30k+ credit card debt

somewhat_confused

I currently have over 30k across 3 credit cards - currently costing over 1k a month.

This is pushing me into the debt spiral where this high payment leaves me with so little left each month that the only way I can get through the month is to spend on the cards…

What is the best way to reduce this to a manageable level?

I liked the idea of a secured loan because it could reduce the 1k down to approx. £250 which would give me some headroom to build savings and clear down the debt faster.

But on the other boards people suggest this is a bad idea, and I understand why.

Help please!

sourcrates

Oh yes, it can be a very bad idea, and I`ll tell you why.

With unsecured credit card debt, the very worst a lender could do for non payment is obtain a CCJ, which you would repay according to your budget.

If you default on a secured loan, you can reasonably expect to lose your home, why would you risk that when there is such an easy, simple solution to your problems, which does not involve any further borrowing.

Its called debt management, its an informal arrangement between you and your creditors, where you repay your debts at an affordable rate, over a longer period of time, leaving you sufficient money to have a life with.

Your debts get paid off, with no more risk to your property, no stress, no hassle, very straightforward, and its recognised by every lender out there, borrowing more money to repay existing debt is the worst possible choice you can make, as many ex bankrupts can attest too.

somewhat_confused

Thank you for the reply.

Surely there are better things that I can do in the meantime though?

Moving the balances to 0% cards?

And surely a debt consolodation loan of a fixed duration is better than trying to pay down credit cards for ever more?

RAS

You need to completely revise your ideas on finance. You start by working out what you need to live on, see the "Link to SOA" in sourcrates' signature.

Once you know that you know how much you can afford to pay your creditors each month.

Make sure the mortgage and CT are paid and any other secure creditors and stop paying your credit cards.

There are a few things to sort out first but you'll stop interest, live better and sleep easier once the first couple of months are over.

ManyWays

If you can post a Statement of Affairs (SoA) here, see https://www.stoozing.com/soa.phpwe could give a more specific response.

But generally:
1) consolidation with a secured loan is very very rarely a good option as it puts your house at risk when you have other less risky and cheaper options such as a debt management plan (DMP)
2) long term 0% balance transfers can be a good choice provided you have the determination to overpay the minimums significantly and do not spend on the closed cards.
3) an unsecured consolidation loan is usually expensive if you cannot get good 0% offers, so again a DMP is usually better.

Are you an exception to these generalisations? Let us see your SoA to say more.

fatbelly

Sensible advice above and there are lots of options which people will go through if they see your soa. Your minimum payments do seem quite high for the level of debt. I wonder why.

sourcrates

Moving balances around can help if you can get zero % deals for a long enough period, but can you?.

Honestly we see so many people who take consolidation loans, and then have to adopt debt management or some other debt solution further down the line, when they don`t change the way they deal with money, they just run the debts up again, and do so numerous times before realising the error of their ways.

Turning unsecured debt into secured may sound like a reasonable deal to you, the general consensus of opinion on these boards is that its a very bad idea, the repayment period may be fixed, but interest rates are not, and can rise without much notice.

somewhat_confused

Thank you for the replies.

I think at this stage my goal is to reduce the cost of the existing debt that I have rather than eliminate it all together by scrimping and scraping. I am comfortable with some level of debt, I just need it to be more manageable.

Is there a more appropriate board to talk about minimising the cost of existing debt?

The reasons for accumulating the debt in the first place are well known to us now and are being addressed - and include a combination of physical and mental health issues. What we are looking for at this stage is financial advice and help and not (1) lecturing on mistakes of the past and (2) guidance on how to conduct ourselves going forward (this is being supported by the appropriately qualified people).

Hope that makes sense!

RAS

There are one or two hacks than can reduce what you pay back but we'd need a list of debts, the current APRs, end dates for any deals, limit of each card and details of the deals, for example if there are different rates for existing debt and new purchases. And obviously, can you get any 0% deals?

Beyond that, have your appropriately qualified people suggested you submit a debt and mental health evidence form?

ArtyJ931

I don’t think you need to worry about people here lecturing you on mistakes of the past. When they talk about offering advice on your SOA it is just that - ideas for how you could get better deals or amend spends etc.

I don’t often comment on SOAs because I’m pretty new to all this myself and still learning. But people who are here and able to help do so because they themselves have been through this exact situation and are in a good non-judgemental place to support and advise others.

However this maybe isn’t the right place if you want financial advice and have others who are supporting as above already.

beanielou

No one is lecturing you. People are trying to help & are doing so realistically.