Huge interest rates, please help!

Saturn001

Hello - I’m trying to help my spouse who has got in a complete mess with finances. 

I’ve included some details below. 

I’m in a relatively good financial position and so can continue to cover the bulk of our household costs (we have separate finances) but given the amount of debt and the huge interest rates I’m wondering if it’s even feasible for progress to be made in reducing the debt? Any help would be amazing, thankyou. 

(The below excludes my income/bills/finances which I am on top of and happy with)

Monthly income after tax: £2045
Life insurance: £25
Car loan/insurance/fuel etc: £488
Payment to me for house/bills/groceries: £450
Hobbies: £70

Balance remaining: £1012

[The car payments are high - trying to see if any wriggle room but looks like they can’t be reduced at the moment]

Debts: 

1. Credit card: £3,500 owed. 26% interest. Min payment £160pm.

2. Credit card: £7,300 owed. 46-52% interest. Min payment £342pm. Payment holiday until mid July (interest still accruing). £500 arrears. 

3. Credit card: £900 owed. 38-45% interest. Min payment £96pm.

4. Credit card: £150 owed. 25% interest. Min payment £9pm. 

5. Credit card: £700 owed. 39% interest. Min payment £40pm.

6. Loan: £2,600 owed. 69% interest!!!!! Payment £138pm. 24 month term. 

So total minimum repayments of £785 per month. 

Thankyou for reading.  

Saturn001

I should have also said -  spouse is happy for me to manage their finances going forward. Also addressing the underlying spending issue. 

ButterCheese

Try to find a credit card with 0% balance transfer (there may be a small one-off fee).  If you get refused for one, just keep trying another.  My partner was refused for 3 but then was accepted on the 4th one with a 12k limit and no interest for 22 months.  Much easier to make a dent in it then, you just use the new card to completely pay off one or two cards in full, up to the limit of your new card.

I would get the loan paid in full, and the £7300 CC as a first priority as both the balances and interest are highest

Saturn001

ButterCheese said:

Try to find a credit card with 0% balance transfer (there may be a small one-off fee).  If you get refused for one, just keep trying another.  My partner was refused for 3 but then was accepted on the 4th one with a 12k limit and no interest for 22 months.  Much easier to make a dent in it then, you just use the new card to completely pay off one or two cards in full, up to the limit of your new card.

I would get the loan paid in full, and the £7300 CC as a first priority as both the balances and interest are highest

Hi and thanks for your reply- unfortunately they won’t qualify for any 0% deals due to poor credit score. Some of the above debts are what I’d call adverse lenders as they’re the only ones who would lend.

Will focus on the loan and 7300 cc first, thanks for your help. 

Grumpelstiltskin

Am I correct? Amount left £1012 Minimum payments £785? Where is the other £200 plus going?

Saturn001

Grumpelstiltskin said:

Am I correct? Amount left £1012 Minimum payments £785? Where is the other £200 plus going?

Yes that’s correct - so £227 left over each month. Sorry I should have made it clear that all of that £227 will now be going towards debt repayments (as I can cover daily living expenses such as haircuts etc). 

I was just wondering how best to use that £227 I suppose - pay it towards the highest interest rate debt first? Thanks for replying. 

Grumpelstiltskin

Why not clear credit card 4, then that is one less to deal with and then go for the highest rate, I hope he is not spending on any card now.

ManyWays

So up to now she has been paying her share of the bills, which is why she has been struggling and borrowing so much, but now you know you are happy to help out? Is that a reasonable summary?
If it is, she can probably make affordability complaints about that loan. Who are the credit card lenders?

Saturn001

Grumpelstiltskin said:

Why not clear credit card 4, then that is one less to deal with and then go for the highest rate, I hope he is not spending on any card now.

Thanks - good idea, I had thought about clearing credit card 4 first (£150 owed) as it feels like a positive quick win. 

All spending has stopped now. Partner is really upset about the mess they’ve got themself in so is giving my visibility of all bank statements/credit report etc so that I can help get them back on track and they won’t be tempted to spend. Will be checking in regularly. 

Saturn001

ManyWays said:

So up to now she has been paying her share of the bills, which is why she has been struggling and borrowing so much, but now you know you are happy to help out? Is that a reasonable summary?
If it is, she can probably make affordability complaints about that loan. Who are the credit card lenders?

I didn’t know about any of this debt as we keep completely separate accounts and finances. 

Based on their salary of £2045 (take home per month) they could comfortably pay me £450 towards house/groceries etc; however I didn’t know they were also trying to service all these debts at the same time. I pay the majority of household bills and I’m happy with this due to my salary. 

The debts have built up on pointless spending - none of it has been on essentials as my salary is enough to cover things like e.g. the washing machine breaking or the car needing new tyres or a service etc. 

I have added the lender names below. I was shocked at the amount Aqua had lent (most of the others have relatively low credit limits) so your comment about making an affordability complaint (which would be to Aqua) is really interesting - maybe something we should consider? Likewise Bamboo. 

1. TESCO Credit card: £3,500 owed. 26% interest. Min payment £160pm. 

2. AQUA Credit card: £7,300 owed. 46-52% interest. Min payment £342pm. Payment holiday until mid July (interest still accruing). £500 arrears. 

3. MARBLES Credit card: £900 owed. 38-45% interest. Min payment £96pm.

4. CAPITAL ONE Credit card: £150 owed. 25% interest. Min payment £9pm. 

5. ZABLE Credit card: £700 owed. 39% interest. Min payment £40pm.

6. BAMBOO Loan: £2,600 owed. 69% interest!!!!! Payment £138pm. 24 month term. 

Grumpelstiltskin

OK I  know you say you keep your finances separate but with that amount of spending didn't you notice  anything?

Is there anything that could be sold to put towards the debt?