Two credit cards, two debts.

TiggyBoon

Hello. My partner has run up £11,000 in debt on two credit cards. He currently owes over just over 6000 on one which he is in arrears with and around 5400 on another which he is paying off monthly and doesn’t touch(he doesn’t have access to it). He originally got one of the credit cards to do a balance transfer but he’s just increased the debt, started off 5000 now doubled in a year. Now it’s impossible to get another balance transfer and I’m at a loss what to do. I personally have an £1800 credit card debt but I am paying that off monthly and don’t use it, I also only work part time so I can’t assist with his debt. Could you offer any advice? Is it worth taking a debt consolidation loan?

enthusiasticsaver

No a debt consolidation loan won't help and will probably lead to higher debt.  He needs to do a budget (soa) There is a link in my signature.  There are two options really.  If he cannot afford to repay and the interest rate is quite high and he is already in arrears a DMP may be the way to go.  He defaults on the cards, the interest is stopped and he comes to an arrangement where he can afford to repay it monthly. The other option is to cut back as much as possible and pay it down monthly.  Eventually he should be able to move it to a 0% card but these deals are getting harder to find. 

Why is he not asking about how to deal with it? Ideally he should come on here and post an soa so we can advise on the best way forward.  

I strongly urge you not to take on any of his debt. 

TiggyBoon

Thanks for responding. I’ll be honest he’s not the best at managing finances and never has been. He’s also the type to bury his head in the sand and too stubborn to ask for help, but I constantly worry about it hanging over us so I wanted to get some advice. None of the debts are in my name.
He was completely debt free at one point but seems to have got into this circle again. Unfortunately, the initial cause was an expensive car repair and then it just snowballed from that as he needed the car for work. He has got a van he is planning to sell, so he will hopefully manage to clear at least £3000, but obviously there will be a big chunk remaining still. He’s quite an impulsive spender, hence why I’ve taken one credit card.
I will see if I can get him to do an soa.

Thanks

fatbelly

TiggyBoon said:

Hello. My partner has run up £11,000 in debt on two credit cards. He currently owes over just over 6000 on one which he is in arrears with and around 5400 on another which he is paying off monthly and doesn’t touch(he doesn’t have access to it). He originally got one of the credit cards to do a balance transfer but he’s just increased the debt, started off 5000 now doubled in a year. Now it’s impossible to get another balance transfer and I’m at a loss what to do. I personally have an £1800 credit card debt but I am paying that off monthly and don’t use it, I also only work part time so I can’t assist with his debt. Could you offer any advice? Is it worth taking a debt consolidation loan?

If he wants to come on here we'd ask him to do a statement of affairs.

He may be quite happy to run with 11k of debt but the interest will be quite high. If he can afford to overpay then he should start with the highest interest card.

If he genuinely can't afford to make the contractual payments without going further into debt, then he may want to look at a debt management plan

TiggyBoon

fatbelly said:

TiggyBoon said:

Hello. My partner has run up £11,000 in debt on two credit cards. He currently owes over just over 6000 on one which he is in arrears with and around 5400 on another which he is paying off monthly and doesn’t touch(he doesn’t have access to it). He originally got one of the credit cards to do a balance transfer but he’s just increased the debt, started off 5000 now doubled in a year. Now it’s impossible to get another balance transfer and I’m at a loss what to do. I personally have an £1800 credit card debt but I am paying that off monthly and don’t use it, I also only work part time so I can’t assist with his debt. Could you offer any advice? Is it worth taking a debt consolidation loan?

If he wants to come on here we'd ask him to do a statement of affairs.

He may be quite happy to run with 11k of debt but the interest will be quite high. If he can afford to overpay then he should start with the highest interest card.

If he genuinely can't afford to make the contractual payments without going further into debt, then he may want to look at a debt management plan

One of the credit cards the 5400 one is currently 0% and he is paying more than the requested amount. The other one (£6000)  he is unfortunately getting charged interest on and again is generally paying more than the requested amount. However, he missed a payment last month putting it into arrears. Maybe it would be worth paying the minimum on the 0% and paying more off on the highest interest.

Thanks for responding.

sourcrates

There comes a time to stop bailing, and just let the boat sink.

Possibly best defaulting on both, having the interest stopped, and just paying off the remaining balance at an affordable rate.

Put aside all though of further borrowing.

MEM62

TiggyBoon said:

Is it worth taking a debt consolidation loan?

No.  You cannot borrow your way out of debt.  And unless he addresses his spending he will just run up more debt once the cash is released - as you saw with his balance transfer.
  

TiggyBoon said:

I’ll be honest he’s not the best at managing finances and never has been. He’s also the type to bury his head in the sand and too stubborn to ask for help, but I constantly worry about it hanging over us so I wanted to get some advice.

Unless he has his lightbulb moment and changes is attitude towards money and, in particular, debt you will have an uphill battle on your hands.  Perhaps you can get him to understand the impact that this will have on your future.

I hope it all works out.      

EssexHebridean

The advantage of him getting defaults on his file for these debts would be that it would then make it increasingly difficult for him to get further credit - and it sounds like that may not be a bad thing. of course if you are in the position of wanting to apply for a mortgage any time soon, that will also be a disadvantage. 

As for the payments, if you go through the figures and it is obvious that there IS enough income to pay the debts, if some of the discretionary spending was to stop, then he needs to target any overpayments to the card which is charging interest, and just pay the minimum on the one which is on 0%. He absolutely mustn't miss any payments on that 0% card either - or he might lose that rate! 

I would also add - in the longer term you won't help him by taking things over for him. We often say on here "You can't have a lightbulb moment for someone else" - right now it sounds as though you realise things need to change, but he's not hit that point yet.  He's not a child though - you shouldn't be in a position of effectively "looking after his pocket money for him" - he needs to take responsibility for himself and his own financial help, I'm afraid. Giving assistance, being a sounding board, and making suggestions are all good. Actually taking over the management of someone elses finances though - not ideal. 

TiggyBoon

Thanks for all the advice. 

I think the best option would be to default on the one in arrears and keep paying that other one as he has. Like I said that one hasn’t been touched, it’s just being paid off and always on time as it’s set up via dd.

Given current circumstances we don’t intend on getting a mortgage anytime soon. I want to clear my credit debt(this was from a previous student account) and then I want to try and save in order to get a mortgage in later years. I’m not even sure this would be achievable as I can’t see him being accepted for a mortgage due to his credit history. My credit score is higher end and my only outstanding debt is the one I’m paying off. However, this isn’t something I’ve looked into as of yet as it’s a lot further down the line.

I won’t take on his debt as you’ve suggested but just offer advice. It’s unfortunate as he previously paid his credit card off in full and now seems to have snowballed. Hopefully, he’ll realize he can’t just sit back.

Thanks again.

Hoenir

TiggyBoon said:

 Maybe it would be worth paying the minimum on the 0% and paying more off on the highest interest.

Yes that would be a positive immediate step to take. While longer term solutions are found. 

MEM62

TiggyBoon said:

I want to clear my credit debt(this was from a previous student account) and then I want to try and save in order to get a mortgage in later years. I’m not even sure this would be achievable as I can’t see him being accepted for a mortgage due to his credit history. 

If he gets his act together now, it will only just over six years before all the negative markers drop off his credit report.  Perhaps this might offer him some incentive.