Serious Debt and I don't know where to turn

IANOLIVER123FOOTBA

After becoming increasingly frustrated with my previous job I left and got another job but it involved a serious drop in salary. During the last 6 months I have been subsidising the deficit in my salary with my credit cards. It has got to the point now where I am really stuggling to keep up the repayments on my cards and i also have a loan. I have recently missed a payment on my loan and 2 payments on my credit card.

I decided it was time to sit down and work out my debts and get a loan to cover all of them so that my monthly outgoings were less. I estimated my debts at approx £13500 but had a real shock when they worked out to £19500.

I have applied for several loans but have been refused (mainly due to my recent missed payments). I have also found that many companies will only lend £15000 unsecured. I need to loan £19500 unsecured but cannot seem to get one from anywhere with a reasonable APR. The last thing I want is get a loan with a big interest rate. Please Help!!!!

Rafter

Ian,

You will find it really tough getting an unsecured loan, particularly with your current credit history.

I suggest you go talk to citizens advice or give the debt councilling service a call.

They can help you to negotiate with your current lenders and hopefully get you back on track.

DON'T GET A LOAN WITH A BIG INTEREST RATE FROM A SPECIALIST LENDER.

There is also loads of great advice on here about cutting your outgoings and managing debt.

Good luck.

R.

Debt_Free_Chick

OK .. take a deep breath. You need to feel in control, and you don't seem to be at the moment.

A few things for you to think about.

1. A loan will not pay off your debts. You will just move your debts from one place to another.

2. If you already have a lot of debt in relation to your salary and late payments on existing debts, you will find it very, very difficult to get a loan at a good rate. You'll probably end up with "sub-prime" lenders who wil charge more than 10% interest - sometimes, much, much more!

3. Even if you could get a loan, you will be paying it off for a long period. Don't just look at the APR - look at how long you'll have to be paying off.

4. Loans are inflexible - you pay a fixed amount, for a fixed period of time. The interest is added to the loan upfront. You can't make one-off extra payments and if you want to pay it back early, you generally get a raw deal. (The exception is a flexible loan, but I think you'll struggle to get accepted).

5. Your income has gone down, but you did not adjust your spending, did you Let's say you were earning £25k and you took a salary drop to £15k ... you kept on spending as though you had £25k, hence the debt. So your first step is to look - very hard - at all your expenses. Everything from rent/mortgage, food, utilities, phone, mobile, travel, going out etc etc.

6. You then need to prioritise your spending. Mortgage/rent & council tax is high priority. Mobile phone, socialising & broadband is low priority. You could do without them and you may have to for a while, until you pay off your debts. Pare back all your expenses to the minimum. Save on utility bills by switching suppliers. Ditch mobiles if you're out of contract or go to a PAYG tarriff. Downgrade broadband to dial-up. Start shopping in markets (for veg) the butcher (for meat) and Aldi or Lidl for store cupboard goods. Start staying in and making proper meals - this saves an absolute fortune!

7. List your current debts. The amount outstanding, the APR and the minimum repayments needed each month.

8. Take your expenses away from your income - what do you have left? If "nothing" or less than that, go back to step 6 and look for more & more savings. If you rent, think about moving to a cheaper place - a house share, or back to your parents ...?

9. You could contact all the companies you owe money too and ask for some help, but you need to see exactly how much you spend, first. You can't and must not make commitments to pay if you can't afford it.

If you want help with your expenses, post the details back here. We may be able to make some suggestions and give you some pointers.

Also, there's good information about managing debt & budgets here. have a good look at the factsheets & Self-Help Packs.

https://www.nationaldebtline.co.uk

Take control!

Good Luck

IANOLIVER123FOOTBA

Thanks for your advice. It has made things a bit clearer and i'm gonna use the pointers that you've given.
One question, if I contact my credit card companies and ask them for help, will this count against me in years to come when trying for credit?

