debt advise please

m.a.d.s

Hi, just after some thoughts/coments about HSBC's dmp, I have a loan, credit card and overdraft with HSBC which in total amounts to £14500. I went into the branch today to try and consolidate them but was refused as my credit is poor. my loan rate was 13.9 over 5 years and my 0% on credit card is due to run out next month.
I have been offered my credit card account closed, my overdraft taken from 1400 back to 0 and my original loan paid for this new debt management plan of £141.00 a month over 12 years at a rate of 6.2%, I think the total repayment is just over 20k which i dont think is too bad and the loan rate is alot lower then my original loan. I was paying £80.00 min payment on ccard £221.00 on loan and £20.00 a month on o/draft charges.
I know its over a longer term but it seems good to me and my best option to get myself staightend out , I dont want any defults and apparently the apr is always !% higher than the base rate which doesnt seem a bad rate for someone in my postion, havent signed anything yet but after anyones thoughts please
Thanks for your time.
p.s do you know if by going onto one of these plans, if you automatically get a default on your credit record for six years has i have never missed a payment on my loan or c/card before being offered this plan? Thats the only thing stopping me from going to the cccs, if i get one just for going onto the plan i may as well go with the cccs, atleast its no intrest to pay, just dont want default on credit report if possible.
All advise recieved with thanks

cassy

this is not a debt management plan,

this is another type of loan, dont use credit to pay off more credit you will get your self in more trouble in the long run, seek advise from the CAB or CCCS before you take any further deals or sign any paperwork,

a true DMP is NOT A LOAN, yes you will end up with defaults but if you are wanting the be debt free, having defaults shouldnt be a problem to you as you shouldnt be wanting more credit,

my advice to you is speak to someone and get advice
and post your statement of affairs people could point out where you could reduce spending.

since you havent missed any payments you could still continue with payments reduce spending and try and pay them off quicker

i made the mistake of doing something like this now another 5 yrs down the line after our wedding, illness, redundancy and buying our house we are in alot of debt

m.a.d.s

thanks for the reply, my loan has a 13.9% apr and my 0% finishes next month on c/c, this new dmp apparently offers me a rate of 6.2% apr or 1% over base rate which is less then half what im currently paying and is more affordable and wouldnt be alot more in intrest even though its over longer??????????

linniestorm

Hi m.a.d.s welcome. Just to reiterate, what HSBC are offering you is not a Debt Management Plan DMP (just mentioning it as you referred to it as one again in your post above) it's another loan.

Yes this loan offer from HSBC may well decrease the interest rates you are paying currently, but a true DMP that you can arrange through one of the debt charities can often freeze the interest or charges you are subject to so the debt won't go up any more. They also work out with you exactly what you can afford to pay back, and divvy up that money to your creditors accordingly, and they take care of it, so you don't have to do it yourself. This new loan from HSBC will be a fixed monthly payment for 12 years, and if there's a month you can't pay, more charges will come, plus the interest you'll be paying back, plus you'll have the hassle from HSBC if your circumstances change. Any negotiation in these situations is done via the debt charities if you're on a proper DMP. Plus you may end up paying it all off a lot sooner as there may well be less interest attached. Obviously it may well end up affecting your credit rating, but so would defaulting on this new HSBC loan. I really would suggest you check out the debt charity websites for all the FAQs on them before you sign up for more credit. See the site's Debt Problems page for the links (under Debt Counselling heading): http://www.moneysavingexpert.com/loans/debt-help-plan

Incidentally, like Cassy (and probably a fair few of us on these boards) I consolidated, as you're considering, except I did it twice, and ended up in more debt, before I took myself in hand to pay it back. Putting it all in one payment seems a lot easier I know from experience, but it's also incredibly tempting and easy to get more credit as well and end up in a worse situation than before!

m.a.d.s

I know this is going to sound bad but im already on a dmp with ccs from 3 years and have 2 years left, but 1 of conditons is that you dont get anymore debt so im worried they will stop my first plan for doing this, i have learnt my lesson now and wont be wanting anymore credit, but if i did go to the cccs would i have to wait for the loan,o/d and c/card to default untill it can go onto the dmp with cccs if they allow it? how would i go about it? thanks

linniestorm

Hey m.a.d.s, I'm sorry I don't know too much about the technicalities of DMPs, there may well be someone around in the morning who will be able to advise you better. If no one picks up your thread, post again on this thread and that will 'bump' it back up to the front page and the morning folk will see it. Don't worry about sounding bad, you don't, we're the last lot to cast the first stone round here, or we'd all have bruises!!!

Considering though that you have been here before, I'd strongly suggest consolidating again is a very bad idea! I know the first time I consolidated I gave a sigh of relief and said 'no more credit for me'. Then 18 months later...same position again. Hang fire and someone should be able to advise you on how to approach CCCS or what your next step should be if not tonight then in the morning.

stapeley

I bet its a secured loan .Never a good idea to change unsecured debt to secured !

4littleone

Hi,

from what you've said it sounds like the interest rate will be variable? As they have told you it will be 1% above base rate. You are aware that interest rates will probably rise aren't you?
If you take this plan you could end up even worse off than you are now.

You said that you haven't missed any payments. So why don't you post a SOA, (statement of affairs) and let us see if we can reduce your outgoings and free up extra cash to pay off the debts quicker.

For example, if you could save £50 a month on your outgoings that could come off the overdraft to reduce that, you could ask the bank to reduce the overdraft limit each month to reflect that. The overdraft will be gone in 28 months. Sooner if you start ebaying etc and put all the extra cashb towards your debt.

What do you do for a living? Can you take on an evening job in a pu/bar for example and put that cash towards your debts?
Check out the "make £10 a day threads for ideas on maximising your income.

m.a.d.s

thats the thing, i cant see that i will be worse of as my loan was 13.9% apr where as the new one is 6.2%, and rather than paying min payment on c/c it will be paid off alot soon this way?

poppyg_2

What debt was the original CCCS DMP for?

I think with the extra credit you have got you are in breach of it now in which case if they find out they would be able to cancel the DMP you have with them?

m.a.d.s

the orignal debts was from mobile, bank loan/account, utilites that all fell behind when i was ill and could not work.