise that it's out of control.  This is the crucial moment you are at & well done for realising!

    Should you think the problem is insurmountable then a DRO may be the answer assuming you meet the other criteria (don't own your own home, don't have a car of any great value, few assets) and that you don't mind having this on your credit history for the next 6 years.  And doing a DRO will mean having a SOA so you might as well start with that anyways.

    Many of us (myself included) have been in a lot worse positions and pulled through so why not give it a go with us?
    "Never retract, never explain, never apologise; get things done and let them howl.”
  • EssexHebridean
    EssexHebridean Posts: 20,905
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    The consolidation loan will almost certainly cost you more in interest than a structured plan to clear the debt. The other issue with consolidation is that often people continue to use credit afterwards, so before you know it, you have the consolidation loan and you have run up further debts on the cards. 

    The red flag right now is that you say the balances are creeping up currently - this isn't likely to be because you're not clearing them fast enough, as these days minimum payments are meant to not only cover the interest but also make a bit of headway into the capital. The most likely reason for balances still increasing is that you are still using the cards - would that be likely? 

    As Brie says - an SOA is the first port of call - there is also a sticky thread at the top of the board about the process for clearing debts which you might find really helpful. 
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