FTD

you will have bigger problems with your credit rating if you go on a repayment plan with a credit card! You need to look at areas you *MUST* cut back on. too often on this site you see people that pay xxx a month to the gym, xxx to sky and mobiles and so on - nice to have, but not as nice as being able to pay off the debts - I'm doing it too!
what cards do you have?
Could you look at taking a smaller loan, enough to pay off one of your cards, possibly one that will give you a good deal on a balance transfer interest rate to move tha balance from one of your other cards to it - Then see if you can get a good deal on an interest rate with the newly freed up card - if you follow!
FTD

IANOLIVER123FOOTBA

My monthly income is £900 after tax.
My monthly expenses are as follows:
Rent: £140.00
Council Tax: £33.00
Loan: £255.00 (outstanding £10,960 Apr 6.8%)
Barclaycard: £128.00 (outstanding £2371 Apr 14.9%)
Natwest C/c £132.00 (o/s £3086 Apr 14.9%)
Virgin C/c £65.00 (o/s £1798 Apr 13.1%)
Other bills: £35.00
Sky: £10.00
Petrol: £40.00
Football: £45.00
Socialising: £100
Phone: £30.00
Dentist: £7.50
Lottery £8.00
Endowment: £20.00
Accident Plan:£4.50
House Ins: £7.18
Positive
Care Plan: £3.00

Grand Total £1063.18

I can see myself that there are many things that I can cut back on and do without but the thing that I'm really concerned abput is the debts that I have on my credit cards. The payments shown above are only the mimimum amounts and all the time there is interest accumulating on them all the time. So very little of my payment is coming off the balance.

Margaret_Millne

Football: £45.00
Socialising: £100
Phone: £30.00
Lottery £8.00

Cutting out on these alone would cover your shortfall.

You don't say what your credit limits are on the cards. Barclaycard are currently offering existing cardholders 2.9% for life on balance transfers, so as FTD says, if you could transfer the balance from that to one of your other cards, or both, you could then balance transfer back up to your credit limit, and you then have a large amount of your debt at 2.9% instead of 13.9 or 14.9%. This has to be a big help.

Read Martins "Credit Card Shuffle" article if you haven't yet done so, that sets out much more clearly than I can the mechanism to follow to do this.

Does "other bills" include food, or is "socialising" your only means of eating.

You have to be very disciplined, but I can tell you our credit card debts are much more than yours, but by operating "the shuffle" we are slowly getting on top of them.

You will find no better crowd to give you help and encouragement than here. Good luck.

Debt_Free_Chick

My monthly income is £900 after tax.
My monthly expenses are as follows:
Rent:            £140.00
Council Tax:  £33.00
Loan:            £255.00 (outstanding £10,960 Apr 6.8%)
Barclaycard:  £128.00 (outstanding £2371 Apr 14.9%)
Natwest C/c  £132.00 (o/s £3086 Apr 14.9%)
Virgin C/c      £65.00 (o/s £1798 Apr 13.1%)
Other bills:    £35.00
Sky:               £10.00
Petrol:           £40.00
Football:       £45.00
Socialising:   £100
Phone:         £30.00
Dentist:        £7.50
Lottery          £8.00
Endowment:  £20.00
Accident Plan:£4.50
House Ins:     £7.18
Positive
Care Plan:      £3.00

Grand Total    £1063.18

As an observation ...

No food? No gas, leccy, phone, mobile, internet, insurance ....?

You firstly need a very thorough & robust budget. Martin has a budget planner on this site and there's one on the National Debtline site.

you'll need all your paperwork - bank statements, bills etc - for at least the past month. And the further back in time the better picture you'll get.

This is an absolutely vital first stage, so do please have a go as soon as possible.

Regards

Debt_Free_Chick

One question, if I contact my credit card companies and ask them for help, will this count against me in years to come when trying for credit?

Probably. But you need more debt like you need a whole in the head right now

Let's just deal with your current position .... any "bad" marks on your credit record disappear after 6 years. Let's face it, it's gonna take a while to pay off this current debt so you won't want/need/or be able to get any more debt during that period - and that won't be a bad thing.

Remember ... credit is marketing hype for DEBT

Good luck

IANOLIVER123FOOTBA

Barclaycard Balance is £2371 Limit is £2400
Virgin Balance £1798 Limit is £4,200
Natwest Balance £3086 Limit is £7,300

The only problem is with my Natwest Credit card I have spoken to them and they have agreed to freeze my account for 3 months and I only have to pay £50 a month but cannot use the account for any purpose.

Any ideas on how to shuffle these? I don't think I'll get accepted if i apply for another card and if i do the credit limit isn't goiong to be high enough.

Also I missed food off which is £80 a month.

I understand that I need to cut things out to be able to manage my money better but then surely this means living like a monk? My debts are gonna take years to pay off. I can't live like that for years? Tell me if I'm being stupid.

Socialising and going out are the only 2 things that I do in my spare time. Cutting both of these out will mean having no life?

IANOLIVER123FOOTBA

gas, electric and water come under other bills. i've got a company mobile phone so they pay my bill and I use the internet at work so have no charges for that either.
I also mistakenly missed off food which comes in at £80 a month.