How best to allocate £6k cash + £6k loan across cards?

Last_straw_berry

Hi all,

I hope everyone is well,

I am hoping someone can help advise me. I want to know what the best way to allocate a lump sum across several credit cards to avoid defaults and stabilise my situation. I would truly be grateful for any advice and ideas.

II had to leave my job and unfortunately spiralled and missed payments for around 7 months on some accounts, they were on payment plans. 

I now have £6,000 cash available, and am also able to take a £6,000 consolidation loan shortly after (my partner has been kind enough to do this and I pay him monthly) 

My creditors are as follows

Tesco Bank – Card 1

• Balance: ~£2,800
• Arrears: £183
• Minimum due: £210 (by 4th Feb)
• Default notice issued (urgent)

Tesco Bank – Card 2

• Balance: £2,015
• Minimum due: £25
• Not currently in arrears

MBNA – Card 1

• Balance: £11,880
• Overdue minimum (incl. missed payments): £2,064
• At credit limit
• Payment plan in place for last 7 months

MBNA – Card 2

• Balance: £2,590
• Overdue minimum: £444
• Payment plan in place

Virgin Money

• Balance: £975
• 23%
• No arrears

PayPal Credit

• Balance: £1,550
• 0% promotional offers until March 
• Minimum £65

Thank you in advance truly am grateful for any advice. 

Emmia

Do you have an income to prevent the debt reoccurring? And repay your partner? The general advice is not to take out "consolidation loans" as these don't fix the problem... And can quickly double your debt if you haven't tackled the reason for that arising 

Your partner is completely liable for repaying the loan even if you don't repay them or you split up 

Last_straw_berry

Thank you for your reply Emmia, I work full time and have a part time job over the weekends to pay for this now. So doing about 60 hours a week. I won’t ever let him get into trouble and have had moments in the past were we have both helped each other in this way. 

sourcrates

It makes absolutely no sense whatsoever to waste 6k of your own money, and 6k of your partners, on debts that all bar a couple already have affordable payment plans in place.

Just allow the Tesco card to follow suite.

Have they all defaulted and interest been stopped?

Its much simpler, and better economically, to pay off defaulted debt affordably, once interest has been stopped.

Last_straw_berry

Thank you for your response Sourcrates,

i really appreciate and see the logic, it’s just in my case I want to avoid defaults while I can. 

The tesco account doesn’t have an actual default, and interest is still being charged. As I’m able to bring things back up to date, I’d prefer to avoid a default being recorded if possible.

I’m currently upskilling with plans to increase my income over the next 4–5 months, so preserving my credit file and keeping accounts live would be the goal. It is doable and I am already making more progress than before. I am pushing more than before to make this happen. I would truly appreciate if anyone knew how to give me advice on the best ones to deploy to if possible  

ManyWays

I agree with @sourcates. Better for your partner not to take this loan (hopefully in the cooling off period) and to allow these debts to defaults and then pay them off. 

A 60 hour week is not good for your health

MEM62

Last_straw_berry said:

i really appreciate and see the logic, it’s just in my case I want to avoid defaults while I can. 

Don't be focused on this.  There is no point in concentrating on preserving your credit standing when you will not be in a position to borrow (and shouldn't be borrowing) money for the foreseeable future.  Just focus on clearing your debt in the most practical and sustainable way.  

enthusiasticsaver

Your credit record will already be trashed so I would not worry about defaults. Consolidation loans are also not a good idea.  I would tackle the debts charging interest with the cash you have. 

EssexHebridean

What are your reasons for not wanting defaults, allowing that you almost certainly already have arrangement to pay markers which in reality are more damaging?