Debt advice 40k

Helloadviceplz

Hello, 

I am in £40k debt (loan 26k and 2 cc totaling 13k). I earn enough to cover the repayments each month but ONLY JUST and I am left with not much to live with. If I continue it would all be paid in five years. I'm a shared ownership homeowner (75% share). I live with my partner who owns his own place too which he rents out. We would like to buy a house together probably in less than five years and possibly have a baby (fingers crossed). I have declined an IVA and am after some alternative advice.

Is it possible to get breathing space from each lender so I can concentrate of paying one at a time for example - one cc is 3k I could pay that in six months if it was the only bill. 

Or

Is it possible to consolidate the debts in anyway at all with it being such a big amount?

Any advice would be great, happy to share more info if needed. 

Thank you
Nat 

CCDarkside

If you cite difficulties in making the repayments then it's very likely you would be able to get informal or formal breathing space. 

But that just kicks it down the road.

The bigger question here is if you can pay it off in 5 years and the debt is £40k then you are already making substantial repayments which you have mentioned you can afford (doesn't really matter if its only just - to the lender you are successfully making the repayments).

So you need to ask yourself the simple question, do you wish to pay it off or not?  If yes, then you continue as you are for the next 5 years.  If not, then you can start to explore the alternatives.

As to consolidation, if you've been successfully repaying a £26k loan then talking to that lender for an extension to cover the rest might be a possibility.  I'd think a new lender would be unlikely to consider a consolidation loan for that amount, but it depends on your income.  Either way i'd probably not mention that you'll be trying for a baby.

RAS

You need to complete your SOA and post it here. Not sure if @sourcrates can advise whether you will need to have 10 posts before you can insert a file (use the little graph icon) in your post?

We need the APRs for the cards and loans as well as the end dates for the loans. I'd add the limits for the cards as well.

It's better to spend a bit of time looking at your statements to identify the costs over the last few months rather than assuming you spend £50 on one category when it's £47.26 or £60.92. Indicate whether each element if the full cost or your portion of a household bill, if you only post your finances.

You've mentioned that you married last year and your partner receives rental income. Are you paying bills in proportion to your income, or just halving them?

Newbie_John

If that's the case and you're married - have a chat with your partner maybe they will help you with breathing space? 

What I would do with my partner in such scenario is to create some financial plan for a year (initiallty) - that I take over most/all payments and they have to focus on getting the debt cleared. All in all - currently each £1000 debt payment is £1000 less for you two, and if it gets paid quicker it will be cheaper long term meaning more money for both of you.

Helloadviceplz

Thank you so much. I will complete the SOA with exact figures and post here when I can. My partner currently pays me £500 towards living costs which is very helpful. I will include this in the SOA. 
I do want to pay this off, especially after deciding against an IVA. However, I really want to build some savings for emergencies and of course, if a baby comes along. I think the SOA and your advice following this will be super helpful. Thank you 

Helloadviceplz

Thank you @Newbie_John. We are not married, and he is also currently in a transitional period of work as he changed careers, he isnt in a position to help atm but hopefully will be later this year (new job starts in May). He supports the costs of overall living/ food/ bills with £500 atm. I imagine that will increase later this year as well. 

RAS

Apologies Helloadviceplz, got you confused with another poster.

Given the situation, you need a couple of things.

To stabilise your debt in the short-term.
And work together to handle your partner's change in income. Is that going to involve a change in payments days, will he start just after the date for notifying HR about wages, will he need to cover additional travel costs before he gets paid? Just having a buffer to deal with that.
Then you can properly work on the debt repayments.

Helloadviceplz

Thank you @RAS. I guess I do want to tackle this alone and not rely on my partner for now. I am hoping to be able to do the snowball effect, I actually just looked at adding £3k to my loan to pay off the CC which would cost me £85 per month for the rest of the loan period. That would clear the CC, and the current CC min payment is over £120. Do you think thats a good idea??

ManyWays

Is it possible to get breathing space from each lender so I can concentrate of paying one at a time for example - one cc is 3k I could pay that in six months if it was the only bill. 
No, not really, if you were the other credit card or the big loan lender, you wouldnt be happy to see someone paying you nothing and clearing another credit card at 1000 a month, would you? You have to treat all the lenders in a similar way, which may mean paying them all less if you cant manage the minimums. That would mess up your credit record which would make buying a house with a joint mortgage unlikely in less than 5 years.

Is it possible to consolidate the debts in anyway at all with it being such a big amount?
Very unlikely to get a bigger unsecured loan, and secured loans put your house at risk, even if they are allowed with your shared ownership (often not).

So if it will all be gone in 5 years paying it normally, that may be your best option. Quicker if your partner could contribute more after May.

One way to speed this up might be winning any affordability complaints, that is a very large loan, what is the interest rate? 

RAS

You really need to slow down a bit.

First things first. You need to do your SOA. A lot depends on the APRs on the card and the loan and how long it,would take to pay them off. A lower payment for longer can cost you more not less.

So SOA first.

elsien

No one can tell you whether the consolidation is a good idea ( for most people it isn’t), without having all the figures, but more importantly, you having an understanding of how the debt was run up in the first place.

It’s the difference between racking up the credit cards on clearly discretionary spending, and dipping into them each month for daily living expenses.
Many people who overspend continue to do so after consolidating loans which means they carry on using the credit cards and end up with even more debt than they had in the first place.
So the SOA would be really helpful, I would look  back over your bank statements et cetera to try and identify where the money has gone if that’s something you are not sure about.