What to do about loan debt

premiumz

Hi all,

I currently have a few debts which have been a real struggle to pay back.
I won't bore you with the details unless you ask, but to sum up the situation:
2 credit cards (AMEX, Lloyds) 10k
1 loan (Lloyds) 18k


These are personal debts. I do have a LTD company debt as well but as that's not under my personal name, I'll leave that out of this thread.

What are my best options to reduce/clear these debts considering I am not in a position to make the payments right now and sinking further into debt trying to pay each one. (it's becoming a snowball)

I have a mortgage of which I am unable to remortgage currently. I'm looking for work as my business took a large downturn. I'm trying to turn it around while looking for work but it's too early to tell how that's going.

So, it's a bit of a sh*tshow at the moment.

Trying hard to pay them off over the years but things have gotten worse and so, I'm left looking for alternative options.

I don't really want to go bankrupt as the house equity is more than the debts, so I may as well sell the house and rent but this isn't a great option either. I have dependents and that process will also take a while, possibly months to a year+.

So ideally, I'm looking for something that could help that wouldn't leave me in the worse credit situation or houseless.

Thanks

ArtyJ931

have a read around and look at debt camel for different options for debt management.

if you would like advice on your budget and where you might be able to save money then completing and posting a Statement of Affairs is a good start.
if you want to know more about different options to manage your debt I personally found debt camel very informative

sourcrates

Debt management is the only informal choice for homeowners.

You can either, set up payment arrangements with the current creditors, or stop paying, allow the accounts to go to collections/default/sale, then make similar arrangements with the debt collectors further down the line.

The advantage in stopping payments and waiting for defaults, is that your credit file recovers six years after a default is registered.

If you go straight to "arrangement to pay", the "AP" markers will still be visible on your credit report, for six years after you have repaid the debt, so potentially twice as long as a default.

Brie

I agree with Arty and sourcrates suggestions.

The SOA that Arty mentions is linked in my signature below. Fill it out based on 2 - 3 months worth of statements and post it back here and we'll try to help you balance your budget.

At the very least stop paying the cards and loan for a month or two to enable you to catch your breath. You can decide whether you need to go for a full default or just have a couple of months break from making payments. Which you decide on will point to what action you will need to take next.

You mention not being able to remortgage currently - can you explain a bit better what's happening there? Your mortgage provider should be able to offer you some deal if your previous offer had come to an end, even if the new one isn't what you might like.

Here's a link to DebtCamel - a very good site for debtfree wannabees!!

Debt solutions - what is your best option?

premiumz

https://forums.moneysavingexpert.com/discussion/comment/82096469#Comment_82096469

When choosing arrangements to pay, does this help reduce the amounts owed, reduce the monthly amount or something else? The only thing about the debt collectors down the line, that seems more like the unknown but also, I really wanted to try and avoid anything bad hitting my credit file in the hopes things turn around for me and I can move forward without having to worry about my credit history taking a smack and having to wait years for better options for things like moving house etc

premiumz

Because I am now looking for work and the equity in the house is sort of at the maximum to loan ratio, I don't think I can take any money out of the house as I don't have the income to provide and show to get the rest on loan. Would Lloyds consider reducing the interest on a loan? I'm thinking about getting a 0% interest CC to move the balances off of those charging me interest right now, but I don't know if I'd be accepted for another CC considering my situation

RAS

Securing consumer debt is a very bad idea.

Yoh won't be able to "remortgage" and are very unlikely to be able to take more equity out, even if that was a remotely sensible thing to do. You can just log in to your current provider 3-6 months before your current fix ends and choose theritheir best offer without a credit check.

Your credit record is already troubled, so trying to preserve it isn't worth the candle. Keeping up with existing payments using more credit or securing debt doesn't sort out the basic problems and just steals from your futures.

Can you advise whether the Lloyds loan is consolidation of previous debt?

If you stop paying all the consumer debts can you afford to pay the mortgage?

Are any of your dependants working? If not could they also look for work? It would really help to know your family composition.

sourcrates

If you can`t make the contractual minimum repayments, then your credit file will suffer regardless, its an old pun I know, but you can`t have your cake, and eat it, if your going to default, then do it in such a way that you control, as far as you possibly can, the sequence of events.

Debt management entails making reduced payments, according to your disposable income, over a longer period of time, during that time its quite likely your debts will be sold for a fraction of their face value, this will then allow the new owners to accept lower settlement deals than would have been possible previously.

This of course depends on the company policy, how well that company is performing, and the time of year, and of course if you have saved up the funds in your emergency/settlement pot.

There are many ways you can tackle this using a mixture of different strategies, by exercising your rights to information, and making every new creditor, when a debt is sold or assigned, provide proof of your liability.

ManyWays

I have a mortgage of which I am unable to remortgage currently

Do you mean you are not being offered a new fix by your current mortgage lender? Do you have mortgage arrears? Or are you a mortgage prosoner, you lender no longer offers any new fixes?

premiumz

https://forums.moneysavingexpert.com/discussion/comment/82096633#Comment_82096633

Because I am now looking for work and the equity in the house is sort of at the maximum to loan ratio, I don't think I can take any money out of the house as I don't have the income to provide and show to get the rest on loan.

My fixed ends in 2 months.

premiumz

https://forums.moneysavingexpert.com/discussion/comment/82096565#Comment_82096565

Hi,
The Lloyds debt was a loan to help pay for a cheap car/help pay bills for several months. At the time our previous car finished it's PCP contract and so we had to sell it and move to a cheaper car, which we did and paid for it outright with part of the loan.
If we stopped paying those debts, I think we can stretch to pay the mortgage each month, otherwise we just slip further into debt at the moment, which is what we have been doing whilst trying to turn things around.
My dependents are too young to work.