£20K Debt help

joshuan542

Hi all,

looking for any advice please, I currently have around 5 points of debt (4 credit cards and a loan) totalling approx £20K, I do earn a good income but due to expenses in life I cant quite meet the minimum payments on all of these cards, which all in all is around £500 per month currently plus the loan payment of £280, Id love to consolidate the £20k potentially to bring the monthly amounts down to be more affordable over time as I cant meet the minimums currently and its not shifting any of the debt for me

due to this,  and younger me not managing money overall correctly my credit score is average to poor currently also 

Any advice would be greatly appreciated

kimwp

Generally it's not considered a good idea to consolidate, experience on here is that most people will end up in more debt as it feels like the problem is solved and the root behaviour doesn't change.

If you can't pay your minimums, then you are probably looking at defaulting on your debts, but before you take any action, you will get the best thoughts on your situation if you complete an SOA (link in my signature). This should accurately reflect your spending - go through your bank accounts to make sure it is accurate and make sure to include any annual spends (divide them by 12 to give a monthly figure)

MEM62

joshuan542 said:

due to this,  and younger me not managing money overall correctly my credit score is average to poor currently also 

The good news first - you do not have a credit score.  The random number presented to you by the CRAs as a 'score' is only seen by you and them and therefore meaningless.   

Now the not so good news.  Debt consolidation usually does not work and you will not find the majority on here endorsing this as a way to deal with your debt.  Post up an SoA and the very knowledgeable boys and girls on here can give you some meaningful advise in dealing with your debt.     

CliveOfIndia

To echo the above, forget about a consolidation loan.  The issues are two-fold.  Firstly, it's all to easy to get a loan, clear the cards, then merrily go out and start spending on them again, meaning you'll soon owe twice as much as you currently do.

Secondly, you will probably find you can't get a loan at anything approaching a sensible APR.  A lender cannot force you to use the loan to pay off your cards.  They therefore have to take the view that a loan would be in addition to, not instead of, your credit card debt - and will factor that into their affordability calculations.

You might possibly want to look at transferring some of the card debt to a 0% Balance Transfer card.  But if your credit history is less than ideal you may find you'd struggle to be accepted.  And even if you can get a BT card, it only buys you a bit of breathing space.

Ultimately there's no benefit to shifting debt from one place to another, you need to address the underlying cause of the debt.  To that end an SOA, as mentioned by previous posters, is an excellent starting point.

kimwp

Just to clarify the credit score comment.

When you look at your credit score, the credit company that you are using will use your credit history, whether you are on the electoral role, etc etc to generate a number that they show to you. Each credit company will use different data and weight it differently. For example, on one company, my score is "excellent" and in the 900's and on another, my score is only "good" at 602.

It is the same with companies that you apply to for credit cards, loans, mortgages etc- they will use their own scoring system, so you won't have the same number (score) with all of them. However, given that they have the same data (plus any they ask you for in the application), the likelihood is that if you have a poor credit score, then you also won't be viewed in a good light by other companies after they have done their own calculations. 

Stateofart

Generally, I like the idea of consolidating, however the concensus on here is that it may lead to borrowing more, so proceed with caution.

sourcrates

Stateofart said:

Generally, I like the idea of consolidating, however the concensus on here is that it may lead to borrowing more, so proceed with caution.

Its so good that many people do it multiple times, and in ever increasing amounts, keeping them in debt to the banks for decades, and costing them 1000`s of £`s in interest charges, what`s not to like?

in_need_of_direction

I went the consolidation route several times, even adding to my mortgage. I only stopped running up debt when I faced each bill rather than trying to disguise them by a reduction in monthly payments